HealthDay News — Market competition levels are associated with changes in the price of generic drugs, according to a study published in the Annals of Internal Medicine.

Chintan V. Dave, PharmD, from the University of Florida in Gainesville, and colleagues conducted a retrospective study involving prescription claims for commercial health plans from 2008 to 2013. They calculated the Herfindahl-Hirschman Index (HHI) by summing the squares of individual manufacturers’ market shares for each 6-month period, with higher values indicating a less competitive market. In each period, the authors estimated the average drug prices for generic drugs. The HHI value estimated in the first half of 2008 was modeled as a fixed covariate.

The researchers identified a cohort of 1120 generic drugs from 1.08 billion prescription claims. Price changes of −31.7, −11.8, 20.1, and 47.4% were seen for drugs with quadropoly (HHI value of 2,500), duopoly (HHI value of 5000), near-monopoly (HHI value of 8000), and monopoly (HHI value of 10,000) levels of baseline competition, respectively, over the study period.

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“Market competition levels were associated with a change in generic drug prices,” the authors wrote. “Such measurements may be helpful in identifying older prescription drugs at higher risk for price change in the future.”

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Dave CV, Kesselheim AS, Fox ER, Qiu P, Hartzema A. High generic drug prices and market competition: A retrospective cohort study [published online July 4, 2017]. Ann Intern Med. doi:10.7326/M16-1432