Drug prices: Generics may keep costs stable but there aren't enough of them

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If drug prices are to remain stable in the coming years, generic brands may hold the key.

That's the conclusion of a new study in JAMA Internal Medicine, which examined the generic drug market and how it has developed since the mid-1980s. The study noted that “prices for several generic drugs have increased 100-fold or more, in part because of limited competition.”

Some of the price increases drew extreme media scrutiny. One example was Daraprim, a drug that has been on the market since the early 1950s. When Turing Pharmaceuticals purchased the rights to the drug, it raised the price of the medication more than 50-fold. That led to at least one Congressional investigation. Another drug company, Valeant Pharmaceuticals, raised the price of the drug for assisted suicides by more than 10-fold.

Researchers examined 417 different types of therapeutic drugs, those that have four or more generic versions on the market are far less likely to be subject to price spikes. However, little more than half--210 in total--of the medications studied were eligible for generic competition. Of those, 133 had four or more generic versions, while 174 had one or more. Thirty-six had no generic alternatives at all.

Neurological and psychiatric drugs were the most likely to have generic alternatives, while little more than just a quarter of cancer drugs have generic versions.

That there are few cancer drugs available in generic versions is of concern for cancer patients, many of whom face crushing medical debt even if they have insurance.

“Robust competition in the generic market has driven down costs for patients and providers alike. However, the JAMA report affirms that competition is essential for preventing price spikes, said Todd Ebert, chief executive officer of the Healthcare Supply Chain Association in a statement. "The report specifically finds that at least four generic competitors are needed to ensure healthy markets. Many treatment fields fall short of this threshold--for example, only two-thirds of cancer drugs have at least one generic.” 

– read the study study abstract
– check out the statement

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