TY - JOUR AU - Aitken, Murray L AU - Berndt, Ernst R AU - Bosworth, Barry AU - Cockburn, Iain M AU - Frank, Richard AU - Kleinrock, Michael AU - Shapiro, Bradley T TI - The Regulation of Prescription Drug Competition and Market Responses: Patterns in Prices and Sales Following Loss of Exclusivity JF - National Bureau of Economic Research Working Paper Series VL - No. 19487 PY - 2013 Y2 - October 2013 DO - 10.3386/w19487 UR - http://www.nber.org/papers/w19487 L1 - http://www.nber.org/papers/w19487.pdf N1 - Author contact info: Murray L. Aitken Senior Vice President IMS Institute for Healthcare Informatics 901 Main Avenue, Suite 612 Norwalk, CT 06851 Tel: 203-845-5201 Fax: 203-845-5314 E-Mail: maitken@imshealth.com Ernst R. Berndt MIT Sloan School of Management 100 Main Street, E62-533 Cambridge, MA 02142 E-Mail: eberndt@mit.edu Barry Bosworth Senior Fellow The Brookings Institution 1775 Massachusetts Avenue Washington, DC 20036 202-797-6122 E-Mail: bbosworth@brookings.edu Iain M. Cockburn Questrom School of Business Boston University 595 Commonwealth Ave Boston, MA 02215 Tel: 617/588-1486 E-Mail: cockburn@bu.edu Richard G. Frank Department of Health Care Policy Harvard Medical School 180 Longwood Avenue Boston, MA 02115 Tel: 617/432-0178 Fax: 617/432-1219 E-Mail: frank@hcp.med.harvard.edu Michael Kleinrock IQVIA Institute for Human Data Science E-Mail: mkleinrock@theimsinstitute.org Bradley Shapiro Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-9316 E-Mail: Bradley.Shapiro@chicagobooth.edu M1 - published as Murray L. Aitken, Ernst R. Berndt, Barry Bosworth, Iain M. Cockburn, Richard Frank, Michael Kleinrock, Bradley T. Shapiro. "The Regulation of Prescription Drug Competition and Market Responses: Patterns in Prices and Sales following Loss of Exclusivity," in Ana Aizcorbe, Colin Baker, Ernst R. Berndt, and David M. Cutler, editors, "Measuring and Modeling Health Care Costs" University of Chicago Press (2018) AB - We examine six molecules facing initial loss of US exclusivity (LOE, from patent expiration or challenges) between June 2009 and May 2013 that were among the 50 most prescribed molecules in May 2013. We examine prices per day of therapy (from the perspective of average revenue received by retail pharmacy per day of therapy) and utilization separately for four payer types (cash, Medicare Part D, Medicaid, and other third party payer - TPP) and age under vs. 65 and older. We find that quantity substitutions away from the brand are much larger proportionately and more rapid than average price reductions during the first six months following initial LOE. Brands continue to raise prices after generics enter. Expansion of total molecule sales (brand plus generic) following LOE is an increasingly common phenomenon compared with earlier eras. The number of days of therapy in a prescription has generally increased over time. Generic penetration rates are typically highest and most rapid for TPPs, and lowest and slowest for Medicaid. Cash customers and seniors generally pay the highest prices for brands and generics, third party payers and those under 65 pay the lowest prices, with Medicaid and Medicare Part D in between. The presence of an authorized generic during the 180-day exclusivity period has a significant impact on prices and volumes of prescriptions, but this varies across molecules. ER -