Markups and Fixed Costs in Generic and Off-Patent Pharmaceutical Markets

Sharat Ganapati and Rebecca McKibbin

No 29206, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: There is wide dispersion in pharmaceutical prices across countries with comparable quality standards. Under monopoly, off-patent and generic drug prices are at least four times higher in the United States than in comparable English-speaking high income countries. With five or more competitors, off-patent drug prices are similar or lower. Our analysis shows that differential US markups are largely driven by the market power of drug suppliers and not due to wholesale intermediaries or pharmacies. Furthermore, we show that the traditional mechanism of reducing market power – free entry – is limited because implied entry costs are substantially higher in the US.

JEL-codes: F14 I11 L44 L65 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-com, nep-hea, nep-ind, nep-ipr, nep-isf and nep-reg
Note: EH IO ITI
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published as Sharat Ganapati, Rebecca McKibbin; Markups and Fixed Costs in Generic and Off-Patent Pharmaceutical Markets. The Review of Economics and Statistics 2021

Downloads: (external link)
http://www.nber.org/papers/w29206.pdf (application/pdf)

Related works:
Journal Article: Markups and Fixed Costs in Generic and Off-Patent Pharmaceutical Markets (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29206

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29206

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().