Change in Generic Drug Prices Linked to Market Competition

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The study noted a price change of -31.7% for quadropoly and 47.4% for monopoly.
The study noted a price change of -31.7% for quadropoly and 47.4% for monopoly.

HealthDay News -- According to a study published in the Annals of Internal Medicine, market competition levels are associated with changes in the price of generic drugs.

Chintan Dave, PharmD, from the University of Florida in Gainesville, and colleagues conducted a retrospective study involving prescription claims for commercial health plans from 2008 to 2013. 

They calculated the Herfindahl-Hirschman Index (HHI) by summing the squares of individual manufacturers' market shares for each 6-month period, with higher values indicating a less competitive market. In each period, the authors estimated the average drug prices for generic drugs. The HHI value estimated in the first half of 2008 was modeled as a fixed covariate.

The researchers identified a cohort of 1120 generic drugs from 1.08 billion prescription claims. Price changes of −31.7%, −11.8%, 20.1%, and 47.4% were seen for drugs with quadropoly (HHI value of 2500), duopoly (HHI value of 5000), near-monopoly (HHI value of 8000), and monopoly (HHI value of 10,000) levels of baseline competition, respectively, over the study period.

"Market competition levels were associated with a change in generic drug prices," the authors write. "Such measurements may be helpful in identifying older prescription drugs at higher risk for price change in the future."

References

Dave C, Kesselheim A, Fox E, et al. "High Generic Drug Prices and Market Competition." Annals of Internal Medicine. 2017. doi:10.7326/M16-1432 [Epub ahead of print]

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