Essays on market competition

Abstract

This dissertation examines various aspects of market competition. The first chapter examines the application process for entry in the U.S. generic prescription medicine market. I use duration analysis to study the effect of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 on the timing of application submission for entry into the generic market. A unique sample of abbreviated new drug applications that included paragraph IV certification submitted to the FDA was collected for this study. The results show that the mean number of days until application submission was not reduced from the median of 2,513.5 days before the enactment of the Medicare Act. The second chapter examines the incentives driving firms to "gun jump," or the act of exchanging information during the pre-merger stages beyond that which is considered to be reasonable and customary. Gun jumping can result in civil penalties and enforcement actions lodged against the merging firms. This chapter examines the effectiveness of the remedial actions that are currently being used to deter it, and argues that enforcement agencies should seek permanent injunctive relief rather than imposing civil penalties on the merging parties. The third chapter uses a unique sample of commercial pharmaceutical claims from 2001 through 2008 to examine the evolution of competition between biosimilars and branded drugs in the U.S. biologic drug market. I find that entry by a biosimilar drug into the human growth hormone market, and entry by branded biologic drugs into the TNF-inhibitor market did not have a statistically significant effect on incumbent drug prices. However, the results suggest that entry by a branded biologic drug into the interferon-beta market decreased incumbent drug prices. When market shares are examined, I find that branded entrants were more successful than their biosimilar counterparts at capturing market share.