Abstract:

We examine how the UK and German health care systems responded to a major cost-saving innovation: the availability of generic simvastatin, a cho¬lesterol-lowering drug. In the German Social Health Insurance, the generic’s entry reduced sales volumes for both branded simvastatin (Zocor) and a close substitute, branded atorvastatin (Lipitor/Sortis). In UK, only the sales of branded simvastatin fell whereas the sales of atorvastatin were mostly unaf¬fected. We trace these experiences to institutional differences in the two health care systems and to the structure of patient cost-sharing in particular.