Generic competition and drug prices in the Malaysian off-patent pharmaceutical market

Promoting generic competition following patent expiration of innovator product is a key policy strategy in containing rising drug expenditure in both developed and developing countries. However, the effect of this measure on drug prices has not been specifically explored in Malaysia. This paper analyses the potential effect of generic competition on drug prices in the off-patent pharmaceutical market in Malaysia using retail price data of 28 off-patent multisource prescription medicines collected in a national medicines price survey in Malaysia. The relationship between number of registered brands of multisource medicines and their proportional prices was examined. The results show that the mean proportional price decreases as the number of brands increases, Pearson’s r (6) =0.89, p=0.017 and the differences between the mean proportional prices among the various brands was significant, one-way ANOVA, F (5, 22) =3.68, p=0.014). However, further analysis using Tukey’s post-hoc test analysis shows that the price differentials were not significant across all the brands of a given off-patent multisource product. The findings of this study revealed evidence of price lowering effect of generic competition among multisource drug products in Malaysia, though the effect was not observable across all drug brands.