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Since 1984, when Congress passed a law designed to encourage companies to manufacture generic drugs, the U.S. prescription drug market has undergone a remarkable transformation. Eighty-six percent of prescriptions dispensed in this country are now generic,[1] compared to 14 percent in 1984.[2] As a result, patients and the health care system are saving hundreds of billions of dollars annually[3] because generic drugs, generally, are much cheaper than their brand-name counterparts.
Howeve...
Since 1984, when Congress passed a law designed to encourage companies to manufacture generic drugs, the U.S. prescription drug market has undergone a remarkable transformation. Eighty-six percent of prescriptions dispensed in this country are now generic,[1] compared to 14 percent in 1984.[2] As a result, patients and the health care system are saving hundreds of billions of dollars annually[3] because generic drugs, generally, are much cheaper than their brand-name counterparts.
However, in 2014, alarm bells sounded as the price of many commonly used generic drugs spiked, in some cases by staggering amounts, prompting probes into the generic drug industry by Congress and the Department of Justice.
According to one recent report, from July 2013 to July 2014 the price of approximately one-fifth of generic drugs increased by more than 25 percent, and for half of these the price more than doubled.[4] In the most extreme cases, the cost rose by more than 1,000 percent. For one drug, the widely prescribed antibiotic tetracycline, the price increased by more than 17,000 percent (the cost of one 500-milligram capsule went from $0.05 to $8.59).[5] Physicians, pharmacists, patients and policymakers have been frustrated by the lack of transparency about the reasons for these extreme price hikes.
On Oct. 2, 2014, Rep. Elijah E. Cummings, the senior Democrat on the House Committee on Oversight and Government Reform, and Sen. Bernard Sanders, chairman of the Senate Health, Education, Labor and Pensions Committee’s Subcommittee on Primary Health and Aging, began investigating the cause of these price increases. As an initial step, they wrote to 14 drug manufacturers and requested information about the escalating prices of generic drugs.[6] On Nov. 20, Sanders convened a hearing of his subcommittee to explore this issue further.[7]
Also in November 2014, the Justice Department issued grand jury subpoenas to two generic drug companies. According to a report on The Wall Street Journal’s Pharmalot blog, a senior executive at one of the companies disclosed that the subpoena was related to “ ‘a federal investigation of the generic pharmaceutical industry into possible violations’ of anti-trust laws.”[8]
For many patients, the hikes in generic drug prices have resulted in financial hardships, with out-of-pocket expenses due to copays and deductibles rising. For others, previously affordable medications likely have become unaffordable, leading patients to forgo lifesaving treatments. It is essential that Congress and the Justice Department get to the bottom of why these price increases are occurring. If illegal conduct is playing a role, the responsible parties must be dealt with promptly and harshly.
References
[1] Generic Pharmaceutical Association. Generic Drugs Savings in the U.S. (6th Annual Edition, 2014). http://www.gphaonline.org/media/cms/GPhA_Savings_Report.9.10.14_FINAL.pdf. Accessed December 5, 2014.
[2] Food and Drug Administration, Center for Drug Evaluation and Research. Generic drugs. http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/SmallBusinessAssistance/ucm127615.pdf. Accessed December 14, 2014.
[3] Ibid.
[4] Drug Channels. Retail generic drug inflation reaches new heights. August 12, 2014. http://www.drugchannels.net/2014/08/retail-generic-drug-inflation-reaches.html. Accessed December 5, 2014.
[5] Ibid.
[6] Ranking Member Cummings and Chairman Sanders investigate staggering price increases for generic drugs. http://democrats.oversight.house.gov/sites/democrats.oversight.house.gov/files/documents/Table%20on%20Generic%20Drug%20Price%20Increases%20FINAL.pdf. Accessed December 5, 2014.
[7] U.S. Senate Subcommittee on Primary Health and Aging. Subcommittee hearing – why are some generic drugs skyrocketing in price? http://www.help.senate.gov/hearings/hearing/?id=a7beb0ef-5056-a032-521e-c63f76dda7f3. Accessed December 5, 2014.
[8] Silverman E. Justice department probes generic companies after price hike reports. November 10, 2014. Wall Street Journal-Pharmalot. http://blogs.wsj.com/pharmalot/2014/11/10/justice-department-probes-generic-competition-after-price-hike-reports/. Accessed December 5, 2014.
