Effects of Pharmaceutical Patents on Patient Welfare: Evidence from Generic Entry of Oral Breast Cancer Therapies

We study the impact of drug prices on patient’s access to care, using the introduction of generic aromatase inhibitors (AIs), an important hormonal therapy for breast cancer patients. The exclusivity period provided by patents allows pharmaceutical companies to charge high prices for brand-name drugs, and thus serves as an incentive for them to develop new drugs. However, the high costs and copays of brand-name drugs could adversely affect patients’ welfare by limiting their access to treatments and increasing the financial burden of therapies for patients. Oncology drugs are a particularly important context for studying the effects of pharmaceutical policy on drug access. Recent advances have led to lifesaving treatments, but many are at an extremely high price during the exclusivity period. I study the effect of generic entry of AI drugs beginning in 2010 on overall rates of hormonal therapy initiation (including previously approved generic treatments and AIs) and specific drug choices to understand how much pharmaceutical patents affected access to these therapies.

After generic entry, median total and out-of-pocket AI prices decreased by $300+ and $30+ respectively for a 30-day supply. Adjusting for clinical factors and demographics, the availability of generic AIs was associated with 1% increase in overall hormonal therapy initiation, and 0.3 month of reduction in time to initiate. Considering most patients initiate 3 or 4 months after diagnosis, the changes in time to initiate was substantial. The three AIs as guideline preferred treatments already had 80% of market share of hormonal therapies, and this only increased by 5 percentage points after all AIs went off patent. However, the first AI that went off patent experienced a 20-percentage point increase in market share after generic entry, in part by reducing the market share of other AIs. Other AIs regained some of their lost market share after their subsequent generic entries. In summary, while overall access to hormonal therapies for breast cancer did not change substantially after generic entry in AIs, the choice of hormonal therapy drugs was very sensitive to the availability of generics. This result suggests that out-of-pocket spending, rather than clinical considerations, played a key role in choice of hormonal therapy. More work is needed to understand how this affected patient health outcomes.