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Specialty Drug Prices and Utilization after Loss of US Patent Exclusivity, 2001–2007Specialty Drug Prices and Utilization after Loss of Exclusivity

Specialty Drug Prices and Utilization after Loss of US Patent Exclusivity, 2001–2007Specialty Drug Prices and Utilization after Loss of Exclusivity

Chapter:
(p.273) 9 Specialty Drug Prices and Utilization after Loss of US Patent Exclusivity, 2001–2007Specialty Drug Prices and Utilization after Loss of Exclusivity
Source:
Measuring and Modeling Health Care Costs
Author(s):
Rena M. ContiErnst R. Berndt
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226530994.003.0010

We examine the impact of loss of US patent exclusivity (LOE) on the prices and utilization of specialty drugs between 2001 and 2007. We examine drugs commonly used to treat cancer and base our analyses on nationally representative data from IMS Health. We describe the average number of manufacturers entering specialty drugs following LOE. We observe the number of firms entering the production of newly generic specialty drugs ranges between two and five per molecule in the years following LOE. However, the existence of time-varying and unobservable contract manufacturing practices complicates the definition of "manufacturers" entering the market. We use pooled data methods to examine whether the neoclassical relationship between price declines and volume increases upon LOE holds among these drugs. First, we examine the extent to which estimated prices of these drugs undergoing LOE fall with generic entry. Second, we estimate reduced form random effect models of utilization subsequent to LOE. We observe substantial price erosion after generic entry; average monthly price declines appear to be larger among physician-administered drugs (38-46.4%) compared to oral drugs (25-26%). Additionally, we find average prices for drugs produced by branded firms rise and prices for drugs produced by generic firms fall upon LOE.

Keywords:   patent exclusivity, specialty, oral and injectable drugs, cancer treatments, generic entry

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