Home Health & LifeStyle Generic Drug Prices Are Skyrocketing, Senate Will Investigate
The feds may need to tame market forces, because the prices of generic drugs are skyrocketing. The affordability principle lies behind generic drugs, but data from the last few years heavily contradicts the idea. Numerous drugs went from pennies per pill up to several dollars.
After drug patents expire and, presumably, original producers manage to recover the production costs, other manufacturers can use the formula to produce variants of the same drug. Production costs are, thus, much lower in the case of generic drugs. According to The Generic Pharmaceutical Association, around $239 billion have been saved in the health care system due to generic drugs.
A team of medical doctors critiqued the situation in The New England Journal of Medicine. Among one of the examples we find albendazole. Medicaid data shows a dramatic increase in the price of the generic drug in the last couple of years. While in 2008 spending on the generic drug equaled around $100,000, the sum went up to $7.5 million just five years later.
Captopril, essential in the treatment of heart failure and hypertension, was 2,800 percent more expensive in Nov. 2013, 40 cents per pill, than it was a year earlier, when one pill cost 1.4 cents.
How has this happened? The authors agree with a governmental report that points drug shortages, supply disruptions, as well as consolidations in the industry. So what policies should be adopted to stop the madness? Unfortunately, the federal government cannot legally interfere with the market under these conditions. The authors point that
'U.S. antitrust laws protect consumers only from anticompetitive strategies such as price fixing among competitors. 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.'
The U.S. Senate and the U.S. Department of Justice are already examining the case. Federal prosecutors asked two generic drugs manufacturer to release information that will be used to determine if anti-competitive practices determined the rise in drug prices. On Nov. 20, Senator Bernie Sanders will hold a hearing on the matter. Sanders said they plan to find out why millions of Americans who rely on prescriptions may soon be unable to afford critical medication.
Author
Jill started her journalistic career by writing trend pieces and following the daily dalliances of today's hottest celebrities. However, she soon realized that, while fascinating, these events didn't hold as much sway over her interest as business news. She fast tracked her way through a business major in college and now enjoys writing in-depth pieces on world news, economy, and the advertising industry. She is also passionate about climate change and believes that alternative fuels are the future of the world. When she's not writing for Wall Street OTC, Jill is tweeting away off her personal account and keeping up a blog at the crossroads between business and entertainment.
