Title: Generic scrip share and the price of brand-name drugs
Description: "Generic drug utilization has risen dramatically, from 19% of scrips in 1984 to 47% in 2001, thus bringing significant direct dollar savings.  Generic drug use may also yield indirect savings if it lowers the average price of those brand-name drugs that are still purchased.  Prior work indicates - and we confirm - that generic competition does not induce brand-name producers to lower prices.  However, consumer choices between generic and brand-name drugs could affect the average price of those brand-name drugs that are purchased.We use nationally representative panel data on drug utilization and costs for the years 1996-2001 to examine how the share of an individual's prescriptions filled by generics affects his average out-of-pocket cost for brand-name drugs.  Our principal finding is that a higher generic scrip share lowers average brand-name prices to consumers, presumably because consumers are more likely to substitute generics when the price gap is great.  This effect is substantial: a 10% increase in the consumer's generic scrip share is associated with a 15.6% decline in the average price he pays for brand-name drugs"--National Bureau of Economic Research web site.
Subjects: Brand name products, Drugs, Generic drugs, Prescription pricing, Prices
Places: United States