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FOUR FACTS CONCERNING COMPETITION IN U.S. GENERIC PRESCRIPTION DRUG MARKETS
Rena M Conti1, Ernst R Berndt2
1Boston University Questrom School of Business, Department of Markets, Public Policy and Law, Questrom School of Business, Boston University, 595 Commonwealth Ave, Boston, MA 02215.
International Journal of the Economics of Business
|October 12, 2020
Summary
Competition in the U.S. generic drug market shows significant entry and exit. Older generic drug products (molforms) see more competition, while newer ones have very limited competition, impacting market structure.
Area of Science:
- Pharmaceutical Economics
- Health Services Research
Background:
- Understanding the U.S. generic drug market is crucial for policy and patient access.
- Generic drug competition dynamics influence drug pricing and availability.
Purpose of the Study:
- To empirically analyze the market structure of U.S. generic drug suppliers.
- To identify key facts about competition, supply, and revenue within generic drug markets.
Main Methods:
- Utilized IQVIA's National Sales Perspective™ data from Q4 2004 to Q3 2016.
- Defined a unique product market ('molform') as a combination of active ingredient and formulation.
- Analyzed supply churning, volume-weighted use, competition levels, and supplier revenues.
Main Results:
- Observed substantial supply churning with frequent entrants and exits.
- Found that volume-weighted use is concentrated in older generic molform cohorts.
- Competition is highest for older molforms and very limited for the youngest (median one competitor).
- Supplier-molform revenues are typically small, largest for younger drugs, and right-skewed.
Conclusions:
- The findings provide an empirical basis for hypotheses on generic drug market structure and performance.
- Results highlight limited competition for new generic drugs, suggesting potential policy implications.
- The study offers insights for evaluating policy reforms in the generic drug sector.
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