International Journal of Industrial Organization, 31(5), pp. 538-553, 2013.
43 Pages Posted: 9 May 2013 Last revised: 29 Sep 2017
Date Written: August 28, 2013
We estimate a model of drug demand and supply that incorporates insurance, advertising, and competition between branded and generic drugs within and across therapeutic classes. We use data on antiulcer drugs from 1991 to 2010. Our simulations show generics and "me-too" drugs each increased welfare more than $100 million in 2010. Furthermore, 2010 insurance payments fell by nearly $1 billion due to generics but rose by over $7 billion due to me-too antiulcer drugs.
Keywords: Pharmaceutical, demand, discrete choice
JEL Classification: I11, L13, L65
Suggested Citation: Suggested Citation