An Examination of the Proposed Teva-Allergan Merger

By William S. Comanor & Diana L. Moss – 

The proposed Teva-Allergan merger joins the largest generic pharmaceutical company in the world, Teva Pharmaceuticals, with an important rival that is currently the third largest in world-wide generic sales. This article evaluates the competitive effects of the merger and its implications for consumer welfare in the United States. These effects could be large since generic sellers introduce a critical measure of competition into pharmaceutical markets and play an important role in making prescription drugs affordable. Limiting the competitive discipline introduced by generic sellers could have substantial adverse consequences.