Inverse Association Between Topical Dermatologic Generic Drug Prices and Number of Manufacturers

A man using a cream medication
A man using a cream medication
Policies that increase market competition among topical dermatologic generic drugs with a limited number of manufacturers may lead to long-term price reductions.

Policies that generate increased market competition between topical dermatologic generic agents with a limited number of manufacturers may, in turn, lead to long-term price reductions. The negative association between the change in drug prices and the median number of manufacturers of these topical generic agents signifies a role for market competition in controlling costs within the dermatology armamentarium, according to the results of a retrospective cost analysis published in JAMA Dermatology.

The investigators sought to describe the association between changes in drug prices and the number of US Food and Drug Administration (FDA)-approved manufacturers among the most frequently used generic topical dermatologic products. They used cumulative annual claims data from the Medicare Part D Prescriber Public User File to identify 597 drugs prescribed by dermatologists with >10 claims. The FDA Orange Book was used to determine the number of manufacturers. The National Average Drug Acquisition Cost (NADAC) database provided the price per unit of each product.

Data were collected between 2013 and 2016. Drugs that were not topically administered, were non-dermatologic, were missing NADAC data, were lacking a generic formulation, or had <400 claims were excluded from the study. The primary study outcomes were the per-unit drug price and the number of FDA-approved manufacturers. Pricing measures, adjusted for inflation, were reported in 2016 US dollars.

A total of 116 topical dermatologic generic products comprised the current analysis, which represented 70.5% of the total Medicare Part D dermatologist-coded claims from calendar year 2015. Whereas drug formulations with 1 or 2 manufacturers during the study period maintained a median percentage price increase of 12.7%, those with  >6 manufacturers exhibited a median percentage decrease in price of 20.5%.

Moreover, products with 1 to 2 manufacturers had a 20.6%, 19.5%, and 33.2% higher percentage increase in price compared with those formulations with 3 to 4 manufacturers, 5 to 6 manufacturers, and >6 manufacturers, respectively. A statistically significant inverse relationship was reported between the percentage change in drug price and the median number of manufacturers (P =.005).

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The investigators concluded that the findings from this study support policies that facilitate robust market competition among topical dermatologic generic agents produced by a small number of manufacturers, which may help pave the way for long-term price reductions.

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Li DG, Joyce C, Mostaghimi A. Association between market competition and prices of generic topical dermatology drugs. JAMA Dermatol. 2018;154(12)1441-1446.