For the study, researchers analyzed 1.08 billion prescription claims from commercial health plans between 2008 and 2013. They divided the data into 11 study periods of six-month increments. Researchers calculated the Herfindahl-Hirschman Index — a common measure of market competition — and average drug prices for 1,120 generic drugs identified in the claims.
Researchers found drugs with the highest levels of market competition were linked to a 31.7 percent price drop during the study period. Drugs with the lowest amount of competition saw prices increase by 47.4 percent.
While researchers identified a strong relationship between market competition levels and generic drug prices, they noted the study’s limitations, as it did not include generic drugs that entered the market after 2008.
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