Did the Demand for Crestor Shrink when Lipitor’s Patent Expired?

This paper uses micro-level data from the Medical Expenditure Panel Survey to investigate whether, following the expiration of Lipitor’s patent, demand for Crestor shrank. The topic holds important policy implications owing to rapidly growing drug spending, because aggregate drug spending could potentially be reduced if insurers introduced incentives that encouraged patients to switch away from name-brand drugs, like Crestor, toward cheaper generic competitors. This paper produces several findings. The expiration of Lipitor’s patent does not appear to have significantly affected the overall market for Crestor. However, patients enrolled in private insurance do appear to have reduced Crestor usage by about 13%. Medicaid patients who used Crestor prior to the change in Lipitor’s patent status also appear to have reduced their Crestor usage by a relatively sizable amount. Finally, the expiration of Lipitor’s patent appears to have resulted in an 18% increase in the strength of a typical Crestor pill, which might be interpreted as a de facto price decrease for Crestor.