Estimating The Cost Of Delayed Generic Drug Entry To Medicaid

Estimating The Cost Of Delayed Generic Drug Entry To Medicaid

Delays in market entry of generic drugs are common. This study sought to identify the prevalence of delayed entry, the reasons for the delays, and the delays’ effects on Medicaid spending in a recent cohort of brand-name medications. We estimated excess Medicaid spending in 2010–16 in the delayed quarter-years after accounting for market average predictions of brand-name market share, ratios of generic to brand-name prices, and Medicaid rebates (60 percent for brand-name and 15 percent for generic drugs). Among sixty-nine brand-name drugs that were predicted to lose market exclusivity, generic entry occurred either before or within a quarter-year of the expected date for thirty-eight products (55 percent), was delayed by more than one quarter for twenty products (29 percent), and did not occur for eleven products (16 percent). For the thirty-one products (45 percent) for which generic entry was delayed by more than one quarter or did not occur, Medicaid spent an estimated excess of $761 million over seven years ($109 million annually). Patent litigation was the most common cause of generic entry delays. Policies that expedite the resolution of patent challenges are needed to ensure the timely entry of generic drugs.

Chintan V. Dave, Michael S. Sinha, Reed F. Beall, and Aaron S. Kesselheim

Health Affairs

June 2020

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