The cornerstone of a well-functioning market is competition. President Biden’s Executive Order 14036, “Promoting Competition in the American Economy” identified a lack of competition as a key driver for problems across economic sectors. By incentivizing competition, it is possible to foster innovation and improve the stability of a market, in turn increasing access and affordability of products. The U.S. prescription drug market is the largest drug market in the world, however, drug prices in the U.S. are much higher than in most of the world. High drug prices mean that people often cannot afford prescription drugs, even when those drugs are otherwise available. We used IQVIA data from 2017 through 2022 to identify the level of competition in different prescription drug markets. We focus on competition in the prescription drug market, because the number of competitors for a particular drug is associated with pricing power – drugs with fewer or only one manufacturer, on average, have higher prices than drugs with multiple manufacturers, holding all else constant. Understanding the baseline level of competition in drug markets will allow us an opportunity to begin to identify tailored policy solutions to further incentivize innovation and competition.
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