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Health Aff (Millwood). 2006 Nov-Dec;25(6):1637-47.

Extensions of intellectual property rights and delayed adoption of generic drugs: effects on medicaid spending.

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Division of Pharmacoepidemiology and Pharmacoeconomics, Brigham and Women's Hospital, Harvard Medical School, in Boston, Massachusetts, USA.


Rising prescription drug costs present a critical policy issue for Medicaid. Generic substitution can reduce costs, but the effects are undercut by extensions of intellectual property (IP) protection, elevated generic prices, and low substitution rates. Using Medicaid prescription data for amoxicillin/clavulanate, metformin, and omeprazole, we calculated the savings that could have been realized if generic drugs had been available and fully substituted at their lowest cost when IP protection first expired (an average delay of twenty-six months). The delay in availability, elevated prices, and slow uptake of generic alternatives for these three drugs alone cost Medicaid 1.5 billion dollars in 2000-2004.

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