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Trajectories of prices in generic drug markets: what can we infer from looking at trajectories rather than average prices?

Author

Listed:
  • Antonio J. Trujillo

    (Bloomberg School of Public Health, Johns Hopkins University)

  • Jose C. Gutierrez

    (Bloomberg School of Public Health, Johns Hopkins University)

  • Emmanuel E. Garcia Morales

    (Johns Hopkins University)

  • Mariana Socal

    (Department of Health Policy and Management, Bloomberg School of Public Health, Johns Hopkins University)

  • Jeromie Ballreich

    (Department of Health Policy and Management, Bloomberg School of Public Health, Johns Hopkins University)

  • Gerard Anderson

    (Department of Health Policy and Management, Bloomberg School of Public Health, Johns Hopkins University)

Abstract

Background Well-functioning competitive markets are key to controlling generic drug prices. This is important since over 90% of all drugs sold in the US are generics. Recently, there have been examples of large price increases in the generic market. Methods This paper examines price trajectories for generic drugs using a group-based trajectory modelling approach (GBTM). We fit the model using quarterly price information in the IBM MarketScan claims database for the past decade. Results We identify three dominant price trajectories for this period: rapid increase trajectories, slow decline and rapid decline. Most generic drugs show a slow or a rapid decline in price trajectories. However, around 17% of all generic drugs show rapid price increase trajectories. Conclusions As Congress is exploring an excise tax on drugs whose list price increases faster than the rate of inflation, we discuss what drugs would be most likely to be affected by this law.

Suggested Citation

  • Antonio J. Trujillo & Jose C. Gutierrez & Emmanuel E. Garcia Morales & Mariana Socal & Jeromie Ballreich & Gerard Anderson, 2022. "Trajectories of prices in generic drug markets: what can we infer from looking at trajectories rather than average prices?," Health Economics Review, Springer, vol. 12(1), pages 1-12, December.
    • Handle: RePEc:spr:hecrev:v:12:y:2022:i:1:d:10.1186_s13561-022-00384-w
    DOI: 10.1186/s13561-022-00384-w
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    References listed on IDEAS

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    1. Richard G. Frank & Andrew Hicks & Ernst R. Berndt, 2019. "The Price to Consumers of Generic Pharmaceuticals: Beyond the Headlines," NBER Working Papers 26120, National Bureau of Economic Research, Inc.
    2. Ernst R. Berndt & Rena M. Conti & Stephen J. Murphy, 2017. "The Landscape of US Generic Prescription Drug Markets, 2004-2016," NBER Working Papers 23640, National Bureau of Economic Research, Inc.
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