The generic competition paradox in a universal healthcare's prescription drug market
by Kenichi Ohkita; Kazumitsu Minamikawa
International Journal of Business and Globalisation (IJBG), Vol. 14, No. 4, 2015

Abstract: This paper provides a game theoretic model on the likelihood of the generic competition paradox in a universal healthcare's prescription drug market. Using a two-stage model in which patients are prescribed either the brand-name drug, a generic alternative, or no drug, it is found that under certain conditions the price of the brand-name drug increases after the entry of generic alternatives. The generic competition paradox is found to require full market coverage and to be more likely to occur with a larger difference in the perceived quality of the brand-name drug and its generic alternatives, higher marginal costs of production, or lower insurance coverage.

Online publication date: Fri, 29-May-2015

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