The market dynamics of brand and generic drugs are very different. The brand industry is generally controlled by one manufacturer with exclusivity, while the generic industry follows a multi-competitor model with drug prices decreasing as more competitors enter the marketplace. Because of the different competitive factors and financial relationships, brand manufacturer revenues are responsible for 76 percent of the final costs for brand products versus generic manufacturers who are responsible for only 36 percent. It is important that policymakers consider the differences inherent in the branded and generic prescription drug markets when considering public policy changes concerning drug pricing.
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