Study on free market and competition in the expired-patent drug markets in Mexico

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Abstract

The study analyzes the degree of competition in the private drug markets once the patent of the original drug expires. Different competition level measures were examined, such as the degree of competition and the speed of entry into the market of generic drugs, as well as their capacity to reduce prices. The study analyzed regulatory factors that may hinder the entry of generics, as well as those related to the incentives of the agents to abuse the legal system in order to extend their de facto exclusiveness in the market were also analyzed. The former includes: those linked to sanitary authorization, as well as those from the industrial property system itself and the prevailing law on prescription of drugs. And, the latter, strategies that may be used by laboratories, and which show some potential to deter the entry of competitors. Consideration was given to the possibility of low sensitivity of the demand to price reductions.