04 Jul Generic Drug Prices Fall As Competition
MedicalResearch.com Interview with:
Dr. Dave
Chintan V. Dave, PharmD
Department of Pharmacotherapy and Translational Research
College of Pharmacy,
University of Florida
Gainesville, FL
MedicalResearch.com: What is the background for this study?
Response: Use of generic drugs as a percentage of total dispensed prescriptions has increased in recent years, from 57% in 2004 to 86% in 2013. The U.S. health care system has recently witnessed a relatively new phenomenon where prices for some older generic drugs have increased hundreds — even thousands — of percentage points in a short time span. Many factors have been linked to these price increases, including shortages in the manufacturing supply chain (leading to reduced production) and a reduction in the number of manufacturers of a drug (resulting in insufficient competition). Understanding how prices relate to market changes may help identify drugs at risk for price changes so that interventions may occur before patient care is affected.
MedicalResearch.com: What are the main findings?
Response: We analyzed 1.08 billion prescription drug claims from 2008-13 and examined 1,120 generic drugs. Using the Herfindahl-Hirschman Index, or HHI, a commonly accepted measure of market competition, we estimated competition levels for each drug. There were three major findings.
First, nearly half the generic drugs studied were found to have competition levels resembling a duopoly — a competition level where only two manufacturers produce a drug.
Second, after controlling for other factors, a generic drug in the highest market competition group was expected to see a decrease of 32 percent in price over the study period, while a generic drug in the lowest market competition group was expected to see a price increase of 47 percent over the same period, a relative difference of more than a 100%.
Third, we found low market competition levels have a more pronounced correlation with drug prices in lower-priced generic drugs compared to their higher-priced counterparts.
MedicalResearch.com: What should clinicians and patients take away from your report?
Response: We found that increases in generic drug prices were strongly associated with market competition levels. My concern is that unless policies are enacted by the regulatory agencies to stabilize generic drug markets in response to a decrease in competition, we will continue to see cases of generic drugs subject to large price increases. Future studies should examine additional factors that could better identify drugs at risk for a price increase.
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Last Updated on July 4, 2017 by Marie Benz MD FAAD