| Abstract: |
Patent expiration represents a turning point for the brand losing patent
protection as bioequivalent generic versions of the drug quickly enter the
market at reduced prices. In this paper, we study how physician
characteristics and their prescribing decisions impact the competition among
molecules of a therapeutic class, once generic versions of one of these
molecules enter the market. Specifically, we study the evolution of the
Selective Serotonine Reuptake Inhibitors (SSRIs) after the introduction of
generic versions of fluoxetine (brand name Prozac) in the United Kingdom (UK).
Our results suggest that, to fully understand the market evolution after
generic entry, public health officials need to consider the marketing
activities of pharmaceutical companies and determine how (1) individual
physicians prescribe all competing drugs, and (2) respond to drug prices and
marketing actions. For example, we find that a group of physicians sensitive
to detailing switch from fluoxetine to non-bioequivalent branded alternatives
after patent expiration, as Prozac significantly reduces its marketing
support. Consequently, the market share of fluoxetine decreases despite being
available at significant price discount under generic form, and despite the
increase of prescriptions by price-sensitive physicians. Hence, governments
interested in assessing generics diffusion should consider the prescribing
across all competitors, whether or not bioequivalent, and determine the size
of physician segments sensitive to pharmaceutical marketing activity and
prices. |