Brand-brand drug competition may not lower prices
Competition between brands may not be effective in lowering drug prices in the United States, suggesting that significant structural reforms will be needed to address rapidly increasing drug prices, according to study findings published in PLOS Medicine.
“Prescription drug spending has risen sharply in the U.S. over the last decade. ... One driver of this growth has been the introduction of novel products with high launch prices,” Ameet Sarpatwari, JD, PhD, of Brigham and Women’s Hospital and Harvard Medical School, and colleagues wrote.
“‘Brand-brand’ competition, which occurs between brand-name products that are indicated for the same condition and may have the same mechanism of action, has been offered as a possible policy solution to alter this trajectory,” they continued.
Researchers conducted a systematic literature review to evaluate the impact that brand-brand competition has on drug pricing in the United States. They searched two online databases to identify studies about brand-brand competition published between 1990 and April 2019 that did not focus on generic competition or non-U.S. markets.
After exclusions, 10 studies with publication dates ranging from 1994 to 2019 and assessment periods running from 1977 to 2016 were included in analyses. Two studies assessed the prices of all marketed or new drugs in the study period and eight were specific to one drug.
Researchers did not find an association between new drug entry and lowered prices among intraclass brand-name products.
Among the studies included in the review, two provided evidence that intraclass brand-name drugs may restrain new drug prices when they are first released by setting them at existing drug prices. As a result, a launch prices may have been lower they would have without competition.
Findings from three studies included in the review suggested that safety and relative effectiveness impacted the effect of brand-brand competition on new drug prices. The studies found that safer and more effective drugs were able to command higher prices at launch compared to other drugs in the same class.
Marketing also affected brand-brand competition among intraclass drug prices, according to study findings. One study, which looked at 360 drugs from 1994 to 2013, found that drugs given higher quality ratings were more heavily marketed and resulted in higher prices not just for the specific drug, but the entire drug class.
Potential barriers to the effectiveness of brand-brand competition in the United States include lack of physician knowledge on the most cost-effective treatments to prescribe and legal limitations on price negotiations between payers and manufacturers, according to the study authors. Rebates paid to pharmacy benefit managers when they accept higher list prices may also be a barrier to the effectiveness of brand-brand competition.
“Our systematic review found no evidence that brand-brand competition lowers list prices in the U.S. market,” Sarpatwari and colleagues wrote. “While more research is needed to identify whether there are specific situations in which such competition may be impactful, structural reforms are ultimately needed to address the rising price of prescription drugs in the U.S.” – by Erin Michael
Disclosures: Sarpatwari reports no relevant financial disclosures. Please see study for all other authors’ relevant financial disclosures.