Generic Drug Effectiveness : An Empirical Study on Health Service Utilization and Clinical Outcomes
Close to 90% of drugs consumed in the US are generics, representing around 30% of the overall drug expenditure. Generic drugs have saved the healthcare system over 2.4 trillion dollars over the past decade. Such cost-saving benefit, however, can only be realized when the drug's effectiveness is ensured. In this paper, we study the effectiveness of generic drugs by exploiting the market entry of generic atorvastatin, which aims to alleviate the risk of cardiovascular disease. We estimate the effect of generic drug usage on health service utilization and clinical outcomes using a staggered difference–in–differences design and address the potential endogeneity using instrumental variables. We find that generic drug usage leads to significantly higher utilization of outpatient visits, inpatient admissions and emergency department visits. As a result, while switching to generic drugs reduces drug costs, it can lead to higher healthcare expenditures for patients with high healthcare needs. Generic drugs also appear to be less clinically effective in reducing patients' low-density lipoprotein cholesterol levels. Moreover, the effect of generic drugs is heterogeneous across different populations, especially among older patients and patients with high prior healthcare expenses. Healthcare service utilization also increases when patients frequently switch across drugs made by different generic manufacturers. Overall, our paper highlights the aggregate impact of generic drug usage on healthcare utilization and differential impacts based on patient and manufacturer heterogeneity with implications for the FDA, physician practices, payers, and pharmacy purchasing groups
Year of publication: |
2022
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Authors: | Liang, Xinyu ; Li, Jun ; Anupindi, Ravi |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (47 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 26, 2022 erstellt |
Other identifiers: | 10.2139/ssrn.4120736 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014030742
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