US prices soaring for some generic drugs

U.S. prices soaring for some generic drugs
Market forces are dramatically driving up the cost of some generic drugs, prompting U.S. investigations into the pricing of what should be cheap alternatives to brand-name medications.
(HealthDay)—Market forces are dramatically driving up the cost of some generic drugs, prompting U.S. investigations into the pricing of what should be cheap alternatives to brand-name medications.

Generics that should cost pennies per dose have undergone radical increases in price in recent years, Aaron Kesselheim, M.D., J.D., M.P.H., author of a new commentary in the Nov. 13 issue of the New England Journal of Medicine, told HealthDay. Kesselheim is the director of the Program on Regulation, Therapeutics and Law at Brigham and Women's Hospital in Boston.

For example, the widely used broad-spectrum antibiotic doxycycline has increased from 6.3 cents to $3.36 per pill. And the long-established antidepressant drug clomipramine has increased from 22 cents to $8.32 per pill, Kesselheim noted in his commentary. Supply chain and manufacturing problems have caused some of these price hikes, he said. But Kesselheim believes that other increases have resulted from too few companies making the of these drugs. "We take for granted that generic drugs are low-cost, but they're only low-cost because there's competition. When that competition goes away, the prices rise," said Kesselheim. "Because we leave this up to the free market, this is a risk we take on."

In response to these increases, both the U.S. Senate and the U.S. Department of Justice have undertaken investigations into generic drug pricing. Federal prosecutors have issued subpoenas to two makers, seeking information about possible collusion between competitors, according to a published report. At the same time, the Senate Subcommittee on Primary Health and Aging has sent letters to executives of 14 pharmaceutical companies asking for answers, and on Nov. 20 will hold a hearing into the matter.


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Nov 14, 2014
"Supply and Demand" are the basics of pricing. Generics were low priced because the pharmaceutical companies were able to sell patent medicine to a gullible public through complicit doctors. Insurance companies broke the deadlock by inventing formulary lists that started with generic drugs and charged the consumer more to use patent drugs. This process created a demand for generic drugs, which insurance companies are now upset about.

The corollary to "Supply and Demand" is "Whatever the market will bear". The "Invisible hand" that Adam Smith wrote about is tipping the scales in favour of higher priced generics. Should there be competition, the invisible hand will lower prices while manufacturers claw at each other for market share. Since the USA has no functional anti-trust laws, the winner will end up able to jack up prices again.

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