Enhancing competition in on-patent markets

The 2018 OECD report Pharmaceutical Innovation and Access to Medicines noted that fostering competition in both on- and off-patent markets can improve the efficiency of pharmaceutical spending. Various policies are used to promote competition among off-patent medicines, but generally do not induce competition in on-patent markets. While tendering is widely used for hospital and other institutional purchasing, it is less common for ambulatory care medicines, or where medicines are reimbursed rather than supplied directly. As part of its broader work agenda on “Increasing the transparency of pharmaceutical markets to inform policies”, this paper explores how payers could harness competition to improve the efficiency of spending on medicines still subject to patent protection or regulatory exclusivity. The OECD undertook an extensive analysis consisting of two parts: 1) a quantitative analysis using product-level time series sales data to explore whether therapeutic competition occurs, and, if so, how it has affected prices and volumes over time, based on a sample of countries and therapeutic classes and 2) a review of current practices and policies on pricing, coverage and procurement of on-patent medicines to identify whether these have been influencing competition between alternative therapeutic products. This report presents the key findings from this analytical work.