Generic drugs prices are on the rise, and the possible reasons why are stirring up heated discussions.
CBS News cites an analysis by Pembroke Consulting, which “found nearly 10 percent of generics more than doubled in price in the past year.” In an article by Forbes, researchers found that 222 drug groups increased in price by 100 percent or more between November 2013 and November 2014 in a research sample of 4,421 (generic) drug groups. “There are also some extreme cases (17 drug groups) where price increases of more than 1000% were seen,” the author adds.
NEJM has exposed several jumps in generic drug prices—one antibiotic, doxycycline, rose from $0.06 to $3.36, and captopril (a hypertension treatment) increased 2,800 percent.
“Numerous factors may cause price increases for non–patent-protected drugs, including drug shortages, supply disruptions, and consolidations within the generic-drug industry,” researchers report in the NEJM study, which typically results in decreased competition in the market. “Manufacturers of generic drugs that legally obtain a market monopoly are free to unilaterally raise the prices of their products. The Federal Trade Commission will not intervene without evidence of a conspiracy among competitors or other anticompetitive actions that sustain the increased price.”
AARP also weighs in on the rise of generic drug prices:
Why are some generics, including pills that have been around for decades, suddenly so expensive? In some cases, the cost of making a generic drug may increase, experts say — although that’s unlikely to explain most of the recent increases. Another reason: Mergers and acquisitions in the generic drug industry have reduced the number of competitors. “One of the reasons generic drugs are inexpensive is that there is competition in the market,” says Aaron Kesselheim, M.D., a Harvard Medical School expert who studies drug pricing. “When that competition goes away, prices will rise.”
As seems to have been the case for the EpiPen price increase, prices swiftly rose following the elimination of the company’s competition.
Still, drugs like Lannett Co.’s ursodiol jumped from $0.45 per capsule to $5.10. And, instead of remaining at a lower price, one of the company’s competitors followed suit and charged nearly the same price, according to Los Angeles Times. Instances like these seem counterintuitive to what we might expect, particularly when competition typically brings drug prices down.
Why are companies raising prices of drugs that have been on the market for years? “Because they can,” one pharmacist says.
So, what do you think? Price spikes or gouging?