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The 130th Annual Meeting of APHA |
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The 130th Annual Meeting of APHA |
Song Hee hong, PhD, College of Pharmacy, University of Arkansas for Medical Sciences, 4301 West Markham St. Slot 522, Little Rock, AR 72205, 501-686-6298, hongsonghee@uams.edu, Marvin Shepherd, PhD, College of Pharmacy, UT Austin, 2409 University Avenue, Austin, TX 78712, and Thomas Wan, PhD, Department of Health Administration, MCV Campus, VCU, 1008 East Clay Street, Richmond, VA 23298.
Objective. To test a hypothesis that product line extension softens price competition between prescription drug brands and their generic versions. Without product line extension, the annual price growth of the original brand slows down after its generic versions enter the market; however, with product line extension, the annual price growth does not slow down.
Data Sources/ Study Setting. Food and Drug Administration’s Orange Book for the identification of patent expiration. Drug Topics’ Red Book for the collection of average wholesale prices. First DataBank’s drug database to identify what products are line-extended. The sample consists of 1985-1995 drug prices for orally administered, non-antibiotic, single active ingredient proprietary prescription drug brands whose patents expired during the period of 1987 to 1992 in the U.S. Market.
Study Design. The study design is a retrospective cross-sectional and time-series analysis. Panel regression analysis quantifies annual price growth rates before and after generic drug entry for each of two different product groups.
Data Collection/ Extraction Methods. Patent expiration was identified by the year a generic version is first listed in FDA’s Orange Book. Average wholesale prices were taken from Drug Topics’ Red Book for the most prevalent package size of each brand sampled. Product line extension is identified by the existence of a new close substitute for a brand sold by the same company.
Principal Findings. Out of 27 prescription drug brands that lost their patents during the period of 1987-1992, eight brands were extended. The number of product line extensions increased as the year of patent loss came close to 1992. The annual price growth of the brands that were line-extended increased by 2.76% after generic drugs enter the market (bG=0.0276, t=1.90). However, the brands that were not line-extended showed a drop of 2.5% in annual price growth after generic drug entry (bG=0.0253 t=-3.37).
Conclusions. The strategy of product line extension by the proprietary drug firm facing the patent expiration of its key brand effectively fends off price rivalry with generic drugs. Proprietary prescription drug brands are more likely to be line-extended as their patent expires in more recent years.
Learning Objectives: At the conclusion of the session, the participant in this session will be able to
Keywords: Pharmacies, Prescription Drug Use Patterns
Presenting author's disclosure statement:
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.