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Does the Market Share of Generic Medicines Influence the Price Level?

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  • Pieter Dylst
  • Steven Simoens

Abstract

Background: After the expiry of patents for originator medicines, generic medicines can enter the market, and price competition may occur. This process generates savings to the healthcare payer and to patients, but knowledge about the factors affecting price competition in the pharmaceutical market following patent expiry is still limited. Objective: This study aimed to investigate the relationship between the market share of generic medicines and the change of the medicine price level in European off-patent markets. Methods: Data on medicine volumes and values for 35 active substances were purchased from IMS Health. Ex-manufacturer prices were used, and the analysis was limited to medicines in immediate-release, oral, solid dosage forms. Countries included were Austria, Belgium, Denmark, Germany, France, Italy, the Netherlands, Spain, Sweden and the UK, which constitute a mix of countries with low and high generic medicines market shares. Data were available from June 2002 until March 2007. Results: Market volume has risen in both high and low generic market share countries (+29.27% and +27.40%, respectively), but the cause of the rise is different for the two markets. In low generic market share countries, the rise was caused by the increased use of generic medicines, while in high market share countries, the rise was driven by the increased use of generic medicines and a shift of use from originator to generic medicines. Market value was substantially decreased in high generic market share countries (-26.6%), while the decrease in low generic market share countries was limited (-0.06%). In high generic market share countries, medicine prices dropped by −43.18% versus −21.56% in low market share countries. Conclusions: The extent to which price competition from generic medicines leads to price reductions appears to vary according to the market share of generic medicines. High generic market share countries have seen a larger decrease in medicine prices than low market share countries. Copyright Adis Data Information BV 2011

Suggested Citation

  • Pieter Dylst & Steven Simoens, 2011. "Does the Market Share of Generic Medicines Influence the Price Level?," PharmacoEconomics, Springer, vol. 29(10), pages 875-882, October.
    • Handle: RePEc:spr:pharme:v:29:y:2011:i:10:p:875-882
    DOI: 10.2165/11585970-000000000-00000
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    References listed on IDEAS

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    1. Weiwei Chen & Mark Messonnier & Fangjun Zhou, 2018. "Factors associated with the pricing of childhood vaccines in the U.S. public sector," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 252-265, February.
    2. Takizawa, Osamu & Urushihara, Hisashi & Tanaka, Shiro & Kawakami, Koji, 2015. "Price difference as a predictor of the selection between brand name and generic statins in Japan," Health Policy, Elsevier, vol. 119(5), pages 612-619.
    3. Kanavos, Panos, 2014. "Measuring performance in off-patent drug markets: A methodological framework and empirical evidence from twelve EU Member States," Health Policy, Elsevier, vol. 118(2), pages 229-241.
    4. Warren A Kaplan & Veronika J Wirtz & Peter Stephens, 2013. "The Market Dynamics of Generic Medicines in the Private Sector of 19 Low and Middle Income Countries between 2001 and 2011: A Descriptive Time Series Analysis," PLOS ONE, Public Library of Science, vol. 8(9), pages 1-11, September.
    5. Lin, Yu-Shiuan & Lin, Min-Ting & Cheng, Shou-Hsia, 2019. "Drug price, dosage and safety: Real-world evidence of oral hypoglycemic agents," Health Policy, Elsevier, vol. 123(12), pages 1221-1229.
    6. Giorgio L Colombo & Enrico Agabiti-Rosei & Alberto Margonato & Claudio Mencacci & Carlo Maurizio Montecucco & Roberto Trevisan, 2013. "Off-Patent Generic Medicines vs. Off-Patent Brand Medicines for Six Reference Drugs: A Retrospective Claims Data Study from Five Local Healthcare Units in the Lombardy Region of Italy," PLOS ONE, Public Library of Science, vol. 8(12), pages 1-9, December.
    7. Elek, Péter & Harsányi, András & Zelei, Tamás & Csetneki, Kata & Kaló, Zoltán, 2017. "Policy objective of generic medicines from the investment perspective: The case of clopidogrel," Health Policy, Elsevier, vol. 121(5), pages 558-565.

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