Book contents
- Frontmatter
- Contents
- List of Tables
- List of Figures
- Contributors
- Acknowledgments
- PHARMACEUTICAL INNOVATION
- 1 Introduction
- PART I THE INDUSTRY STRUCTURE OF PHARMACEUTICAL INNOVATION
- PART II STRUCTURING INCENTIVES FOR RESEARCH AND DEVELOPMENT
- PART III COMPETITION AND MARKETING
- 8 Competition between Generic and Branded Drugs
- 9 The United States' Experience with Direct-to-Consumer Advertising of Prescription Drugs: What Have We Learned?
- PART IV PUBLIC EVALUATION OF THE BENEFITS AND COSTS OF INNOVATION
- Notes
- References
- Index
8 - Competition between Generic and Branded Drugs
Published online by Cambridge University Press: 18 December 2009
- Frontmatter
- Contents
- List of Tables
- List of Figures
- Contributors
- Acknowledgments
- PHARMACEUTICAL INNOVATION
- 1 Introduction
- PART I THE INDUSTRY STRUCTURE OF PHARMACEUTICAL INNOVATION
- PART II STRUCTURING INCENTIVES FOR RESEARCH AND DEVELOPMENT
- PART III COMPETITION AND MARKETING
- 8 Competition between Generic and Branded Drugs
- 9 The United States' Experience with Direct-to-Consumer Advertising of Prescription Drugs: What Have We Learned?
- PART IV PUBLIC EVALUATION OF THE BENEFITS AND COSTS OF INNOVATION
- Notes
- References
- Index
Summary
Introduction
The United States is the country for which generic competition is the most highly developed. It is a key location of drug price competition, and there are many institutional mechanisms to encourage the utilization of generics. The Hatch-Waxman Act of 1984 was enacted with the dual objectives of facilitating entry of generic competition while preserving sufficient patent exclusivity time to incentivize drug innovation. In this chapter's next section, I discuss the provisions of the 1984 Act in some detail and review how managed care organizations encourage generic competition. Sections III through V examine findings of several economic analyses of generic competition. Section VI examines studies of effective patent life and how the 1984 Act has affected the incentives for drug innovation. Section VII focuses on the strategic responses of branded and generic firms to the 1984 Act. Section VIII provides a brief summary and discusses issues for further research.
Drivers of Generic Industry Growth
The Hatch-Waxman Act
The generic industry has evolved rapidly since the mid-1980s. A key event fostering the development of this industry was the passage of the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act. This Act changed the regulatory criteria for U.S. Food and Drug Administration (FDA) approval of generics, thereby significantly reducing the costs and time delays of generic entry. The Act also provided benefits to innovative firms by restoring some of the patent life lost during the long regulatory period for new drugs.
- Type
- Chapter
- Information
- Pharmaceutical InnovationIncentives, Competition, and Cost-Benefit Analysis in International Perspective, pp. 153 - 173Publisher: Cambridge University PressPrint publication year: 2007
- 12
- Cited by