ICYMI: Are low-cost generic drugs a thing of the past?
The reality that generic drug prices have risen dramatically is no longer news. Since July, stories about skyrocketing generic drug prices have proliferated, including multiple examples of drug costs that have been hiked to a staggering, and even unbelievable, degree.
Overall, 50% of generic drugs have increased in price, including 10% which have at least doubled in price. Most of the generic drug price changes occurred over a one-year period, between summer 2013 and summer 2014. For example, during that period, the price of captopril, an old-line ACE inhibitor used to treat congestive heart failure and hypertension, increased from 1.4 cents per pill to 39.9 cents per pill—an almost 30-fold increase.
Ironically, captopril was launched by BMS as Capoten in 1981 and became available as a generic in 1996. It is not the newest, or the most sophisticated cardiovascular drug—but it has long been a go-to medication for physicians whose patients have limited insurance coverage, or for those who do not have pharmaceutical coverage at all.
Likewise, the price of a 25-mg dose of clomipramine, a tricyclic antidepressant, which is used to treat both depression and obsessive-compulsive disorder, increased in price from 22 cents to $8.32 per pill over a one-year period. And in terms of antibiotics, there have been substantial price increases of numerous generics, including doxycycline, a broad-spectrum antibiotic that is almost 50 years old. The cost of a 100-mg dose of doxycycline has increased from 6.3 cents per pill, to $3.36 per pill.
The stories go on and on, but beyond the shock value, the question remains, “Why are generic drug prices rising so fast and so high?” The prevailing theory is that the sudden sharp increase in generic drug prices is a function of several factors combined, including drug shortages, manufacturing glitches, drug recalls, supply disruptions, consolidation of the generic drug industry, and numerous bans on generic-drug manufacturing facilities in India. All of these factors lead to decreased competition—and increased prices.
NEJM weighs in
Last month, the New England Journal of Medicine took a new approach to the topic of generic drug prices in an article entitled “High-cost generic drugs—implications for patients and policymakers.” In addition to examining broad trends and some of the most extreme cases, three physicians considered possible remedies for increasingly out-of-reach generic drug prices.
One case study included in the article focused on albendazole, a broad-spectrum antiparasitic medication used to treat intestinal parasites, neurocysticericosis, and hydatid disease. The main recipients of albendazole are immigrants. In fact, the Centers for Disease Control and Prevention (CDC) recommends presumptive treatment for all refugees arriving in the U.S. if they have not had prior treatment.
Decreasing competition, increasing prices
Albendazole has been around since 1982, when the company that eventually became GSK started marketing it outside of the U.S. In 1996, albendazole was approved by the FDA. In October 2010, GSK sold U.S. marketing rights for albendazole to privately owned Amedra Pharmaceuticals. And in 2011, Teva stopped manufacturing the only therapeutically interchangeable drug that can be used to treat parasitic infections—mebendazole (Vermox)—for business-related reasons.
The result: Between 2008 and 2013, the average cost of an albendazole prescription rose from $36.10 per prescription to $241.30 per prescription—an increase in overall annual spending from less than $100,000 to more than $7.5 million. Many of the people who need albendazole are spending thousands of dollars out of pocket, and more often than not, relying on Medicaid or the Refugee Medical Assistance Program.
Can this problem be fixed?
Considering the role that manufacturers themselves play in pushing prices higher, it’s not difficult to imagine that there is some broad price-fixing conspiracy among generic drug manufacturers. However, there are strong U.S. antitrust laws designed to protect consumers from price-fixing—despite the fact that a manufacturer that legally obtains a market monopoly is free to raise its prices.
There are already some solutions in place that can be leveraged to help alleviate shortages and to increase competition. For example, in the past, the FDA has approved lower-priced drug imports. In addition, the FDA also has the power to work with domestic manufacturers to help them integrate new raw-material resources into their production lines.
Currently, those strategies are either not being employed or are not working. That's why Drs. Alpern, Stauffer, and Kesselheim recommend that the FDA provide special support for new generic drug manufacturers, including creating an expedited approval pathway and waiving generic drug user fees.
Numerous theories abound about what is driving the increase in generic drug prices. There is no simple answer, but one thing is clear: consumers and lawmakers are going to continue demanding a solution.
- New England Journal of Medicine High-cost generic drugs---implications for patients and policymakers
- NYT Lawmakers Look for Ways to Provide Relief for Rising Cost of Generic Drugs