AUTHOR=Yina Chen , Pengcheng Liu , Haomiao Nie , Yang Cao TITLE=An empirical study of the impact of generic drug competition on drug market prices in China JOURNAL=Frontiers in Public Health VOLUME=Volume 11 - 2023 YEAR=2023 URL=https://www.frontiersin.org/journals/public-health/articles/10.3389/fpubh.2023.1146531 DOI=10.3389/fpubh.2023.1146531 ISSN=2296-2565 ABSTRACT=Generic substitution is encouraged to reduce pharmaceutical spending in China, and with incentive policies, the market size of the generic drug continues to rise. To find out how the generic competition affects drug price in this area, this study examines how the quantity of generic drug manufacturers can influence average drug price in the Chinese market. This study uses a rigorous selection of drugs from the 2021 China’s National Reimbursement Drug List (NRDL), and uses drug-level fixed effects regressions to estimate the relationship between competition and price within each drug. We note that drug prices decline with increasing competition in the Chinese market, but not in a perfectly linear manner, with marginal price declines decreasing after the fourth entrant and "rebounding" at subsequent entrants, especially the sixth. The findings suggest the importance of maintaining effective competition between suppliers to control prices, and that additional controls on generic drug prices, particularly for late-entry generic drugs, should ensure effective competition in the Chinese market.