Among the market characteristics, only generic competition is significantly related with price, and only in the random effects model. Generic competition reduces price, as expected, but by well less than 1% for each 10% increase. The impact of generic competition might have been mitigated by the addition of generic substitution to the regulatory systems of many EU countries by the late 1990s. In 1993, the EU introduced legislation allowing supplementary patent certificates (SPCs) that, analogous to the Roche-Bolar provision of the Waxman-Hatch Act in the US, allows generic manufacturers to develop versions of products that are still under patent protection. SPC applications must go through a specific national patent office, giving member countries the opportunity to separately address the issue. In Germany and UK, generic suppliers can formulate and test products and complete product review in another country while the patent is active, which can substantially reduce the time between patent expiration and generic launch. For example, German generics have been launched the day following patent expiration. In France, meanwhile, required documentation cannot be submitted for review until after patent expiration, delaying the launch of generic competition for up to five years.
Aysegul Timur, Gabriel Picone, and Jeffrey S. DeSimone
International Journal of Health Care Finance and Economics
December 2011
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