Abstract
BackgroundAlthough the association between the price of generic drugs and market competitiveness has been explored in various high-income countries, this association has not been empirically evaluated in South Korea. We aim to determine the association between the prices of generic drugs and market competitiveness in South Korea.MethodsA list of originator drugs approved by the national authority from 2000 to 2019 and their corresponding generic drugs were grouped along with the baseline information. The market was categorized into four groups based on the number of manufacturers: duopoly (2 manufacturers); low- (3–25 manufacturers); medium- (26–75 manufacturers); and high-competition (more than 76 manufacturers) markets. Price variance, calculated as the difference between the maximum price and minimum price divided by the maximum price, was obtained. A multivariate regression model was applied to regress price variance on the characteristics of market competitiveness, controlling for the characteristics of the originator drugs and their price level in the market.ResultsA total of 986 originator drugs were identified and then divided into duopoly (31%), low- (56%), medium- (9%), and high-competition (4%) markets; the median of the price variance for these markets was 0.013, 0.077, 0.200, and 0.228, respectively. In a multivariate regression model, price variance was associated with the characteristics of the originator drug, including the Anatomical Therapeutic Chemical classification, the route of administration, and the approval year. Controlling for the characteristics of the originator drugs, market competitiveness was positively associated with price variance.ConclusionsThe positive association between price variance and market competitiveness is still consistent in South Korea, where rare price competition among a large number of generic manufacturers has been reported. However, no significant price variance was observed between medium- and high-competition markets. These findings support policies for managing a large number of generic manufacturers in South Korea.
Highlights
The association between the price of generic drugs and market competitiveness has been explored in various high-income countries, this association has not been empirically evaluated in South Korea
We found a positive association between price variance and the number of generic manufacturers, controlling for the Anatomical Therapeutic Chemical (ATC) classification, route of administration, and type of originator drug
These findings suggest that policies for managing the number of generic manufacturers fewer than 76 manufacturers could be introduced in the market without limiting price competition
Summary
The association between the price of generic drugs and market competitiveness has been explored in various high-income countries, this association has not been empirically evaluated in South Korea. When a pharmaceutical patent or statutory exclusivity expires, manufacturers can be granted marketing authorization for generic substitutes and penetrate originator markets [1,2,3,4]. For prescription drugs, matters in high-income countries [14,15,16,17]. Son Health Economics Review (2020) 10:30 or statutory exclusivity To address these issues, governments have established several ways to negotiate lower prices for originator drugs and to expand the use of health technology assessment for reimbursement decisions [21,22,23]. Governments are assessing how they can lower pharmaceutical expenditures through generics [14, 24]
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