Four Facts Concerning Competition in U.S. Generic Prescription Drug Markets

Rena Conti and Ernst R. Berndt

No 26194, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We establish four facts concerning competition among U.S. generic drug suppliers, using IQVIA’s National Sales Perspective™ 2004Q4 – 2016Q3 data. We define a unique product market (“molform”), consisting of the combination of a molecule active ingredient and a route of administration formulation, aggregated over different dosages and strengths. We find: (i) supply exhibits substantial churning in entrants and exits; (ii) volume-weighted use concentrates in older generic molform cohorts; (iii) the extent of competition is greatest for the oldest molform cohorts and is smallest for the youngest molform cohorts. With a median of one competitor, the extent of competition in the youngest molform cohort is very limited; and (iv) supplier-molform annual revenues are typically small, are largest for relatively young drugs, but are heavily right skewed. These four facts provide an empirical platform on which to construct and empirically evaluate hypotheses regarding generic drug market structure, performance, and possible policy reforms.

JEL-codes: I10 L10 L65 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-com and nep-ind
Note: EH IO
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