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Published on: January 13, 2023
Generic substitution: micro evidence from register data in Norway
Dag Morten Dalen1, Kari Furu, Marilena Locatelli
1BI Norwegian School of Management, Oslo, Norway. dag.m.dalen@bi.no
Summary
Doctor and patient factors significantly influence generic drug choices. Pharmacy practices and price differences also impact generic substitution rates, especially when brand-name loyalty is strong.
Area of Science:
- Health Economics
- Pharmaceutical Policy
- Behavioral Economics
Background:
- Generic drug substitution is crucial for healthcare cost containment.
- Understanding factors influencing generic prescribing and dispensing is vital for policy development.
Purpose of the Study:
- To examine the determinants of generic drug selection versus brand-name drugs.
- To analyze the impact of prices, prescriber/patient characteristics, and market structure on generic substitution.
Main Methods:
- Analysis of a comprehensive Norwegian Prescription Database dataset from February 2004 and 2006.
- Inclusion of 23 different chemical substances to assess choice probabilities.
- Statistical modeling controlling for pharmacy retail chain affiliation.
Main Results:
- Doctor and patient characteristics significantly influence generic drug choice probabilities.
- Price differentials and insurance coverage are key drivers of generic substitution.
- Pharmacies play a substantial role in promoting generic uptake, and brand loyalty is higher in markets with recent generic entry.
Conclusions:
- Healthcare provider behavior, patient preferences, and pharmacy interventions are critical for increasing generic drug utilization.
- Market dynamics, including generic entry timing and price competition, shape brand loyalty and substitution rates.
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