Decreasing utilization and increasing prices of brand-name oral contraceptive pills: Implications to societal costs and market competition

Abstract

The affordability of pharmaceuticals has been a major challenge in US health care. Generic substitution has been proposed as an important tool to reduce the costs, yet little is known how the prices of more expensive brand-name drugs would be affected by an increased utilization of generics. We aimed to examine the trend of overall utilization and the total costs of brand-name oral contraceptive pills (OCPs), the most widely used form of contraception, and its association with the pharmaceutical market concentration among the OCPs. Data from the Medical Expenditure Panel Survey (MEPS) 2011-2014, a nationally representative survey of healthcare utilization, were extracted on the utilization of generic and brand-name OCPs. A multiple logit regression analysis was conducted to assess the trend in utilization of brand-name OCPs over time. Total costs, including the costs to the payers and consumers, were synthesized. The Herfindahl-Hirschman Index (HHI), an index describing market concentration, was constructed, and a multiple regression analysis was conducted to evaluate the association between the brand-name OCP prices and the market share of individual brand-name drugs. The odds of utilizing brand-name drugs decreased steadily in 2012, 2013, and 2014 compared to 2012 (AOR 0.87, 0.73, 0.55, respectively, p<0.05) controlling for patient mix. Despite significant decline in total utilization, there was a 90% increase in the price of brand-name OCPs, resulting an 18% increase in revenue from 2011 to 2014 for the industry. During this time, pharmaceutical market concentration for OCPs increased (HHI increased from 1105 in 2011 to 2415 in 2014). Each percentage point increase in the market share by a brand-name OCPs was associated with a $3.12 increase in its price. Market mechanisms matter. Practitioners and policy makers need to take market mechanisms into account in order to realize the benefits of generic substitutions.