Pharmaceutical Induced Demand – Brand Creep in the Case of Statins

Tuesday, June 14, 2016: 3:40 PM
B26 (Stiteler Hall)

Author(s): Ralph Bradley

Discussant: Alan White

The first statin for reducing cholesterol was introduced in 1987 and had an 82% success rate in adequately reducing low-density lipoprotein (LDL). While this statin was successful for a majority of patients after this introduction, by 2006, it had only 5.3% of the entire statin market even though it was the least expensive molecule. The first part of this study attempts find the reason that a drug, which is the least expensive and has such a high success, rate has so few sales. We use a medical claims data base for calendar years 2006 to 2010. In 2006, two major statin molecules lose patient protection and the generic price is usually 50% of the brand price; yet, 40% stay with the branded drug even though the generic should be an almost perfect substitute for the brand. More patients switch out of the molecule than into the molecule after patent expiration despite the price drop for the molecule. Over 90% of these switches go to a more expensive molecule. The second part of this study uses a discrete choice model to gain insight behind this substitution behavior. The final part of this study investigates how unnecessary shifts to branded products that are promoted by direct to consumer advertising and by physician outreach affect a statin price index with a cost of living basis. Current price index methods do account for unnecessary shifts to more expensive molecules with patent protection, and as a result could make them downwardly biased.