Effect of multiple-source entry on price competition after patent expiration in the pharmaceutical industry.

OBJECTIVE: To analyze the effect of multiple-source drug entry on price competition after patent expiration in the pharmaceutical industry. DATA SOURCES: Originators and their multiple-source drugs selected from the 35 chemical entities whose patents expired from 1984 through 1987. Data were obtained from various primary and secondary sources for the patents' expiration dates, sales volume and units sold, and characteristics of drugs in the sample markets. STUDY DESIGN: The study was designed to determine significant factors using the study model developed under the assumption that the off-patented market is an imperfectly segmented market. PRINCIPAL FINDINGS: After patent expiration, the originators' prices continued to increase, while the price of multiple-source drugs decreased significantly over time. By the fourth year after patent expiration, originators' sales had decreased 12 percent in dollars and 30 percent in quantity. Multiple-source drugs increased their sales twofold in dollars and threefold in quantity, and possessed about one-fourth (in dollars) and half (in quantity) of the total market three years after entry. CONCLUSION: After patent expiration, multiple-source drugs compete largely with other multiple-source drugs in the price-sensitive sector, but indirectly with the originator in the price-insensitive sector. Originators have first-mover advantages, and therefore have a market that is less price sensitive after multiple-source drugs enter. On the other hand, multiple-source drugs target the price-sensitive sector, using their lower-priced drugs. This trend may indicate that the off-patented market is imperfectly segmented between the price-sensitive and insensitive sector. Consumers as a whole can gain from the entry of multiple-source drugs because the average price of the market continually declines after patent expiration.

Gene therapy: socioeconomic and ethical issues. A roundtable discussion.

Gene therapy research has the potential to revolutionize the way in which many human diseases are treated. Despite its enormous potential, roundtable panelists concluded that the field needs time to mature scientifically without pressure to develop a marketable therapeutic product. In addition, health care decision makers, physicians, and the lay public need to be educated on the future medical, economic, and ethical ramifications of gene therapy.

Prescribing problems and pharmacist interventions in community practice.

Interventions performed by 89 community pharmacists in 5 states to correct the prescribing problems they identified on new prescription orders were documented by trained observers. Pharmacists intervened to resolve a prescribing-related problem in 623 (1.9%) of 33,011 new prescription orders that were screened and dispensed during the study period. A panel of three expert evaluators concluded that 28.3% of the prescribing problems identified during the study could have caused patient harm if the pharmacist had not intervened to correct the problem. The rate at which pharmacists identified prescribing problems was negatively related to the number of prescriptions they dispensed per hour, suggesting that in pursuing distributive efficiency, some pharmacists may be exceeding their safe dispensing threshold. The authors recommend that the interprofessional system of oversight and verification (i.e., "checks and balances") in the delivery of pharmaceutical care in the community setting should be maintained and strengthened.

Battered bottom lines: the impact of eroding pharmaceutical discounts on health-care institutions.

For several years, the American Society of Hospital Pharmacists (ASHP) has voiced concern about the impact of federally mandated changes on the pharmaceutical products marketplace. Since this marketplace is relatively inelastic, manipulating one segment in the interest of cost efficiencies is likely to result in price increases in other segments. That manipulation could come through such decisions as a "one-price" policy for pharmaceuticals, mandatory rebates for certain segments of the marketplace, or the elimination of discounts. The issue of cost-effective purchasing of prescription drugs and related supplies has recently come under increased scrutiny from the U.S. Congress, the Department of Health and Human Services, the General Accounting Office, and the Federal Trade Commission. In light of these and future activities, ASHP determined that there was a need to collect credible data on the potential impact of the termination of the Robinson-Patman Act's nonprofit institutional exemption, other discounts, or both on pharmaceutical expenditures in institutional health-care settings. The authors of this paper report the results and analysis of a 1990 mail survey conducted by ASHP and Concepts in Healthcare, Inc., to collect information on pharmaceutical purchasing and discounting procedures in community hospitals and selected nonhospital settings in the United States. Survey respondents reported that they would expect substantial increases in pharmaceutical expenditures if volume and nonprofit discounts were eliminated. Nonprofit hospitals expected a 24.4% increase in pharmaceutical expenditures in the wake of discount elimination, while for-profit institutions projected an 11.9% increase. Pharmaceutical expenditures of the study hospitals averaged $1.69 million per year; respondents estimated that this sum would increase by $390,000 (23.1%) if volume and nonprofit discounts were eliminated.

Pharmacists' compensation and work patterns, 1990-91.

