NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Murray L. Aitken

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Working Papers

October 2013The Regulation of Prescription Drug Competition and Market Responses: Patterns in Prices and Sales Following Loss of Exclusivity
with Ernst R. Berndt, Barry Bosworth, Iain M. Cockburn, Richard Frank, Michael Kleinrock, Bradley T. Shapiro: w19487
We examine six molecules facing initial loss of US exclusivity (LOE, from patent expiration or challenges) between June 2009 and May 2013 that were among the 50 most prescribed molecules in May 2013. We examine prices per day of therapy (from the perspective of average revenue received by retail pharmacy per day of therapy) and utilization separately for four payer types (cash, Medicare Part D, Medicaid, and other third party payer – TPP) and age under vs. 65 and older. We find that quantity substitutions away from the brand are much larger proportionately and more rapid than average price reductions during the first six months following initial LOE. Brands continue to raise prices after generics enter. Expansion of total molecule sales (brand plus generic) following LOE is an increasi...

Forthcoming: The Regulation of Prescription Drug Competition and Market Responses: Patterns in Prices and Sales following Loss of Exclusivity, Murray L. Aitken, Ernst R. Berndt, Barry Bosworth, Iain Cockburn, Richard Frank, Michael Kleinrock, Bradley Shapiro. in Measuring and Modeling Health Care Costs, Aizcorbe, Baker, Berndt, and Cutler. 2014

October 2010Brand Loyalty, Generic Entry and Price Competition in Pharmaceuticals in the Quarter Century After the 1984 Waxman-Hatch Legislation
with Ernst R. Berndt: w16431
The landmark Waxman-Hatch Act of 1984 represented a “grand compromise” legislation that sought to balance incentives for innovation by establishing finite periods of market exclusivity yet simultaneously providing access to lower cost generics expeditiously following patent expiration. Here we examine trends in the first quarter century since passage of the legislation, building on earlier work by Grabowski and Vernon [1992,1996] and Cook [1998]. The generic share of retail prescriptions in the U.S. has grown from 18.6% in 1984 to 74.5% in 2009, with a notable acceleration in recent years. This increase reflects increases in both the share of the total market potentially accessible by generics, and the generic efficiency rate – the latter frequently approaching 100%. Whereas in 1994, ...

Published: Berndt, Ernst R. and Murray L. Aitken, “Brand Loyalty, Generic Entry and Price Competition in Pharmaceuticals in the Quarter Century after the 1984 Waxman - Hatch Legislation”, International Journal of the Economics of Business 18(2):177 - 201, July 2011.

May 2010Characterizing Markets for Biopharmaceutical Innovations: Do Biologics Differ from Small Molecules?
with Mark Trusheim, Ernst R. Berndt: w16014
Much has been written about the seemingly less formal, more agile biotechnology industry and its extensive interactions with academia and startups, as well as its distinct scientific, manufacturing and regulatory profile. Employing a data base encompassing all 96 biologics and 212 small molecules newly launched in the U.S. between 1998Q1 and 2008Q4, we compare their downstream clinical and commercial characteristics -- therapeutic class concentration, launch delays following approval, Orphan Drug and priority review status, supplemental indications, black box warning and safety record, and pricing and revenue growth during the product life cycle. We conclude that the market dynamics of biologics differ substantially from those of small molecules, although therapeutic class composition pl...

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