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Therapeutic Substitution in Response to Patent Expiry? Statins in Australia

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  • Christopher Bates
  • Susan J. Méndez

Abstract

This study aims to investigate the effects of generic entry on the market share of different statins. We use administrative records from a representative sample of Australians between 2003 and 2014 and analyse over 21 million prescriptions to quantify the change in the total market share of each statin after experiencing generic entry for the first time. With detailed information on patients' benefits and prices, we also estimate potential savings from increasing the use of statins where generics became available. Our results indicate that despite the price decrease, the market share of the molecule experiencing generic entry does not significantly increase, and there is some evidence of substitution away from statins with generic availability. For the most commonly used molecules, this association is stronger in patients receiving higher government subsidies. We calculate potential savings of A\$17 million if patients had initiated treatment with the most prescribed off‐patent statin rather than a patent‐protected statin. Generic entry after patent expiry presents an opportunity for a significant reduction in pharmaceutical expenditure if these are preferred. This study highlights the importance of improving prescription systems that help doctors recommend lower cost, clinically appropriate alternatives and enhance the effectiveness of policies promoting generic substitution.

Suggested Citation

  • Christopher Bates & Susan J. Méndez, 2024. "Therapeutic Substitution in Response to Patent Expiry? Statins in Australia," Economic Papers, The Economic Society of Australia, vol. 43(2), pages 112-123, June.
    • Handle: RePEc:bla:econpa:v:43:y:2024:i:2:p:112-123
    DOI: 10.1111/1759-3441.12407
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    References listed on IDEAS

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    1. Mariana Carrera & Dana P. Goldman & Geoffrey Joyce & Neeraj Sood, 2018. "Do Physicians Respond to the Costs and Cost-Sensitivity of Their Patients?," American Economic Journal: Economic Policy, American Economic Association, vol. 10(1), pages 113-152, February.
    2. Sotiris Vandoros, 2014. "Therapeutic Substitution Post‐Patent Expiry: The Cases Of Ace Inhibitors And Proton Pump Inhibitors," Health Economics, John Wiley & Sons, Ltd., vol. 23(5), pages 621-630, May.
    3. Darius Lakdawalla & Tomas Philipson, 2012. "Does Intellectual Property Restrict Output? An Analysis of Pharmaceutical Markets," Journal of Law and Economics, University of Chicago Press, vol. 55(1), pages 151-187.
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