GENERIC DRUG MARKET SHARE RISE MAY NOT RESTRAIN PRICE INCREASES

GENERIC DRUG MARKET SHARE RISE MAY NOT RESTRAIN PRICE INCREASES for brand name drugs subject to state generic substitution laws, according to a recently released survey by several Federal Trade Commission staff members. The survey, for example, found that between 1980-1984, for the 10 top substitution drugs of 1980, the prices of the brand name products "rose by about the same amount (36.2%) as the average of all drugs. Thus, whether an increase in generic market share itself can force down the mfr.'s price of the leading brand and whether the increase in generic market shares in individual drug entities brought about by substitution will be enough to accomplish this is still an open question." In their report, entitled Generic Substitution and Prescription Drug Prices: Economic Effects of State Drug Product Selection Laws, authors Alison Masson and Robert L. Steiner conclude that: "drug product selection laws have reduced retail prescription prices by increasing the market share of generics, but not at the scale hoped for by some advocates of the laws." The 1984 figures were based on an extrapolation from 1980 data, estimated increases in number and average price of prescriptions, and estimated doubling of the substitution rate. Results showed generic purchases saved consumers at least $130 million in 1984, but the savings represented generic substitution "on probably less than a fifth of all eligible prescriptions." The "vivid result," said the authors, was "the very modest amount of substitution occurring in most states and most drugs." They found that generic prescribing by physicians accounted for nearly three-quarters (71.7%) of the overall generic market share. Therefore, "since a change in the amount of generic prescribing translates almost directly into generic market share, whatever determines differences in generic prescribing is responsible for a good portion of any differences in average retail prescription drug prices." Masson and Steiner found that seven drugs accounted for more than half of all generically dispensed prescriptions. The seven drugs (quinidine sulfate, nitroglycerin, tetracycline, ampicillin, penicillin VK, hydrochlorothiazide, and amoxicillin) are prescribed frequently and usually by generic name. The format of the physician's prescription pad, often designed by substitution laws, was also shown to be a significant factor in generic prescribing. "In particular," said Masson and Steiner, "if prohibition of substitution is made especially convenient for the physician, substitution occurs less frequently because, presumably, physicians prohibit it more often." Questioning "Why Isn't Substitution Prevalent?" the study cited "consumer resistance." The authors referred to a 1983 FDA survey showing that only 3-6% of patients ask their doctors how to take the drug prescribed, precautions, or side effects. "If patients fail to ask even about these behavioral and health issues, it seems unlikely that they will challenge the doctor's choice of brand," speculated Masson and Steiner. The FTC report predicted the potential influence of drug product substitution laws, saying, "as consumers and health professionals continue to garner experience with generics, they are likely to find substitution increasingly acceptable."