Non-Tariff Barriers and Bargaining in Generic Pharmaceuticals

Generic drug prices have received a great deal of attention in the past few years. Many agencies have conducted investigations into the pricing patterns for generic drugs. Price spikes for several specific generic drugs have also been widely reported in the media. Today, 90% of all retail prescriptions sold in the United States are generic drugs. Thus, these prices affect affordability of prescription drugs. We construct two Laspeyres chained price indexes for generic prescription drugs. The first reflects direct out-of-pocket payments by consumers to pharmacies for dispensing generic prescription drugs. The second measures the total price received by the pharmacy (the direct out-of-pocket payment plus the price paid to the pharmacy by the insurer). The chained direct out-of-pocket consumer price index we construct shows a roughly 50% decline for generic prescription drugs between 2007 and 2016. The total consumer price index for generic prescription drugs fell by nearly 80%.

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Pharmacists' Decision Making in the Selection of Generic Pharmaceuticals

Journal of Pharmaceutical Marketing & Management ◽

10.1300/j058v04n01_05 ◽

1989 ◽

Vol 4 (1) ◽

pp. 75-91 ◽

Cited By ~ 2

Author(s):

Richard Segal

Keyword(s):

Decision Making ◽

Generic Pharmaceuticals ◽

Selection Of

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Cost and Price of Comparable Branded and Generic Pharmaceuticals

JAMA ◽

10.1001/jama.1987.03390180053014 ◽

1987 ◽

Vol 257 (18) ◽

pp. 2435

Author(s):

Jere E. Goyan

Keyword(s):

Generic Pharmaceuticals

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Physician Agency and Adoption of Generic Pharmaceuticals

The American Economic Review ◽

10.1257/aer.102.6.2826 ◽

2012 ◽

Vol 102 (6) ◽

pp. 2826-2858 ◽

Cited By ~ 58

Author(s):

Toshiaki Iizuka

Keyword(s):

Health Care ◽

Health Care Services ◽

State Dependence ◽

Brand Name ◽

Policy Makers ◽

Patient Costs ◽

Static Efficiency ◽

Care Services ◽

Physician Agency ◽

Generic Pharmaceuticals

I examine physician agency in health care services in the context of the choice between brand-name and generic pharmaceuticals. I examine micro-panel data from Japan, where physicians can legally make profits by prescribing and dispensing drugs. The results indicate that physicians often fail to internalize patient costs, explaining why cheaper generics are infrequently adopted. Doctors respond to markup differentials between the two versions, indicating another agency problem. However, generics' markup advantages are short-lived, which limits their impact on increasing generic adoption. Additionally, state dependence and heterogeneous doctor preferences affected generics' adoption. Policy makers can target these factors to improve static efficiency. (JEL D82, I11, J44, L65)

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