|The AmeriKat observing the latest|
IP dynamic duo...
|Senator Sanders (I-VT)|
A recent Forbes article attributes the rapid price increase of some generic drugs to the flurry of mergers and acquisitions witnessed in the life sciences sector in the past 18 months. With consolidation, the number of potential generic competitors has reduced in number. Fewer generic entrants means less price competition, resulting in price increases. The article also cites other factors such as manufacturing and quality issues which have resulted in drug supply shortages. But without more evidence, these explanations seem more like speculation than justification.
This lack of concrete evidence may be why, last Fall, Congressman Cummings and Senator Sanders, wrote letters to 14 generic drug manufacturers (including Actavis, Teva and Mylan) requesting information about escalating prices of generic drugs. Data supplied by the Healthcare Supply Chain Association (HSCA) on recent purchases by group purchasing organizations (GPOs) of ten generic drugs were cited by the pair. In particular, the average market price of albuterol sulfate, a common asthma treatment, in October 2013 was $11. Six months later, by April 2014, it rose to $434. The price increase of doxcycline was 8,281%. These price increases are especially significant considering that, as reported in a 2014 IMS report, generic products accounted for 86% of dispensed prescriptions in 2013. In a statement, Senator Sanders proclaims "Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescriptions to manage their health needs. We’ve got to get to the bottom of these enormous price increases."
Last November also saw the introduction of legislation that would require generics to pay rebates to state Medicaid programs for products that increase in price faster than inflation. The President of the Generic Pharmaceutical Association (GPhA), Ralph Naes, stated that the proposed legislation
"misses the forest for the trees. In actuality, generic drugs continue to be a resounding success in lowering health care costs and benefiting patients. Indeed, generics saved $239 billion in 2013 (a 14% increase in savings from 2012) and more than $1.46 trillion over the recent decade. Further, the Express Scripts 2013 Drug Trend Report issued in 2014 shows that since 2008, the price of brand drugs has almost doubled, but the price of generic drugs has been cut roughly in half.
Unfortunately the newly proposed legislation makes it clear that the hearing was not intended to be meaningful examination of ways to ensure savings. The proposed bill reflects a basic misunderstanding of the pharmaceutical marketplace, and attempts to impose brand pharmaceutical provisions on generic drugs. This effort is misguided and will threaten patient access to affordable medicines."
As far as the AmeriKat understands, the Cummings-Sanders investigation is still on-going. However, she will be interested to see if any particular factors, beyond domestic legislative and pricing issues, is to blame. If the price increases are due to global market factors and decisions, including consolidation, the issue of generic price increase may not be an issue facing only US politicians. Sounds like a perfect topic for an eager IP economist...
For more information see these articles from Wall Street Journal, GaBI and the New York Times.