A study published this week in PLoS Medicine suggests that brand-to-brand competition is not likely to reduce drugs’ list prices.
While one key driver of growth in prescription drug spending is the introduction of novel therapies, the growth in spending on existing products is also on the rise. Brand-to-brand competition, in which multiple brand-name therapies in the same class compete with one another, has been proposed as one possible solution for rising spending, based on the assumption that these products will compete on price. A study published this week in PLoS Medicine, however, suggests that brand-to-brand competition is not likely to reduce drugs’ list prices.
The systematic review of studies on how drug market entry impacts price relied on publications in the PubMed and EconLit databases. Ten studies, with publication dates ranging from 1994 to 2019, were included.
The studies reviewed, write the authors, did not show that new drug entry lowered prices for brand-name products. With respect to anti—tumor necrosis factor (anti-TNF) therapies in particular, data showed that the mean annual cost of the 3 anti-TNF agents approved before 2009—adalimumab, etanercept, and infliximab—increased by 144% between 2009 and 2016, even after 3 new anti-TNF agents—golimumab, certolizumab pegol, and intravenous golimumab—entered the marketplace. Furthermore, this increase was “over 4-fold greater than what would have been expected if the new products were not introduced and secular trends had continued,” write the authors.
An assessment of 24 injectable cancer therapies approved between 1996 and 2012 showed that the annual monthly cost of these products grew by 3.7%, more than double the annual health-inflation rate of 1.2%. Only 1 product, ziv-aflibercept, declined in price.
While new drugs did not put downward pressure on prices of other drugs in their classes, some evidence pointed to restraint in launch price as a result of brand-to-brand competition. A consideration of pricing trends for new drugs launched between 1978 and 1987 showed a 38% decrease in the ratio of a new drug’s launch price to the average class price when the number of drugs in a class increased from 1 to 2.
Relative effectiveness and safety appeared to have a role in pricing, with innovative products launching at higher prices that reduced over time and with noninnovative products launching at lower prices and increasing those prices over time. Heavy marketing was also associated with higher prices.
No studies reviewed, conclude the authors, show that brand-to-brand competition lowers list prices of existing drugs, although it may rein in launch prices for new drugs. “These findings underscore some distinctive features of the US pharmaceutical market,” write the authors. “In a truly competitive market, introduction of similar products should lower prices of previously available products.” They add that, for biosimilars, which cannot be substituted at the pharmacy level without an interchangeable designation, “biosimilar competition may more closely resemble brand—brand competition than brand–generic competition.”
Reference
Sarpatwari A, DiBello J, Zakarian M, Najafzadeh M, Kesselheim AS. Competition and price among brand-name drugs in the same class: a systematic review of the evidence [published online July 30, 2019]. PLoS Med. doi: 10.1371/journal.pmed.1002872.
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