www.fgks.org   »   [go: up one dir, main page]
Skip to main content
SpringerLink
Log in

Generic Entry, Reformulations and Promotion of SSRIs in the US

  • Original Research Article
  • Published:
PharmacoEconomics Aims and scope Submit manuscript

Abstract

Background

Previous research has shown that a manufacturer’s promotional strategy for a brand name drug is typically affected by generic entry. However, little is known about how newer strategies to extend patent life, including product reformulation introduction or obtaining approval to market for additional clinical indications, influence promotion.

Objective

To examine the relationships among promotional expenditures, generic entry, reformulation entry and new indication approval.

Methods

We used quarterly data on national product-level promotional spending (including expenditures for physician detailing and direct-to-consumer advertising [DTCA], and the retail value of free samples distributed in physician offices) for selective serotonin reuptake inhibitors (SSRIs) over the period 1997–2004. We estimated econometric models of detailing, DTCA and total quarterly promotional expenditures as a function of the timing of generic entry, entry of new product formulations and US FDA approval for new clinical indications for existing medications in the SSRI class. Expenditures by pharmaceutical manufacturers for promotion of antidepressant medications was the main outcome measure.

Results

Over the period 1997–2004, there was considerable variation in the composition of promotional expenditures across the SSRIs. Promotional expenditures for the original brand molecule decreased dramatically when a reformulation of the molecule was introduced. Promotional spending (both total and detailing alone) for a specific molecule was generally lower after generic entry than before, although the effect of generic entry on promotional spending appears to be closely linked with the choice of product reformulation strategy pursued by the manufacturer. Detailing expenditures for Paxil® were increased after the manufacturer received FDA approval to market the drug for generalized anxiety disorder (GAD), while the likelihood of DTCA outlays for the drug was not changed. In contrast, FDA approval to market Paxil® and Zoloft® for social anxiety disorder (SAD) did not affect the manufacturers’ detailing expenditures but did result in a greater likelihood of DTCA outlays.

Conclusion

The introduction of new product formulations appears to be a common strategy for attempting to extend market exclusivity for medications facing impending generic entry. Manufacturers who introduced a reformulation before generic entry shifted most promotion dollars from the original brand to the reformulation long before generic entry, and in some cases manufacturers appeared to target a particular promotion type for a given indication. Given the significant impact that pharmaceutical promotion has on demand for prescription drugs in the US, these findings have important implications for prescription drug spending and public health.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Table I
Fig. 1
Table II
Table III
Table IV

Similar content being viewed by others

Notes

  1. The use of trade names is for product identification purposes only and does not imply endorsementThe use of trade names is for product identification purposes only and does not imply endorsement.

  2. Because of the introduction of proton pump inhibitors (PPIs), which are generally regarded as more potent therapeutic substitutes, and the launch of over-the-counter versions of the H2-blockers.

References

  1. Donohue J, Cevasco M, Rosenthal M. A decade of direct-to-consumer advertising of prescription drugs. N Engl J Med 2007; 357 (7): 673–681

    Article  PubMed  CAS  Google Scholar 

  2. Frank RG, Salkever DS. Generic entry and the pricing of pharmaceuticals. J Econ Manag Strategy 1997 Spring; 6 (1): 75–90

    Article  Google Scholar 

  3. US Congressional Budget Office. How increased competition from generic drugs has affected prices and returns in the pharmaceutical industry. Washington, DC: USGPO, 1998 Jul

    Google Scholar 

  4. Grabowski H, Vernon J. Brand loyalty and price competition in pharmaceuticals after the 1984 Drug Act. J Law Econ 1992; 35 (2): 331–350

    Article  Google Scholar 

  5. Hudson J. Generic take-up in the pharmaceutical market following patent expiry: a multi-country study. Int Rev Law Econ 2000; 20: 205–221

    Article  Google Scholar 

  6. Frank RG, Salkever DS. Pricing, patent loss and the market for pharmaceuticals. Southern Econ J 1992; 59 (2): 165–179

    Article  Google Scholar 

  7. Hurwitz MA, Caves RE. Persuasion or information? Promotion and the shares of brand name and generic pharmaceuticals. J Law Econ 1988; 31 (2): 299–320

