Post Launch Price Decline for Generic Tabs and Caps

Sep 2, 2022 | Generics

We tend to assume that different forms of generic solid dose products are equally cheap to produce and so will see their prices decline equally fast after launch. But is this true? To find out Wavedata Looked at 70 capsule products (SKUs) and 343 tablets, tracked their average UK sales prices to pharmacies and dispensing doctors in the months after launch. We then used this to create an estimate of how quickly competition between suppliers forced prices down.

The graph shows that the prices of capsules actually declined faster than tablets in the two years after launch, and that capsule forms were slightly more expensive at launch than tablets. However, after the first two years the rate of price decline of both forms levels off and follows a trend sometimes referred to as a ‘scalloped curve’. This curve  and the rate of price decline has been seen many times before not just in generic pharmaceuticals but in other situations where brands have lost their patent protection and generic or branded generic versions have been launched. Examples are televisions and computers.

After about five years the prices of both tablets and capsules become unstable and prices can rise for a period. These bounces or price spikes are seen in many generic pharmaceutical products and can occur regularly in predictable patterns. Wavedata have previously confirmed that price bounces happen in 81% of generic products, with 30% of products experiencing one bounce, 26% two, 17% three,  6% four and 2% five. This analysis was based on the 22 years that Wavedata have been operating and all the generic launches which have happened during that time.

Eventually prices decline to just a few % of their starting price, but although the overall trend is down, price bounces can disturb the long term trend temporarily. Looking in the long term, the capsule forms have declined to as low as 4% of their value at launch, whereas tables reached 9%. So, tables maintain long term value slightly better than capsules at least in the sample and time period we looked at.

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