TY  - JOUR
N2  - The purpose of this paper is to examine the extent of generic competition in European
countries, given an understanding of these countries' different pharmaceutical price regulations and
health care structures. In particular, this study investigates generic competition among the five largest
European pharmaceutical markets; the United Kingdom, Germany, France, Italy and Spain, with
comprehensive IMS data set for 10 years (1994-2003), in order to estimate the effect of generic entry
on drug prices at the product level. Both within and across these countries, different interventions are
being applied to in-patent and off-patent markets during 10 years of the study period. For example, in
Germany, markets for on-patent drugs are largely unregulated and prices are set relatively freely;
however, once generics enter the market, the German government uses reference pricing to set
reimbursement rates. In the UK, originator medicine prices are free from direct regulatory
intervention, but are subject to a rate of return regulation. Additionally, once generics enter the
market, the UK's government uses price caps. France, Italy, and Spain, on the other hand, use direct
price controls for originator drugs and reference pricing system for generic drugs. Accordingly, this
analysis finds that generic entry has a negative effect on prices in countries with free pricing originator
market, whereas in European Union (EU) countries with strict price and reimbursement regulation,
generic competition is ineffective and/or counterproductive. Low regulated prices for originator
products do not encourage generic entry following patent expiration. This finding is consistent with
less generic firms and less competitive late entrants in regulated environments. Thus, strict price
regulation undermines price competition in the off-patent sector, and cost savings from post-patent
competition are not realized in countries with strict pricing and reimbursement policies.
Y1  - 2015/05//
TI  - Generic Competition and Price Regulation in Pharmaceuticals: Evidence from the European Union
UR  - http://eprints.imtlucca.it/2671/
AV  - public
SN  - 0167-7187
A1  - Tuncay, Berna
KW  - Keywords: Pharmaceuticals
KW  -  Generic entry
KW  -  Price competition
KW  -  Market regulation
KW  -  Hedonic regression. JEL codes: D22
KW  -  I11
KW  -  I18
KW  -  L11
KW  -  L51
KW  -  L65
ID  - eprints2671
PB  - Elsevier
JF  - International Journal of Industrial Organization
ER  -