Title: The interaction between leading drugs and pharmacy-owned labels in Chile

Authors: Gonzalo Escobar E.; Iván Valdés D.

Addresses: Department of Economics and Business, University Andres Bello, Fernandez Concha 700, Las Condes, Santiago, Chile ' Faculty of Administration and Economics, University of Tarapacá, Iquique, Chile

Abstract: In this paper, a data panel technique to estimate a model of relative prices between large pharmacy-owned drugs and leading drugs was used. Under the assumption that dominant firm market share increases by 10%, and the other 2 (smaller ones) loss 5%, the relative prices diminish by -0.043%. The market size impacts positively (18.5%) the relative prices, implying that a larger market size the entry of more brands is encouraged, and then more competition and lower prices will be observed. This impacts the owned-brand price, which means that the leading drug price has a high degree of rigidity. For the drug specific effect - measures the drug that is targeted, the original or the leading generic - to commercialise its own brand, if the pharmacy targets the leading generic the variation of relative price between the own-brand drug and leading generic is 0.5267; which means that the owned-brand drug margin increases.

Keywords: drug markets; generic pharmaceuticals; microeconomics; competition.

DOI: 10.1504/IJBE.2023.127706

International Journal of Business Environment, 2023 Vol.14 No.1, pp.67 - 93

Received: 13 Sep 2021
Accepted: 25 Apr 2022
Published online: 14 Dec 2022 *