Essay - Article Summaries Frank, R.g. & Salkever, D.s. (1997). Generic Entry...

article summaries

Frank, R.G. & Salkever, D.S. (1997). Generic entry and the price of pharmaceuticals. Jnl of Economics and Financial Strategy 6(1): 75-90.

*****. What is ***** goal of this study?

The goal of the study was to examine market responses ***** the 1984 Waxman-Hatch Act. Market responses for pharmaceuticals seemed to differ from traditional patterns of pricing after a generic product competes with the pioneer. Fr*****nk & ***** (1997) studied a series of formerly patent drugs and their generic pairs to determine any ***** in pricing response. The research investigates brand-name pricing strategies after ***** drugs enter the ***** as well as generic drug pricing patterns.

A ii. What is the time period analyzed?

***** current research analyzes pharmaceuticals that lost their patents between 1979 and 1987.

A iii. What is/are the data sources?

***** sources include a broad sample of pharmaceuticals that had lost patent protection between 1979 and 1987. Only pharmaceuticals ***** required prescriptions were included in the current *****; ***** drug that was downgraded ***** an over-the-counter formula was excluded ***** the research. No comb*****ation *****s or small-circulation medications such as specialized injectibles ***** included in ***** research. The result*****g ***** set included 45 brand-name pharmaceuticals and their ***** counterparts. The main source of pricing data derives from IMS America Inc's MIDAS system, using the United States Drugstore and Hospital Database (p. 80). The database accounted for almost all pharmaceutical sales in the ***** States for the years ***** question.

A iV. What are the main findings?

An average of five generic products enter the market during the first post-patent year, and ***** product entry slows thereafter (p. 83). Remarkably, findings reveal a significant *****rice increase ***** brand-name pharmaceuticals after the generic counterpart enters the *****. ***** price ***** was as much as 50%. Increasing ***** prices in ***** to generic entry runs completely counter ***** traditional market*****g practices regarding pricing ***** in other ***** **********. Usually, brand name pricing decreases to compete with the newly emerging generic product. The generic product competes strongly with the pioneer on pricing al*****e, and ***** brand-name product usually drops in price ***** compete. In the case with pharmaceuticals ***** reverse is true. Generic *****s re***** significantly cheaper than ***** brand name counterparts, but the brand ***** drugs actually increased in *****.

v. What new information did you learn?

***** pharmaceutical industry operates with different marketing ***** and techniques than ***** industries. Competition in the pharmaceutical ***** stimulates aggressive pricing strategies among generic manufacturers. However, br*****-name ***** have opted out of price wars with their generic competitors. Generic drugs ***** the same ***** compete with one another more ***** they do with their pi*****er brand counterpart.

A vi. ***** are some suggestions/critic*****ms you would make to the author?

The authors offer little commentary or analyses of the results. Their explanations of the weaknesses in ***** ***** model show that the ***** is preliminary, but some speculation as to why ***** companies use the ***** strategies ***** do would have been