Association for Public Policy Analysis & Management

We establish four facts concerning limited competition among mature U.S. generic drug suppliers, using IQVIA’s National Sales Perspective™ 2004Q4 – 2016Q3 data. We define a unique product market consisting of the combination of a molecule active ingredient and a route of administration formulation (a unique “molform”), aggregated over different dosages and strengths, generally consistent with Federal Trade Commission practice. We find generic molform markets: (i) exhibit substantial churning, with differing time trends in entrants and exits; (ii) contain a small number of generic competitors (median 2-3), implying competition in steady state is limited; (iii) are predominantly supplied by one or two manufacturers; and (iv) typically generate small but highly right-skewed manufacturers’ annual revenues (median less than $1.2 million in 2016). The findings are generally robust to product vintage, but vary across product formulation. These four facts concerning generic product market competition provide an empirical platform on which to construct and empirically evaluate hypotheses regarding market structure, performance, and possible policy reforms.