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Collusion in the US Generic Drug Industry

Robert Clark (), Christopher Anthony Fabiilli () and Laura Lasio
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Robert Clark: Queen's University
Christopher Anthony Fabiilli: Competition Bureau Canada

No 1474, Working Paper from Economics Department, Queen's University

Abstract: We study cartels that operated in the US generic drug industry, leveraging quarterly Medicaid data from 2011-2018 and a difference-in-differences approach comparing the evolution of prices of allegedly collusive drugs with a group of competitive control drugs. Our analysis highlights (i) the difficulty of establishing a suitable control group when collusion is pervasive, (ii) the importance of accounting for market structure changes when defining the control period, and (ii) the existence of across- and within-drug heterogeneity. We focus on six drug markets that that were part of the expanded initial complaint and where there was no entry in the same class during the collusive period, permitting a clean measure of the causal impact of collusion on prices. Our most conservative estimates suggest that collusion led to price increases of between 0% and 166% for each of the six drugs, and damages of between $0 and $3 million for the Medicaid market.

Keywords: antitrust; generic drugs; price fixing (search for similar items in EconPapers)
JEL-codes: D22 D43 I18 K21 L12 L13 L41 L65 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2021-11
New Economics Papers: this item is included in nep-com, nep-hea, nep-ias, nep-ind, nep-law and nep-reg
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