Dissertations & Theses (Open Access)

Date of Award

Spring 5-2020

Degree Name

Doctor of Philosophy (PhD)

Advisor(s)

Paul Rowan, Phd

Second Advisor

Robert Morgan, Phd

Third Advisor

Mary Smith, Phd

Abstract

When a patent expires, innovator (brand-name) drugs lose their monopoly status and new generic competitors are free to enter the market. Theoretically, free market entry and exit should lead to a drop in the price of the innovator drug as per the tenets of perfect competition. Yet instead of prices decreasing, innovator drug prices are often minimally impacted by generic competition and the innovator continues to maintain both market power and market share – a phenomenon labelled the generic competitor paradox (Scherer, 1993) That the expected supply and demand dynamic is less pronounced in multisource drug markets, suggests that non-price considerations influence purchasing behaviour in multisource prescription drug markets. This dissertation focuses on the marketing theory of brand equity to rationalise the non-price competitive advantages that established prescription innovator (brand-name) drugs have over newer bioequivalent generic entrants. By analysing the prescribing habits of physicians, we find that brand equity confers a competitive advantage to the innovator drug: Brand equity is cultivated during the period of patent granted monopoly and creates a first-mover market advantage that is reinforced by the strategic creation of brand loyalty, which serves as a barrier to entry for generic substitutes.

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