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. 2018 Nov;27(11):1717-1737.
doi: 10.1002/hec.3796. Epub 2018 Jul 10.

The effects of state-level pharmacist regulations on generic substitution of prescription drugs

Yan Song  1 , Douglas Barthold  2
Affiliations

The effects of state-level pharmacist regulations on generic substitution of prescription drugs

Yan Song et al. Health Econ. 2018 Nov.

Abstract

Substituting generic for brand name drugs whenever possible has been proposed to control prescription drug expenditure growth in the United States. This work investigates two types of state laws that regulate the procedures under which pharmacists substitute bioequivalent generic versions of brand name drugs. Mandatory substitution laws require pharmacists to use the generic as a default, and presumed consent laws allow them to assume that the patient agrees to the substitution. Both situations can be overruled by the patient. Using plausibly exogenous changes in states' laws, we use difference-in-differences and a discrete choice model to show that although the mandatory switching laws have little effect, the presumed consent laws reduce consumers' probability of purchasing brand name drugs by 3.2% points. The differential effectiveness of the laws is likely caused by pharmacists' profit motives. These results offer important implications for policies that seek to reduce drug expenditures by incentivizing the use of generic drugs.

Keywords: generic drugs; generic substitution; pharmacist regulation; prescription drugs; presumed consent.

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Conflict of interest statement

Conflicts of interest: none

Figures

Figure A1
Figure A1. Average out-of-pocket payment for brand name drugs
Source: MEPS baseline sample
Figure A2
Figure A2. Average out-of-pocket payment for generic drugs
Source: MEPS baseline sample
Figure A3
Figure A3. Average total payment for brand name drugs
Source: MEPS baseline sample
Figure A4
Figure A4. Average total payment for generic drugs
Source: MEPS baseline sample
Figure 1
Figure 1. Generic substitution laws in 2006
Alaska and Washington D.C. are both explicit and permissive, and Hawaii is explicit and mandatory. Oklahoma has no data. Data source is the NABP Survey of Pharmacy Laws (2006-2012).
Figure 2
Figure 2. Generic drug share evolution, 2006–2012
Source: MEPS baseline sample
See this image and copyright information in PMC

References

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