Explaining why increases in generic use outpace decreases in brand name medicine use in multisource markets and the role of regulation

• Published in: PloS one 2024-05, Vol.19 (5), p.e0301716-e0301716
• Main Authors: Blankart, Katharina E, Vandoros, Sotiris
• Format: Article
• Language: English
• Subjects: Brand loyalty; Brand name products; Brand names; Drug Costs; Drug dosages; Drug stores; Drugs; Drugs, Generic - economics; Drugs, Generic - therapeutic use; Economic aspects; Expenditures; Generic drugs; Germany; Health Expenditures; Humans; Influence; Market entry; Market segments; Markets; Medicine; Medicine and Health Sciences; People and Places; Perceptions; Pharmaceuticals; Physicians; Physicians - economics; Prescribing; Prescription drugs; Prescription pricing; Prices; Pricing; Regulation; Regulatory mechanisms (biology); Segments; Social Sciences; Substitutes; User statistics
• ISSN: 1932-6203; 1932-6203
• DOI: 10.1371/journal.pone.0301716

Healthcare systems worldwide face escalating pharmaceutical expenditures despite interventions targeting pricing and generic substitution. Existing studies often overlook unwarranted volume increases in multisource markets due to differential physician perceptions of brand name and generics. This study aims to explain the outpacing of generic medicine use over brand name use in multisource markets and assess the regulatory role, specifically examining the impact of reference pricing on volume and intensity increases. Analyzing German multisource prescription medicine markets from 2011 to 2014, we evaluate regulatory mechanisms and explore whether brand name and generic medicines constitute separate market segments. Using an Oaxaca-Blinder decomposition approach, we divide the differential in brand name versus generic medicine use rates into market structure and unobserved segment effects. Generic use rates surpass same-market brand name substitution by 3.87 prescriptions per physician and medicine, on average. Reference pricing mitigated volume increase, treatment intensity and expenditure. Disparities in quantity and expenditure dynamics between brand name and generic segments are partially explained by market structure and segment effects. Generic medicine use effectively reduces expenditures but contributes to increased net prescription rates. Reference pricing may control medicine use, but divergent physician perceptions of brand name and generics, revealed by identified segment effects, call for nuanced policy interventions.