Several major trends were observed in these findings from the 1990-91 National Pharmacists' Compensation Survey (for details see the final report). Only 72.6% of licensed pharmacists were working full-time in pharmacy; another 14.4% were working part-time in pharmacy, and nearly 13.0% were either not working in pharmacy or not working at all. Although 90.0% of active men pharmacists were working full-time, only 70.7% of active women pharmacists were working full-time. Men were more likely to be working in independent and chain pharmacies as a manager or owner. Women were more likely to be working in hospital or chain pharmacies as a staff pharmacist. Pharmacists' base salary in 1990 was substantially higher for men than for women with averages of $46,661 versus $42,668. Total pharmacy compensation showed a similar pattern but an even greater spread between men and women with averages of $51,032 versus $44,751. However, after adjusting for years in practice and number of hours worked per week, the base HWE for employee pharmacists shows that men and women pharmacists do get "equal pay for equal work" in the first 20 years of practice. The difference that develops between men and women with more years in practice is probably due to the higher proportion of men in management positions and to differences in practice setting preferences.(ABSTRACT TRUNCATED AT 250 WORDS)

Price indexes for pharmaceuticals used by the elderly.

The analysis presented in this report was undertaken to identify those drug entities that account for a significant proportion of the retail expenditures for prescription drugs used by the elderly. Commercial data bases were used to develop fixed weight Laspeyres price indexes based specifically on drugs used in the elderly population. The indexes provide the capability to analyze price trends for drug groupings that are not possible with the producer price index (PPI) or the Consumer Price Index (CPI). From 1981 through 1988, the average annual rate of increase in manufacturers' prices was 9.1 percent, and retail prices increased at an average annual rate of 6.6 percent. The indexes represent potentially powerful tools in analyzing drug price trends, an important component of drug program expenditure forecasting and management.

Variables affecting pharmacists' willingness to accept third-party prescription contracts: a conjoint analysis.

Pharmacists were asked to rate their willingness to accept 12 hypothetical third-party prescription contracts offering different combinations of dispensing fees, average wholesale price levels for the ingredients, and payment lag times. Dispensing fee explained the most variance in the dependent variable of willingness to accept third-party contracts, followed by payment lag time and average wholesale price level.

Pharmacists' evaluations of the nonprescription availability of metaproterenol, cimetidine, ibuprofen, and nystatin.

The relative importance of six switch evaluation criteria in pharmacists' evaluations of the appropriateness of switching four drugs from prescription to nonprescription status was assessed. A questionnaire was constructed for three potential switch candidates (metaproterenol, cimetidine, and nystatin) and one already switched drug (ibuprofen 200 mg). Pharmacists were asked to judge (1) the overall appropriateness of switching these four drugs and (2) the appropriateness of switching these drugs based on the FDA switch criteria of safety, effectiveness, and labeling and two other proposed criteria: the need for oral counseling about the product and perceived market need for the product. Additionally, pharmacists were asked to rate whether they believed the study drugs would be profitable to their pharmacies if the drugs were switched to nonprescription status. A total of 1161 pharmacists were reached by the mailings, of whom 417 (34.8%) responded. Only ibuprofen 200 mg received a positive overall switch approval rating from the pharmacists; cimetidine received the lowest rating. The six evaluation criteria were tested for significant association with pharmacists' overall judgment of the appropriateness of switching each drug. The three most influential criteria were safety, labeling, and market need for the product, respectively. Profitability to the pharmacy was not significantly associated with pharmacists' overall judgment of switch appropriateness. Regression analysis identified safety, labeling, and market need as important in the evaluation of all four drugs, and pharmacists' evaluation of the relative importance of these criteria was a predictor of their overall judgment of the appropriateness of a switch. Consumer safety, not personal economic interests, most influenced pharmacists' judgment of the appropriateness of a switch from prescription to nonprescription status for four drugs.

Pharmacists, pharmaceuticals, and drug information in the 21st century.

The future holds great promise for the Rx-to-OTC switch, if we will collectively plan and manage that process. The impact of Rx-to-OTC switches will extend far beyond the technical and regulatory issues and implications. Certainly, pharmaceutical manufacturers, the Food and Drug Administration, and the Federal Trade Commission are at the center of this issue, but no less important are the roles of physicians, pharmacists, and consumers. The social and economical, and even logistical, aspects of the switch process should be considered as antecedents to an Rx-to-OTC switch policy, rather than as consequences to be measured after such a policy has been determined. Finally, the evolution of an Rx-to-OTC switch policy in the coming months and years should avoid the path of political and administrative expediency and it should avoid the consideration of special interests in isolation from the broader social context. The development of a sound Rx-to-OTC switch policy will occur only if the direction and demand truly comes from within the ranks of the consumers.

Comparison of consumer-oriented books on medications.

Consumers increasingly want to be informed about the processes involved in their own health care. Health professionals may be called upon to recommend appropriate consumer-oriented sources of information. To assist the health professional in making a rational recommendation, 15 currently available consumer-oriented books on prescription medications were compared with respect to readability, number of drugs covered, completeness of drug monograph information, price, and other factors. Mean readability scores, reported as a reading grade level, ranged from 9.2 to 14.3. The number of drugs covered by these books ranged from 135 to 1,200. Monograph completeness scores were assigned by determining the percentage of information from a standard reference's drug monograph covered in each book. The lowest percentage completeness score was 21.4%, while the highest was 76.7%. Prices for the books ranged from $2.50 to $19.95. Regardless of the relative priorities placed on these factors, a consumer or health professional may use the objective and descriptive assessments of this study to make an informed decision when choosing among consumer-oriented sources of medication information.