Therapeutic equivalence and the generic competition paradox
Nabin, Munirul Haque, Mohan, Vijay, Nicholas, Aaron and Sgro, Pasquale 2012, Therapeutic equivalence and the generic competition paradox, B.E. journal of economic analysis and policy, vol. 12, no. 1, pp. 1-26.
Following the passage of the Waxman-Hatch Act (1984), FDA approval for a generic drug requires the establishment of bio-equivalence between the generic drug and an FDA approved branded drug. However, a large body of evidence in the medical community suggests that bio-equivalence does not guarantee therapeutic equivalence; in some instances the lack of therapeutic equivalence can lead to fatal consequences for patients switching to generic products. In this paper, we construct a simple model to analyze the implications of therapeutic non-equivalence between branded and generic drugs. We show, theoretically and empirically, that this distinction can provide a plausible explanation of the generic competition paradox.
Field of Research
140209 Industry Economics and Industrial Organisation