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The first generic entrant into Canadian pharmaceutical markets has a surprisingly durable impact on market share: consistent with past research, we show that first entrants have a boost of roughly 25% in their expected market share some six years after entry. There appears to be considerable inertia in pharmacies’ choice of which generic drug to stock. In this article, we empirically explore possible explanations for this puzzling phenomenon, including reputation, pharmacy “gratitude,” patient resistance to switching, and transactions costs. [ABSTRACT FROM PUBLISHER]

Differential pricing has been considered extensively for its potential to increase access to medicines in low- and middle-income countries. A differential pricing system applied within an economic union (such as the European Union [EU]) comprising high-income and middle-income countries would also increase access and provide stronger incentives to invest in the R&D of innovative medicines. Access to innovative medicines is limited in EU markets with relatively low GDP per capita, indicating that the current pricing system does not promote efficient access. This article looks at how theory could be put into practice suggesting ways to implement a differential pricing system in the EU that can enhance overall welfare. [ABSTRACT FROM PUBLISHER]