Association Between Market Competition and Prices of Generic Topical Dermatology Drugs

Abstract

IMPORTANCE During the last decade, increases in drug prices for commonly prescribed dermatologic medications have outpaced the rate of inflation, national health care growth, and reimbursements. Among nondermatologic medications, studies have shown a role for robust generic market competition in reducing drug prices. The association between competition and the costs of topical dermatologic generic drugs has not been evaluated. OBJECTIVE To characterize the association between changes in drug price and the number of US Food and Drug Administration (FDA)-approved manufacturers among the most commonly used topical dermatologic generic products. DESIGN, SETTING, AND PARTICIPANTS This retrospective cost analysis of the most commonly prescribed topical dermatologic generic drugs used cumulative annual claims data from the Medicare Part D Prescriber Public User File to identify 597 dermatologist-prescribed drugs with more than 10 claims. The number of manufacturers and the price per unit were identified from the FDA Orange Book and the National Average Drug Acquisition Cost (NADAC) database, respectively, for 2013 through 2016. Drugs that were nondermatologic, were not topically administered, were missing NADAC data, were lacking a generic formulation, or had fewer than 400 claims were excluded. MAIN OUTCOMES AND MEASURES Primary outcomes included per-unit drug price and number of FDA-approved manufacturers. Pricing measures were adjusted for inflation and are reported in 2016 dollars. RESULTS The present analysis included 116 topical dermatologic generic formulations, representing 70.5% of the total Medicare Part D dermatologist-coded claims from 2015. Drug formulations with 1 to 2 manufacturers during the study period sustained a median percentage increase in price of 12.7%, whereas those with more than 6 manufacturers had a median percentage decrease in price of 20.5%. Formulations with 1 to 2 manufacturers had a 20.6%, 19.5%, and 33.2% higher percentage increase in price than those with 3 to 4 manufacturers, 5 to 6 manufacturers, and more than 6 manufacturers, respectively. There was a statistically significant inverse association between the percentage change in drug price and median number of manufacturers (Spearman correlation coefficient, −0.26; P = .005). CONCLUSIONS AND RELEVANCE The negative association between the change in drug price and the median number of manufacturers of generic topical dermatologic drugs indicates a role for market competition in controlling the costs of generic drug prices within dermatology. These findings support policies that facilitate robust market competition among topical dermatologic generic drugs produced by a limited number of manufacturers.

Is greater generic competition also linked to lower drug prices in South Korea?

“…Based on this belief, governments have applied measures to introduce generic drugs in a timely manner, to stimulate price competition among generic drugs, and to increase generic penetration in various clinical settings. Meanwhile, several studies provide insights into competition, particularly the number of manufacturers, and its effect on lowering drug prices [ 11 , 12 , 26 ].…”

“…These results are surprising when we directly compare the number of generic manufacturers in South Korea with the number in the United States. Li et al (2018) categorized the topical dermatologic generic drug market in the United States into four groups [ 12 ]: 1–2, 3–4, 5–6, and more than 6 generic manufacturers. Similarly, Alpern et al (2017) provide information on the number of oral antibiotic drug manufacturers in the United States [ 26 ].…”

“…Generic drugs can be used for discounted price compared to the originate drug. The role of generic drugs or the number of generic manufacturers in reducing drug prices has been well documented in the previous literature [ 11 , 12 ]. The price of generics with 2 or fewer manufacturers is more likely to be increased compared to that of generics with 3 or more manufacturers.…”

Spending on World Health Organization essential medicines in Medicare Part D, 2011-15: retrospective cost analysis

“…This finding is consistent with previous literature suggesting that market entry of a generic drug manufacturer is most beneficial for reducing costs among a subset of drugs with limited market competition. 31 32 33 New policy from the Food and Drug Administration that provides for expedited review of drugs with limited market competition may therefore help to reduce some of the excessive increases in spending on essential medicines in the future. 34…”

The potential impact of same-class substitution of topical steroids on health care spending

“…2 Realizing these savings is made difficult, in part, by dynamic and unpredictable drug price fluctuations associated with a lack of competition among generic manufacturers and poor transparency of costs to prescribing physicians. 3 When physicians write prescriptions, they may not be aware of the cheapest option or may be making decisions based on outdated information. There is no feedback to physicians on costs.…”