Premium
Entry in the ADHD drugs market: Welfare impact of generics and me‐too's
Author(s) -
Bokhari Farasat A. S.,
Fournier Gary M.
Publication year - 2013
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12017
Subject(s) - welfare , drug , public economics , economics , business , pharmacology , medicine , market economy
Recent decades have seen a growth in treatments for attention deficit hyperactivity disorder ( ADHD ) including many branded and generic drugs. In the early 2000's, new drug entry dramatically altered market shares. We estimate a demand system for ADHD drugs and assess the welfare impact of new drugs. We find that entry induced large welfare gains by reducing prices of substitute drugs, and by providing alternative delivery mechanisms for existing molecules. Our results suggest that the success of follow‐on patented drugs may come from unanticipated innovations like delivery mechanisms, a factor ignored by proposals to retard new follow‐on drug approvals.