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The European Journal of Health Economics
Published in: The European Journal of Health Economics 8/2016

01-11-2016 | Original Paper

The diffusion of generics after patent expiry in Germany

Authors: Katharina Elisabeth Fischer, Tom Stargardt

Published in: The European Journal of Health Economics | Issue 8/2016

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Abstract

To identify the influences on the diffusion of generics after patent expiry, we analyzed 65 generic entries using prescription data of a large German sickness fund between 2007 and 2012 in a sales model. According to theory, several elements are responsible for technology diffusion: (1) time reflecting the rate of adaption within the social system, (2) communication channels, and (3) the degree of incremental innovation, e.g., the modifications of existing active ingredient’s strength. We investigated diffusion in two ways: (1) generic market share (percentage of generic prescriptions of all prescriptions of a substance) and, (2) generic sales quantity (number of units sold) over time. We specified mixed regression models. Generic diffusion takes considerable time. An average generic market share of about 75 % was achieved not until 48 months. There was a positive effect of time since generic entry on generic market share (p < 0.001) and sales (p < 0.001). Variables describing the communication channels and the degree of innovation influenced generic market share (mostly p < 0.001), but not generic sales quantity. Market structure, e.g., the number of generic manufacturers (p < 0.001) and prices influenced both generic market share and sales. Imperfections in generic uptake through informational cascades seem to be largely present. Third-party payers could enhance means to promote generic diffusion to amplify savings through generic entry.
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Metadata
Title
The diffusion of generics after patent expiry in Germany
Authors
Katharina Elisabeth Fischer
Tom Stargardt
Publication date
01-11-2016
Publisher
Springer Berlin Heidelberg
Published in
The European Journal of Health Economics / Issue 8/2016
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI
https://doi.org/10.1007/s10198-015-0744-3

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