Research Article: Competition and price among brand-name drugs in the same class: A systematic review of the evidence

Date Published: July 30, 2019

Publisher: Public Library of Science

Author(s): Ameet Sarpatwari, Jonathan DiBello, Marie Zakarian, Mehdi Najafzadeh, Aaron S. Kesselheim, Joel Lexchin

Abstract: BackgroundSome experts have proposed combating rising drug prices by promoting brand–brand competition, a situation that is supposed to arise when multiple US Food and Drug Administration (FDA)-approved brand-name products in the same class are indicated for the same condition. However, numerous reports exist of price increases following the introduction of brand-name competition, suggesting that it may not be effective. We performed a systematic literature review of the peer-reviewed health policy and economics literature to better understand the interplay between new drug entry and intraclass drug prices.Methods and findingsWe searched PubMed and EconLit for original studies on brand–brand competition in the US market published in English between January 1990 and April 2019. We performed a qualitative synthesis of each study’s data, recording its primary objective, methodology, and results. We found 10 empirical investigations, with 1 study each on antihypertensives, anti-infectives, central nervous system stimulants for attention deficit/hyperactivity disorder, disease-modifying therapies for multiple sclerosis, histamine-2 (H2) blockers, and tumor necrosis factor (TNF) inhibitors; 2 studies on cancer medications; and 2 studies on all marketed or new drugs. None of the studies reported that brand–brand competition lowers list prices of existing drugs within a class. The findings of 2 studies suggest that such competition may help restrain how new drug prices are set. Other studies found evidence that brand–brand competition was mediated by the relative quality of competing drugs and the extent to which they are marketed, with safer or more effective new drugs and greater marketing associated with higher intraclass list prices. Our investigation was limited by the studies’ use of list rather than net prices and the age of some of the data.ConclusionsOur findings suggest that policies to promote brand–brand competition in the US pharmaceutical market, such as accelerating approval of non-first-in-class drugs, will likely not result in lower drug list prices absent additional structural reforms.

Partial Text: Prescription drug spending has risen sharply in the US over the last decade [1]. A 2018 report by the Department of Health and Human Services (DHHS) Office of Inspector General found that net spending on brand-name drugs in Medicare Part D—the prescription drug benefit program for seniors—increased 62% from 2011 to 2015, despite a 17% decrease in the number of prescriptions of these products over the same period [2]. One driver of this growth has been the introduction of novel products with high launch prices. In 2017, the median annual list price of a new cancer medication was $160,000, compared to $101,000 in 2013 [3]. Another major contributor has been routine price increases for existing products, which accounted for about 60% of the increase in US revenues for the 45 top-selling drugs between 2014 and 2017 [4]. Without intervention, the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary projected that net US spending on prescription drugs will increase faster than any other major healthcare good or service over the next decade [5].

In our systematic literature review, we found no studies that show that brand–brand competition lowers list prices of existing drugs within a class. However, we found evidence that brand–brand competition may anchor the list prices of new drugs below what they would be in the absence of such competition. We also found that the effect of brand–brand competition on drug prices is likely modified by relative drug quality and the extent of marketing, with safer or more effective new drugs commanding higher prices and greater marketing associated with higher intraclass prices.

Our systematic review found no evidence that brand–brand competition lowers list prices in the US market. While more research is needed to identify whether there are specific situations in which such competition may be impactful, structural reforms are ultimately needed to address the rising price of prescription drugs in the US.

Source:

http://doi.org/10.1371/journal.pmed.1002872

 

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