The Impact on Cost-Effectiveness of Accounting for Generic Drug Pricing: Four Case Studies

Guidance on the conduct of health technology assessments rarely recommends accounting for anticipated future price declines that can follow loss of marketing exclusivity. This article explores when it is appropriate to account for generic pricing and whether it can influence cost-effectiveness estimates. This article presents 4 case studies. Case study 1 considers a hypothetical drug used by a first patient cohort at branded prices and by subsequent, “downstream” cohorts at generic prices. Case study 2 explores whether statin assessments should account for generic prices for downstream cohorts that gain access after the initial cohort. Case study 3 uses a simplified spreadsheet model to assess the impact of accounting for generic pricing for inclisiran, used when statins insufficiently reduce cholesterol. Case study 4 amends this model for a hypothetical, advanced, follow-on treatment displacing inclisiran. Assessments should include generic pricing even if the first cohort using a drug pays branded prices and only downstream cohorts pay generic prices (case study 1). Because eventual generic pricing for statins did not depend on decisions for downstream cohorts, assessing reimbursement for those cohorts could safely omit generic pricing (case study 2). For inclisiran (case study 3), including generic pricing notably improved estimated cost-effectiveness. Displacing inclisiran with an advanced therapy (case study 4) modestly affected estimated cost-effectiveness. Although this analysis relies on simplified and hypothetical models, it demonstrates that accounting for generic pricing might substantially reduce estimated cost-effectiveness ratios. Doing so when warranted is crucial to improving health technology assessment validity. •Without reimbursement at branded prices, drug manufacturers would not develop many drugs, and those drugs would never become available at generic prices. Therefore, cost-effectiveness analyses should include generic prices because they represent an anticipated consequence of reimbursement at branded prices.•Including price declines in an analysis of inclisiran, a new cholesterol treatment, yields more favorable cost-effectiveness ratios. Assuming displacement of inclisiran with a follow-on drug does not substantially alter this result if we assume that it likewise eventually loses exclusivity and declines in price.•To ensure realistic value estimates, cost-effectiveness analyses should account for anticipated life cycle price pat