Wei Zhang1,2, Huiying Sun1, Daphne Guh1, Aslam H Anis1,2. 1. a Centre for Health Evaluation and Outcome Sciences , St. Paul's Hospital, 588-1081 Burrard Street, Vancouver , BC , Canada. 2. b School of Population and Public Health , University of British Columbia , Vancouver , BC , Canada.
Abstract
BACKGROUND: In 1998, the province of Ontario, Canada implemented price-cap '70/90' regulations: the first generic must be priced at ≤70% of the associated brand-name price and subsequent generics must be priced at ≤90% of the first generics' price. The price-cap was further lowered to 50% in 2006 and 25% in 2010 for all generic drugs regardless of the first or subsequent generic entrants. This study assessed the impact of such price-cap regulations on market entry by generic firms using the formulary database from 9 provinces (January 2004-March 2013). METHODS: A logistic regression was estimated to compare the probability of entry during the three policy periods in Ontario ('70/90', '25', versus '50'). Since different price-caps were subsequently introduced in other provinces, Alberta, British Columbia, New Brunswick and Saskatchewan, difference-in-differences was used to compare market entry. RESULTS: In Ontario, compared with the period '50', generic firms were 76% and 63% less likely to enter markets in the periods '25' and '70/90', respectively. The difference-in-differences showed that the entry probability decreased the most in Ontario during the '25' period from the '50' period. CONCLUSION: Lowering the price-cap level to 25% leads to a significantly lower probability of market entry by generic firms.
BACKGROUND: In 1998, the province of Ontario, Canada implemented price-cap '70/90' regulations: the first generic must be priced at ≤70% of the associated brand-name price and subsequent generics must be priced at ≤90% of the first generics' price. The price-cap was further lowered to 50% in 2006 and 25% in 2010 for all generic drugs regardless of the first or subsequent generic entrants. This study assessed the impact of such price-cap regulations on market entry by generic firms using the formulary database from 9 provinces (January 2004-March 2013). METHODS: A logistic regression was estimated to compare the probability of entry during the three policy periods in Ontario ('70/90', '25', versus '50'). Since different price-caps were subsequently introduced in other provinces, Alberta, British Columbia, New Brunswick and Saskatchewan, difference-in-differences was used to compare market entry. RESULTS: In Ontario, compared with the period '50', generic firms were 76% and 63% less likely to enter markets in the periods '25' and '70/90', respectively. The difference-in-differences showed that the entry probability decreased the most in Ontario during the '25' period from the '50' period. CONCLUSION: Lowering the price-cap level to 25% leads to a significantly lower probability of market entry by generic firms.
Authors: Wei Zhang; Huiying Sun; Daphne P Guh; Larry D Lynd; Aidan Hollis; Paul Grootendorst; Aslam H Anis Journal: Int J Health Policy Manag Date: 2022-06-01