Competition in prescription drug markets, 2017-2022 / Sonal Parasrampuria and Stephen Murphy.

Format:

Book

Author/Creator:

Parasrampuria, Sonal, author.

Murphy, Stephen, author.

Language:

English

Subjects (All):

Prescription pricing.

Pharmaceutical industry--economics.

Pharmaceutical industry.

Physical Description:

1 online resource (1 PDF file (22 pages)) : illustrations

Place of Publication:

Washington, DC : Office of the Assistant Secretary for Planning and Evaluation (ASPE), U.S. Department of Health and Human Services, 2023.

Summary:

The cornerstone of a well-functioning market is competition. President Biden's Executive Order 14036, "Promoting Competition in the American Economy" identified a lack of competition as a key driver for problems across economic sectors. By incentivizing competition, it is possible to foster innovation and improve the stability of a market, in turn increasing access and affordability of products. The U.S. prescription drug market is the largest drug market in the world; however, drug prices in the U.S. are much higher than in most of the world. High drug prices mean that people often cannot afford prescription drugs, even when those drugs are otherwise available. We used IQVIA data from 2017 through 2022 to identify the level of competition in different prescription drug markets. We focus on competition in the prescription drug market, because the number of competitors for a particular drug is associated with pricing power - drugs with fewer or only one manufacturer, on average, have higher prices than drugs with multiple manufacturers, holding all else constant. Understanding the baseline level of competition in drug markets will allow us an opportunity to further incentivize innovation and competition.KEY FINDINGS: 1. In 2022, average cost of a biological product, 174 per prescription, was 3.7 times greater than average cost of a small molecule drug, 48 per prescription.2. Among the 1,838 small molecule drugs in 2022, 43 percent (796 drugs) had only one manufacturer, 16 percent (298 drugs) had 2-3 manufacturers, 9 percent (156 drugs) had 4-5 manufacturers, and 32 percent (588 drugs) had 6+ manufacturers. Drugs with a single manufacturer accounted for a disproportionate share of drug spending; the 43 percent of drugs with one manufacturer accounted for 65 percent of small molecule drug expenditures.3. Among the 268 biological products on the market in 2022, 81 percent (216 products) had only one manufacturer, 13 percent (34 products) had 2-3 manufacturers, 4 percent (12 products) had 4-5 manufacturers, and 2 percent (6 products) had 6+ manufacturers. The 81 percent of biological products with only one manufacturer accounted for 74 percent of total biological product expenditures. The pattern of biological products with one manufacturer accounting for a smaller share of the total spending is different than the pattern seen for small molecule drugs.4. Between 2017 and 2022, for small molecule drugs, the proportion of drugs with 6+ manufacturers rose while those with a single manufacturer declined over time. In contrast, biological products predominantly had one manufacturer, and the proportion of products with one manufacturer continued to increase over time.5. We then focused on high-cost drugs. Among specialty drugs, in 2022, 63 percent of small molecule drugs (273 drugs) and 87 percent of biological products (164 products) had only one manufacturer. Focusing on the top 10 percent of drugs based on price, i.e., the highest priced drugs, 89 percent of small molecule drugs (136 drugs) and 100 percent of biological products (59 products) had only one manufacturer.6. Among the highest priced drugs, the most common therapeutic classes were enzyme inhibitors (68 drugs), immunomodulators (21 drugs), antineoplastic monoclonal antibodies (20 drugs), miscellaneous antineoplastics (9 drugs), and other neurological/ neuromuscular (9 drugs). Ninety-two percent had only a single manufacturer.

Notes:

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