Bonk R J, Myers M J, Knowlton C H, Sabapathi D, McGhan W F
Department of Pharmacy Practice and Pharmacy Administration, Philadelphia College of Pharmacy and Science, Pennsylvania, USA.
Pharmacoeconomics. 1996 Sep;10(3):251-61. doi: 10.2165/00019053-199610030-00006.
Dynamic competition based on innovation, rather than classical competition based on price, may better explain the research-intensive pharmaceutical market. In an exploratory comparison of these models, economic indicators of annual change in price and price elasticity of demand were tested in a repeated-measures design by analysis of variance. Between 1990 and 1992, updated US prescribing guidelines for hypertension provided a framework in which the contrast between 2 newer classes and 2 older classes of first-line therapies served as a marker for innovation. The principal hypothesis was that newer classes would be less elastic than older classes, but with such innovation-based differences eroding over time. Although temporarily greater inelasticities for newer classes supported dynamic competition, initially extreme inelasticities for newer classes indicated a market distortion or a shifting demand curve. These exploratory results, although requiring substantiation, point toward using dynamic competition in crafting healthcare policy for the pharmaceutical market.
