OBJECTIVES: To investigates the impact of patent expiry on drug prices in the Netherlands.

METHODS: All drugs that faced patent expiration in the Netherlands between January 1999 and December 2016 were identified. Patent expiration was defined as the time at which the first generic drug entered the market (obtained a list price) with a ATC code identical to the originator drug. Monthly drug prices and prescription were extracted from a national price and sales database. This data was used to calculate the average monthly price per DDD for every drug weighted by the corresponding prescriptions of every strength, package size and administration form. All data was combined to calculate the overall price ratio-, the generic to brand price ratio and the price development of the originator compared to moment of patent expiry.

RESULTS: In total 257 drugs faced generic competition between 1999 and 2016. The relative price decreases after 24 months differed significantly among different drugs varying from -89% to +89%. The overall price ratio 24 months after patent expiry was 0.66 (0.19-0.99;10^th-90^th percentile range). The generic to brand price ratio was 0.56 (0.15-0.94; 10^th-90^th percentile range) and the price ratio of the originator decreased to 0.80 (0.45-1.00; 10^th-90^th percentile range). Sales revenue before patent expiry significantly impacted the price decreases after patent expiration with higher sales resulting in lower price ratios.

CONCLUSIONS: Patent expiry leads to significantly lower drug prices. As drug prices are dynamic over time and generic entry leads to savings on the national healthcare budget, this should be taken into account when making predictions on future healthcare expenditures.