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1 results

  • 7 - Collusion in Generic Drug Markets

  • from Part II - Seller Cartels
  • Roger D. Blair, University of Florida, Christine Piette Durrance, Tirza J. Angerhofer, Duke University, North Carolina
  • Book:
    Antitrust Policy in Health Care Markets
    Published online:
    24 November 2022
    Print publication:
    08 December 2022, pp 136-167

  • Summary

    When a patent on a pharmaceutical product expires, therapeutically equivalent generic versions of the drug rapidly enter the market. Competition among the generic producers ordinarily causes the price of drugs to plummet. This, of course, is socially beneficial since consumers are considerably better off. Health insurers are also better off because the costs of insurance claims fall. Nearly everyone gains – except for the pioneer firm whose patent monopoly has expired. For many generic drugs, however, this scenario has failed to materialize because the generic producers allegedly decided to collude rather than compete. Various state attorneys general have filed complaints against 30 well-known generic drug manufacturers for their alleged collusion of more than 160 pharmaceutical drugs. The complaints allege that a large-scale cartel engaged in price fixing, customer allocation, and bid rigging in the market for generic drugs, leading to higher prices and lower sales.