Authorized Generics – The Debate Continues
In late June, PhRMA released a study concluding that authorized generic drugs lead to lower drug prices for consumers. The Generic Pharmaceutical Associate (GPhA) replied, via press release. (Antitrust Review posts on: the study & the press release).
GHpA apparently decided a reply via press release is insufficient so it hired a couple of economists to perform a study. Yesterday, GHpA released its own study. The study finds:
We examine the impact of AGs on retail prices, using exactly the same markets as the PhRMA study. We use retail prices since we are interested in benefits to consumers. We find that:
- Discounts off retail brand prices were on average 0.6% less in markets with AGs than in those without them when weighting by sales revenues;
- Discounts off retail brand prices were on average 5% more in markets with AGs when not weighting by sales revenues;
- Brand name prices in AG markets increase more than those in no-AG markets, suggesting that the PhRMA study’s finding of greater percentage “discounts” to brand prices in markets with AGs is due in part to higher brand prices, rather than lower generic prices; and
- AGs raise policy concerns because they may diminish Hatch-Waxman incentives for generic firms to challenge brand name patents, which would result in higher consumer prices.
The study also critiques the underlying analytical approach of the PhRMA study.
PhRMA, shockingly enough, has responded to the GHpA study via press release. Give PhRMA’s and GHpA back-and-forth on this issue, I suspect another study will be forthcoming.
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