Temporal comparison of biologic medication prices between the United States and Australia

The Impact of Generic Entry of Pharmaceuticals in Australia

OBJECTIVES

In this article, we estimate the initial and temporal impacts of generic entry on benchmark drug prices as reimbursed through the Pharmaceutical Benefits Scheme of Australia and the degree to which further generic competition affects these prices under the current regulatory framework.

METHODS

We construct a panel data set consisting of 781 Pharmaceutical Benefits Scheme listed drugs over a 95-month time period and use fixed-effect regressions. The dynamic price effects of generic competition are investigated by implementing panel methods.

RESULTS

Our results suggest that generic entry into the Australian pharmaceutical market causes significant initial price reductions of approximately 31% and that successive generic entrants also act to further reduce drug prices. Through subgroup analyses, we identify that the effect of generic competition varies significantly according to the drug's therapeutic group and mode of drug administration and the dynamic analysis indicates that generic entry results in continuous price reductions even after large initial drops.

CONCLUSIONS

Generic competition reduces reimbursed drug prices in Australia to a greater extent than previous research has identified, although the average price effects can vary significantly depending on a drug's therapeutic group or mode of drug administration. Prices generally continue to fall significantly over time under the price disclosure mechanism.

Determinants of drug prices: a systematic review of comparison studies

OBJECTIVE

In this systematic review on drug price comparison studies, we report on recent determinants of drug prices in a national and international context to facilitate regulation of drug prices by purchasers and policymakers worldwide. Determinants of drug prices were divided into non-modifiable and modifiable and were categorised as pertaining to a country's income level, pharmaceutical market system and its policies and government.

PRIMARY OUTCOME

Determinants of drug prices or price variance.

DESIGN

We systematically searched PubMed, EMBASE, Web of Science and Cochrane Library for peer-reviewed articles published between 2004 and 22 July 2020 that reported an association of the primary outcome with one or more determinants. We performed a best-evidence synthesis of these associations for determinants covered in at least three studies.

RESULTS

31 publications were included. Only one publication described net drug prices and 30 described retail drug prices. Five modifiable determinants were associated with lower retail prices: generic market portion, discounts, tendering policies, central (governmental) purchasing and pricing regulation schemes. The originators market portion and a system in which mark-ups are common were associated with higher retail prices. Retail prices were highest in the USA, even compared with other high-income countries. A positive association between national income level and drug retail prices could not be established among middle-income and high-income countries. Retail prices were highest in low-income countries when adjusted for purchasing power parity.

CONCLUSIONS

Literature on determinants of net drug prices is extremely sparse. Various healthcare system interventions, market-specific and governmental regulations are consistently associated with lower retail prices. Some interventions are easily implementable in developing or middle-income countries, such as tendering, central purchasing and fixed pricing regulation schemes. Net drug price comparison studies are needed to overcome the lack of price transparency and to quantify the effectiveness of policy measures on net drug prices.