It is possible that patients discussing possible use of PPIs with their physician might first be directed to use the lowest-cost OTCs. On the other hand, since their dosage is lower, the OTCs may not be as effective, and in order to avoid additional physician visits, the patient might instead be prescribed either an Rx H2or an Rx PPI as first-line therapy. Thus, how marketing of the PPIs affects the split between Rx and OTC versions of the H2s remains an empirical issue. IV. DATA SOURCES, DESCRIPTIONS AND INTERPRETATIONSEmpirical research on interactions among prescription drug and OTC markets at the time of patent expiration requires integrating data from a number of diverse sources. We now briefly summarize our data sources. We begin with prescription drugs, and then move on to the OTCs. A. PRESCRIPTION DRUG MARKETS Price, quantity, revenue and marketing data for antiulcer and heartburn prescription drugs are taken from IMS Health, monthly from January 1988 through June 1999. IMS' Retail PerspectiveTMtracks monthly shipments from manufacturers and wholesalers to retail warehouses and outlets. The revenue data are those to manufacturers and wholesalers, and not to the retail outlets (who add retail margins). Although revenues are net of chargebacks (discounts given purchasers and channeled through wholesalers), rebates (payments made to providers who often do not take title to the pharmaceuticals, e.g., managed care organizations) are not included in the IMS revenue data, nor are prompt payment discounts. The exclusion of rebates from the revenue data implies an overstatement of Rx revenues and prices, but the extent of this overstatement is unknown, for data on rebates tend to be highly proprietary. In spite of this drawback in the IMS data, however, a very high proportion of branded and generic pharmaceutical companies are known to purchase and utilize the IMS data for their internal
RX-OTC SWITCHES AND AFTERLIFE FOLLOWING PATENT PROTECTION- PAGE 10 -research. The level of aggregation of the IMS retail purchase data is at the presentational form, e.g., bottles of 30 tablets each having a 150 mg strength. We convert these various presentational sales measures into quantity or unit data by using the recommended daily dosage for active duodenal ulcer treatment as the transformation factor. The resulting quantity data can then be interpreted as the hypothetical patient days of therapy per month were all patients taking the recommended active duodenal ulcer daily dosage.16Data on recommended daily dosages are taken from Physicians' Desk Reference. Price per day of therapy is then computed as revenues divided by the quantity of therapy days in that month. Further details on price, quantity and revenue measurement are found in the Data Appendix of Berndt, Bui, Lucking-Reiley and Urban .