Brand-Name versus Generic Drugs: An Empirical Study on Health Outcomes of Generic Atorvastatin Usage
Speakers
Ms. Xinyu Liang
University of Michigan
Xinyu is a PhD candidate in Technology and Operations at the Ross School of Business, University of Michigan. She conducts research in the healthcare supply chain, focusing on the quality and accessibility of healthcare products such as medications and care delivery. Methodologically, she has developed a flexible toolkit in empirical and behavioral operations, and applied machine learning methods that address emerging questions with the most suitable approaches. She has established research collaborations with industry practitioners, scholars, and frontline professionals in the pharmaceutical and medical industry. Her research is currently under review at Management Science, Production and Operations Management, and Cancer. She has served as a consultant to several leading pharmaceutical companies at McKinsey and IQVIA. Her work has provided actionable insights that inform decision-making for both policymakers and business collaborators.
| Date: |
| Wednesday, 22 November 2023 |
| Time: |
| 10:00 am - 11:30 am |
| Venue: |
|
NUS Business School Mochtar Riady Building BIZ1 0302 15 Kent Ridge Drive Singapore 119245 (Map) |
Abstract
| Generic drugs represent approximately 90% of prescriptions and have saved the US healthcare system over 2.4 trillion dollars over the past decade. The full potential of these cost-saving benefits, however, can only be unlocked when the drug’s effectiveness is ensured. In this paper, we focus on atorvastatin, the world’s best-selling statin designed to alleviate cardiovascular risks, as an example to study its effectiveness against the brand-name counterpart. We estimate the effect of generic drug usage on health outcomes by leveraging the market entry of generic atorvastatin, addressing the potential endogeneity using instrumental variables, coupled with the Heckman selection models. We find that the usage of generic atorvastatin significantly increases healthcare service utilization, particularly leading to more outpatient visits, emergency department visits, and inpatient admissions. Clinically, despite no significant association with increases in major adverse events and side effects, the generic version leads to higher LDL-C levels and is less effective in mitigating cardiovascular symptoms. Moreover, the treatment effectiveness is heterogeneous, with a more pronounced effect among more senior patients and those with higher prior healthcare expenditures. Furthermore, we show variations in generic drug effectiveness across manufacturers, particularly between authorized generic manufacturers and regular manufacturers. Our findings corroborate the FDA inspection results and recall records that manufacturers who identified as producing the least effective drugs also had more quality violations and subsequent product recalls. Overall, our paper highlights the impact of generic drug usage on healthcare outcomes and differential effects based on patient and manufacturer heterogeneity with implications for the FDA, payers, and medical practitioners.
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Link to the paper: