HSR&D Citation Abstract
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Hernandez I, Good CB, Gellad WF, Parekh N, He M, Shrank WH. Number of manufacturers and generic drug pricing from 2005 to 2017. The American journal of managed care. 2019 Jul 1; 25(7):348-352.
To evaluate how changes in generic drug prices and the incidence of abrupt price increases varied with the number of manufacturers supplying each drug.
Analysis of 2005 to 2016 monthly wholesale acquisition costs (WACs) and University of Pittsburgh Medical Center Health Plan counts of pharmacy claims for National Drug Codes (NDCs) for generic drugs.
Each year, NDCs were categorized according to the number of manufacturers offering each combination of active ingredient and dosage form: 1 to 3, 4 to 7, and more than 7. For every month from January 2006 to January 2017, we estimated the 12-month change in WAC (eg, 12-month change in January 2006 was calculated as the difference in WAC between January 2006 and January 2005, divided by the WAC in January 2005), before and after weighting each NDC by counts of pharmacy claims. We evaluated the proportion of NDCs that had large price increases, greater than 20%, 50%, 100%, and 500% within a year.
Before 2010, price changes were higher for drugs supplied by a lower number of manufacturers; however, after 2010, prices increased sharply, and drugs supplied by 4 to 7 manufacturers showed increases similar to or higher than those supplied by 1 to 3. In 2013, prices increased by an average of 29% for drugs supplied by 1 to 3 and 4 to 7 manufacturers, and 10% for more than 7. Price changes increased after weighting by counts of pharmacy claims, demonstrating that price increases disproportionately affected widely used drugs. The proportion of NDCs from drugs supplied by 1 to 3 manufacturers that doubled in price within a year was 3.6 times higher in 2012 to 2015 than in 2005 to 2009 (4.6% vs 1.3%, respectively).
Increases in generic drug prices are concerning because they affected widely used drugs and suggest that generic drug prices may be increasingly insensitive to competition.