    Article  Google Scholar 

  8. Caves RE, Whinston MD, Hurwitz MA, et al. Patent expiration, entry and competition in the U.S. pharmaceutical industry. Washington, DC: The Brookings Institution, 1991: 1–66

    Google Scholar 

  9. Iizuka T. What explains the use of DTCA of prescription drugs? J Ind Econ 2004; 52 (3): 349–379

    Article  Google Scholar 

  10. Berndt ER, Kyle MK, Ling D. The long shadow of patent expiration: generic entry and rx to OTC switches. In: Freenstra RC, Shapiro MD, editors. Scanner data and price indexes. Chicago (IL): University of Chicago Press for the National Bureau of Economic Research, 2003: 229–267

    Chapter  Google Scholar 

  11. The FDA approval history, letters, reviews and related documents [online]. Available from URL: http://www.access-dataida.gov/scripts/cder/drugsatfda/index.cfm [Accessed 2008 Apr 16]

  12. IMS Health. Top-line industry data: total US promotional spend by type, 2006 [online]. Available from URL: http://www.ims health.com/ims/portal/front/articleC/0,2777,6599_80402580_81493254,00.html [Accessed 2008 Apr 16]

    Google Scholar 

  13. Kaiser Family Foundation and Health Research Education Trust. Employer health benefits: 2006 annual survey September 2006, section 9 [online]. Available from URL: http://www.kff.org/insurance/ehbs092606nr.cfm [Accessed 2008 Apr 16]

  14. Smith C. Retail prescription drug spending in the national health accounts. Health Aff 2004; 23 (1): 160–167

    Article  Google Scholar 

  15. Gibson TB, Ozminkowski JR, Geotzel RZ. The effects of prescription drug cost sharing: a review of the evidence. Am J Manag Care 2005; 11 (11): 730–740

    PubMed  Google Scholar 

  16. Huskamp HA, Deverka PA, Epstein AM, et al. The effect of incentive-based formularies on prescription-drug utilization and spending. N Engl J Med 2003; 349 (23): 2224–2232

    Article  PubMed  CAS  Google Scholar 

  17. Scherer FM. The pharmaceutical industry. In: Culyer AJ, Newhouse JP, editors. Handbook of health economics. Vol 1B. Amsterdam: Elsevier, 2000

  18. Dorfman R, Steiner PO. Optimal advertising and optimal quality. Am Econ Rev 1954; 44 (5): 826–836

    Google Scholar 

  19. Schmalensee R. The economics of advertising. Amsterdam: North-Holland, 1972

    Google Scholar 

  20. Palda K. Economic analysis for marketing decisions. New York: Prentice-Hall, 1969

    Google Scholar 

  21. Rosenthal MB, Berndt ER, Donohue JM, et al. Promotion of prescription drugs to consumers. N Engl J Med 2002; 346 (7): 498–505

    Article  PubMed  Google Scholar 

  22. Scott-Morton F. Barriers to entry, brand advertising, and generic entry in the U.S. pharmaceutical industry. Int J Indus Org 2000; 18: 1085–1104

    Article  Google Scholar 

  23. Ellison SF, Ellison G. Strategic entry deterrence and the behavior of pharmaceutical incumbents prior to patent expiration: working paper No. 13069, 2007 [online]. Available from URL: http://www.nber.org/papers/wl3069 [Accessed 2008 Apr 16]

    Google Scholar 

  24. Ellison SF, Cockburn I, Griliches Z, et al. Characteristics of demand for pharmaceutical products: an examination of four cephalosporins. RAND J Econ 1997; 28 (3): 426–446

    Article  PubMed  CAS  Google Scholar 

  25. Reiffen D, Ward MR. Generic drug industry dynamics. Rev Econ Stat 2005; 87 (1): 37–49

    Article  Google Scholar 

  26. Lu JL, Comanor WS. Strategic pricing of new pharmaceuticals. Rev Econ Stat 1998; 80: 108–118

    Article  Google Scholar 

  27. FDA orange book of approved therapeutic equivalents [online]. Available from URL: http://www.fda.gov/cder/ob [Accessed 2008 Apr 16]

