Wednesday, December 03, 2014

Market forces are dramatically driving up the cost of some generic drugs

Market forces are dramatically driving up the cost of some generic drugs, prompting investigations into the pricing of what should be cheap alternatives to brand-name medications.
Generics that should cost pennies per dose have undergone radical increases in price in recent years, said Dr. Aaron Kesselheim, author of a new commentary in the New England Journal of Medicine, and director of the Program on Regulation, Therapeutics and Law at Brigham and Women's Hospital in Boston.
For example, the widely used broad-spectrum antibiotic doxycycline has increased from 6.3 cents to $3.36 per pill. And the long-established antidepressant drug clomipramine has increased from 22 cents to $8.32 per pill, Kesselheim noted in his commentary.
Supply chain and manufacturing problems have caused some of these price hikes, he said. But Kesselheim believes that other increases have resulted from too few companies making the generic versions of these drugs.
"We take for granted that generic drugs are low-cost, but they're only low-cost because there's competition. When that competition goes away, the prices rise," said Kesselheim. "Because we leave this up to the free market, this is a risk we take on."
In response to these increases, both the U.S. Senate and the U.S. Department of Justice have undertaken investigations into generic drug pricing.
Federal prosecutors have issued subpoenas to two generic drug makers, seeking information about possible collusion between competitors, according to a published report. At the same time, the Senate Subcommittee on Primary Health and Aging has sent letters to executives of 14 pharmaceutical companies asking for answers, and on Nov. 20 will hold a hearing into the matter.
"We've got to get to the bottom of these enormous price increases," subcommittee chairman Sen. Bernie Sanders, I-Vt., said in a press release announcing the hearing. "Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescriptions to manage their health needs, and now some of them are becoming unaffordable."
Generic drugs usually are inexpensive because a number of different companies are cranking out equivalent versions of brand-name medications for which the patent has expired, Kesselheim said.
A representative of the generics industry said makers are already key players in cutting medical bills for consumers.
Generic drugs are a "critical part of system-wide efforts to hold down health care costs," said Ralph Neas, president and CEO of the Generic Pharmaceutical Association, a trade group.
Neas noted that the world's leading health care analytics firm, IMS Institute for Healthcare Informatics, found that generics saved $209 billion in 2012, $239 billion in 2013 and almost $1.5 trillion over the recent decade. That data was compiled by the IMS Institute on behalf of the Generic Pharmaceutical Association, according to an association news release.
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