Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because

Question

Quizplus · Accepted Answer

Once a brand drug loses its exclusive patent, generic drugs can enter the market and compete with the brand drug. However, brand drugs can still maintain market power for the following reasons:

(i) Brand loyalty: Consumers may have developed a preference for the brand drug and are willing to pay a higher price for it.

(ii) Regulatory barriers: The FDA may require specific testing or labeling that makes it difficult for generic drugs to enter the market.

(iii) Strategic pricing: Brand drugs may strategically lower their prices to make it more difficult for generic drugs to compete.

Name Brand Drugs Are Able to Continue Capitalizing on Their