  28. Burke WJ, Gergel I, Bose A. Fixed-dose trial of the single isomer SSRI escitalopram in depressed outpatients. J Clin Psych 2002; 63 (4): 331–336

    Article  CAS  Google Scholar 

  29. Scott S. The medicalisation of shyness: from social misfits to social fitness. Sociol Health Illn 2006; 28 (2): 133–153

    Article  PubMed  Google Scholar 

  30. Kessler RC, Berglund P, Dernier O, et al. Lifetime prevalence and age of onset distributions of DSM-IV disorders in the National Comorbidity Survey Replication. Arch Gen Psychiatry 2005; 62 (5): 593–602

    Article  PubMed  Google Scholar 

  31. Berndt ER. The United States’ experience with direct-to-consumer advertising of prescription drugs: what we have we learned? In: Sloan FA, Hsieh C, editors. Pharmaceutical innovation: incentives, competition, and cost-benefit analysis in international perspective. Cambridge, UK: Cambridge University Press, 2007: 174–195

    Chapter  Google Scholar 

  32. Angell M. The truth about drug companies. New York: Random House, 2004: 187–188

    Google Scholar 

  33. Donohue JM, Berndt ER, Rosenthal M, et al. Effects of pharmaceutical promotion on adherence to the treatment guidelines for depression. Med Care 2004; 42 (12): 1176–1185

    Article  PubMed  Google Scholar 

  34. Donohue JM, Berndt ER. Effects of direct-to-consumer advertising on medication choice: the case of antidepressants. J Public Policy Market 2004; 23 (2): 115–127

    Article  Google Scholar 

  35. Kravitz RL, Epstein RM, Feldman MD, et al. Influence of patients’ requests for direct-to-consumer advertised antidepressants: a randomized controlled trial. JAMA 2005; 293 (16): 1995–2002

    Article  PubMed  CAS  Google Scholar 

  36. Berndt ER, Mortimer R, Bhattacharjya A, et al. Authorized generic drugs, price competition, and consumers’ welfare. Health Aff 2007; 26 (3): 790–799

    Article  Google Scholar 

Download references

Acknowledgements

Financial support was provided by the Agency for Healthcare Research and Quality (P01 HS10803). Haiden Huskamp acknowledges financial support from the National Institute of Mental Health (K01 MH 66109). Julie Donohue acknowledges financial support from the NIH Roadmap Multidisciplinary Clinical Research Career Development Award Grant (K12 RR023267). Ernst Berndt and Richard Frank have testified in litigation and regulatory matters involving generic competition and the impact of direct-to-consumer promotion on healthcare and spending. Julie Donohue has served as a consultant to GSK and CanWest Global Communications. Ernst Berndt has testified as an expert witness on behalf of Eli Lilly in litigation involving atypical antipsychotics.

A previous version of this paper was presented at the 13th National Institute of Mental Health Biennial Research Conference on the Economics of Mental Health in September 2006. We thank our discussant, Daniel Eisenberg, and other participants for their helpful comments.

Author information

Authors and Affiliations

  1. Department of Health Care Policy, Harvard Medical School, 180 Longwood Avenue, Boston, Massachusetts, Longwood Avenue, USA

    Haiden A. Huskamp & Richard G. Frank

  2. Department of Health Policy and Management, University of Pittsburgh Graduate School of Public Health, Pittsburgh, Pennsylvania, USA

    Julie M. Donohue

  3. Feinberg School of Medicine, Northwestern University, Chicago, Illinois, USA

    Catherine Koss

  4. Alfred P. Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA

    Ernst R. Berndt

Authors
  1. Haiden A. Huskamp
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Julie M. Donohue
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Catherine Koss
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Ernst R. Berndt
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Richard G. Frank
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Haiden A. Huskamp.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Huskamp, H.A., Donohue, J.M., Koss, C. et al. Generic Entry, Reformulations and Promotion of SSRIs in the US. Pharmacoeconomics 26, 603–616 (2008). https://doi.org/10.2165/00019053-200826070-00007

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.2165/00019053-200826070-00007

Keywords

Search

Navigation