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The same old medicine but cheaper: The impact of patent expiry on physicians’ prescribing behaviour

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  • Fiorentini, Gianluca
  • Bruni, Matteo Lippi
  • Mammi, Irene

Abstract

We study the evolution of statin consumption between 2005-2017 in the Italian region Emilia-Romagna. We run an interrupted time series analysis on monthly data for the three market-leading statins, focusing on economic shocks due to generic entries of simvastatin (April 2007) and atorvastatin (March 2012). We find significant variations in long-term trends and abrupt jumps in volumes and number of patients, involving the molecule losing patent protection and its competitors within the same family. Through counterfactual analysis, we provide comprehensive estimates of the cost savings associated with generication and show that the effect due to spillovers across molecules can be relatively large. Finally, we find evidence of heterogeneous effects across age groups and between naïve patients and the rest of the population. On the whole, prescribers’ behaviour comes out as sensitive to price changes even in an NHS context where patients and physicians are mostly shielded from the financial consequences of choosing a specific molecule. Our evidence is consistent with the view that, when generication increases the price gap across alternative compounds, physicians adjust prescriptions to changes in the cost-effectiveness ratio and align their choice with policymakers’ objectives more closely.

Suggested Citation

  • Fiorentini, Gianluca & Bruni, Matteo Lippi & Mammi, Irene, 2022. "The same old medicine but cheaper: The impact of patent expiry on physicians’ prescribing behaviour," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 37-68.
    • Handle: RePEc:eee:jeborg:v:204:y:2022:i:c:p:37-68
    DOI: 10.1016/j.jebo.2022.10.003
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    More about this item

    Keywords

    Interrupted time-series; Generic drugs; Physicians’ prescribing behaviour; Counterfactual analysis; Patent expiration; Pharmaceutical markets;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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