In the context of a three-stage model with consumers differing in their health insurance coverage, the paper shows that there exist conditions under which the price of brand-name drugs increases following the entry of generic drugs.

This paper examines incentives for brand-name pharmaceutical producers to market pseudo-generic versions of their own branded products upon the expiry of patent protection.Using a two-stage game model, we determine that under plausible demand and cost conditions, brand-name incumbents can find...