Price regulation and relative delays in generic drug adoption

Abstract

Increasing the adoption of generic drugs has the potential to improve static efficiency in a health system without harming pharmaceutical innovation. However, very little is known about the timing of generic adoption and diffusion. No prior study has empirically examined the differential launch times of generics across a comprehensive set of markets, or more specifically the delays in country specific adoption of generics relative to the first country of (generic) adoption. Drawing on data containing significant country and product variation across a lengthy time period (1999-2008), we use duration analysis to examine relative delays, across countries, in the adoption of generic drugs. Our results suggest that price regulation has a significant effect on reducing the time to launch of generics, with faster adoption in higher priced markets. The latter result is dependent on the degree of competition and the expected market size.

Keywords: Adoption; Duration analysis; Generic competition; Regulation.