Study shows swift move from brand to generic drugs

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Plavix ceded 90% of its market share to generics within two months
Plavix ceded 90% of its market share to generics within two months

While pay-for-delay tactics have come under scrutiny, the strategy has managed to achieve what it set out to do: preserve the lifeline of patented medications as long as possible.

A study published by the National Bureau of Economic Research highlights just what drug makers have been fighting for. The seven-person research team comprised of professionals from the IMS Institute for Healthcare Informatics, MIT, the Brookings Institution, and Boston and Harvard Universities tracked patient and payer migration from branded drugs to generics by tracking sales of six drugs which lost their initial exclusivity between July 2009 and May 2013. All six were derived from the 50 most prescribed molecules and included blood thinner Plavix, depression drug Lexapro, cholesterol medication Lipitor and the antibiotic Augmentin, among others.

Among the findings were that generics increased the total volume of drug sales—both the brand and the generic—when the patent lapses and generics start to gain traction. They also found that generic competition actually prompted drug companies to raise prices on branded drugs.

Researchers also found that the rush to generics is faster than price reductions over the first six months of the patent-free drug market, and that generics captured 60% of the market within 90 days or less. Plavix ceded 90% market share to generics within two months while it took six months for Lexapro to lose 90% of market share, and Lipitor's 90% market share decline took nine months.

While the downward arc may look uniform, researchers found that the drop-off is staggered, with third-party payers leading the push for generics, and generally hitting at 60% market substitution first. Medicaid is the last payer to hit the 60% generics mark. Researchers note that Medicaid's perceived lag may not be keeping sales receipts high, because manufacturer rebates could mean branded drugs cost the government program less than generics during 180 days following the initial patent loss.

Researchers also found that generic adoption does not vary with age. They write this finding indicates “consumers take FDA judgments about interchangeability at face value.”

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