Price Competition in Pharmaceuticals: The Case of Anti‐infectives

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Abstract
A fundamental question in industrial organization regards the relationship between price and the number of sellers. This relationship has been particularly important in the pharmaceutical industry where legislative changes were specifically designed to foster competition. Previous research on the pharmaceutical industry has shown generic entry has a mixed impact; generic prices fall rapidly with generic entry, whereas branded prices tend to increase or decrease only slightly. Using more complete data, focused on one segment of the pharmaceutical industry—anti‐infectives—we find that the relationship between pharmaceutical prices and the number of sellers is more like that found in other industries. (JEL L11, L65, D4)

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