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Competition between on-patent medicines in Europe

Author

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  • Roediger, Alexander
  • Wilsdon, Tim
  • Haderi, Artes
  • Pendleton, Kathy
  • Azais, Boris

Abstract

There is widespread concern regarding the high price of innovative medicines and their impact on the sustainability of healthcare systems. However, the debate rarely accounts for the evolution of prices over the lifetime of the medicine and the impact of competitive forces. This article uses the experience of hepatitis C (HCV), during the years 2010–2017 to examine the impact of in-class competition and implications for policies that enable competition. To study the HCV market, we focused on European countries and applied a two-step approach involving a comprehensive literature review and an analysis of monthly sales data in US$ across seven European countries from July 2011 until July 2017. We find that competition to address the unmet medical need has led to significant treatment improvements to the benefit of patients, payers and the wider healthcare system and society. Competitive launches have led to innovative agreements, lowering the cost per treatment and improving patient access to treatment. For innovators, intense competition does not only impact the price set and their market share but in many cases shortens the economic life of the product to only a fraction of the patented period. This has an impact on future research decisions, focusing efforts on areas where unmet need is greatest. Sustainable innovation requires a well-balanced policy framework that provides the appropriate incentives and encourages competition.

Suggested Citation

  • Roediger, Alexander & Wilsdon, Tim & Haderi, Artes & Pendleton, Kathy & Azais, Boris, 2019. "Competition between on-patent medicines in Europe," Health Policy, Elsevier, vol. 123(7), pages 652-660.
    • Handle: RePEc:eee:hepoli:v:123:y:2019:i:7:p:652-660
    DOI: 10.1016/j.healthpol.2019.05.009
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    References listed on IDEAS

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    1. Swathi Iyengar & Kiu Tay-Teo & Sabine Vogler & Peter Beyer & Stefan Wiktor & Kees de Joncheere & Suzanne Hill, 2016. "Prices, Costs, and Affordability of New Medicines for Hepatitis C in 30 Countries: An Economic Analysis," PLOS Medicine, Public Library of Science, vol. 13(5), pages 1-22, May.
    2. Berndt Ernst R. & McGuire Thomas & Newhouse Joseph P., 2011. "A Primer on the Economics of Prescription Pharmaceutical Pricing in Health Insurance Markets," Forum for Health Economics & Policy, De Gruyter, vol. 14(2), pages 1-30, November.
    3. Panos Kanavos & Joan Costa Font & Alistair McGuire, 2007. "Product differentiation, competition and regulation of new drugs: the case of statins in four European countries," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 455-465.
    4. Z. John Lu & William S. Comanor, 1998. "Strategic Pricing Of New Pharmaceuticals," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 108-118, February.
    5. Steven N. Wiggins & Robert Maness, 2004. "Price Competition in Pharmaceuticals: The Case of Anti-infectives," Economic Inquiry, Western Economic Association International, vol. 42(2), pages 247-263, April.
    6. Danzon, Patricia M & Chao, Li-Wei, 2000. "Does Regulation Drive out Competition in Pharmaceutical Markets?," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 311-357, October.
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    Cited by:

    1. Brekke, Kurt R. & Dalen, Dag Morten & Straume, Odd Rune, 2023. "The price of cost-effectiveness thresholds under therapeutic competition in pharmaceutical markets," Journal of Health Economics, Elsevier, vol. 90(C).
    2. Biancalani, Francesco & Gnecco, Giorgio & Riccaboni, Massimo, 2022. "Price-volume agreements: A one principal/two agents model," European Journal of Operational Research, Elsevier, vol. 300(1), pages 296-309.

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