DYNAMIC COMPETITION AS AN EXPLORATORY MODEL OF HEALTH-CARE POLICY FORTHE ANTIHYPERTENSIVE MARKET

Dynamic competition based on innovation, rather than classical competi tion based on price, may better explain the research-intensive pharmac eutical market. Ln an exploratory comparison of these models, economic indicators of annual change in price and price elasticity of demand w ere tested in a repeated-measures design by analysis of variance. Betw een 1990 and 1992, updated US prescribing guidelines for hypertension provided a framework in which the contrast between 2 newer classes and 2 older classes of first-line therapies served as a marker for innova tion. The principal hypothesis was that newer classes would be less el astic than older classes, but with such innovation-based differences e roding over time. Although temporarily greater inelasticities for newe r classes supported dynamic competition, initially extreme inelasticit ies for newer classes indicated a market distortion or a shifting dema nd curve. These exploratory results, although requiring substantiation , point toward using dynamic competition in crafting healthcare policy for the pharmaceutical market.