
Contents
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9.1 Introduction 9.1 Introduction
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9.2 Unique Institutions Governing Generic Entry, Manufacturing, and Pricing of Specialty Drugs 9.2 Unique Institutions Governing Generic Entry, Manufacturing, and Pricing of Specialty Drugs
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9.2.1 Branded and Generic Drug Regulatory Approval 9.2.1 Branded and Generic Drug Regulatory Approval
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9.2.2 Supply Conditions 9.2.2 Supply Conditions
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9.2.3 Information and Regulatory Timing 9.2.3 Information and Regulatory Timing
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9.2.4 Drug Shortages 9.2.4 Drug Shortages
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9.2.5 Supply and Demand Side Prices 9.2.5 Supply and Demand Side Prices
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9.3 The Model 9.3 The Model
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9.3.1 Theoretical Considerations and Empirical Findings for Entry Models 9.3.1 Theoretical Considerations and Empirical Findings for Entry Models
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9.3.2 Theoretical Considerations—Price and Use Models 9.3.2 Theoretical Considerations—Price and Use Models
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9.3.3 Theoretical Considerations—Shortage Models 9.3.3 Theoretical Considerations—Shortage Models
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9.4 Data and Descriptive Trends 9.4 Data and Descriptive Trends
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9.5 Results 9.5 Results
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9.5.1 Count Models for Descriptive Purposes 9.5.1 Count Models for Descriptive Purposes
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9.5.2 Supplier Prices following LOE 9.5.2 Supplier Prices following LOE
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9.5.3 Impact of LOE on Utilization Volume 9.5.3 Impact of LOE on Utilization Volume
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9.5.4 Predicting Shortage Reports as a Function of Manufacturer Counts, Preshortage Usage Trends 9.5.4 Predicting Shortage Reports as a Function of Manufacturer Counts, Preshortage Usage Trends
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9.5.5 Sensitivity Analyses 9.5.5 Sensitivity Analyses
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9.6 Discussion and Policy Implications 9.6 Discussion and Policy Implications
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Appendix Appendix
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References References
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12 Risk Adjustment of Health Plan Payments to Correct Inefficient Plan Choice from Adverse Selection
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9 Specialty Drug Prices and Utilization after Loss of US Patent Exclusivity, 2001–2007Specialty Drug Prices and Utilization after Loss of Exclusivity
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Published:March 2018
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Abstract
We examine the impact of loss of US patent exclusivity (LOE) on the prices and utilization of specialty drugs between 2001 and 2007. We examine drugs commonly used to treat cancer and base our analyses on nationally representative data from IMS Health. We describe the average number of manufacturers entering specialty drugs following LOE. We observe the number of firms entering the production of newly generic specialty drugs ranges between two and five per molecule in the years following LOE. However, the existence of time-varying and unobservable contract manufacturing practices complicates the definition of "manufacturers" entering the market. We use pooled data methods to examine whether the neoclassical relationship between price declines and volume increases upon LOE holds among these drugs. First, we examine the extent to which estimated prices of these drugs undergoing LOE fall with generic entry. Second, we estimate reduced form random effect models of utilization subsequent to LOE. We observe substantial price erosion after generic entry; average monthly price declines appear to be larger among physician-administered drugs (38-46.4%) compared to oral drugs (25-26%). Additionally, we find average prices for drugs produced by branded firms rise and prices for drugs produced by generic firms fall upon LOE.
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