OBJECTIVES: There has been extensive research on the entry and exit of brand name prescriptions, as well as their lifecycle. However, there has been relatively less work on similar questions in the generic prescription market. This study examines the factors associated with the lifecycle and exit decision for products in the generic market.

METHODS: The monthly sales data for generic medications from 2007-2017 was obtained from the Truven Health Marketscan Databases. The database contains information on reimbursed health care claims for employees and their dependents as well as Medicare-eligible retirees with employer sponsored Medicare supplemental plans. Using survival analysis methods, the study examines the association between the likelihood of exit from the generic market and type of condition treated (chronic vs non chronic), the number of suppliers in the market, payments received for prescriptions, cost of inputs and demographic characteristics of the treated population.

RESULTS: The study included 603177 observations of 9689 unique generic products. The results show that generic products used for chronic conditions have a 58% lower hazard of exit compared to those used to treat non-chronic conditions. There is also a 31% higher hazard in markets with only one supplier, a 0.2% lower hazard for every dollar increase in the in payments received and a 0.1% higher hazard of exit for every dollar increase in the ingredient cost of generic prescriptions.

CONCLUSIONS: This study is a valuable contribution to the literature on the product life cycle of generic prescriptions, which has not been extensively studied in comparison to the brand name market. The insights gained in this analysis improve the understanding of the generic market and serve as a useful first step for further study in this market.