Why do generic medications cost so much? Because they can

KEY TAKEAWAY: Lack of competition within the generic medication market has led to high prices and a feeling that we may not save as much as we thought switching from a branded medication to a generic one.

Generic drugs — which, per the FDA, are “chemically identical” to branded medicines — appear to be more affected by a lack of competition than their higher-priced brand rivals, a study found.

According to James Dennin from Payoff “how much does competition affect prices? Between 2008 and 2013, generic drugs with four or more manufacturers got about 32% cheaper, according to the study. But in a non-competitive marketplace with only one manufacturer, prices actually rose about 47% over those same five years, after controlling for other factors like shortages and how the drug is administered. The study used data compiled from more than 1 billion drug claims across 1,120 generic drugs”.

For a reality check look at the price for generic Gleevec. The current price of Gleevec is $146,000, and the Red Book price for Sun’s generic is $140,000, so there really isn’t much difference in price. So the generic cost of Gleevec is almost the same price as the brand. If you were a patient would you want the generic product at that price?

There had been some propaganda that generic manufacturers were “not making that much profit” but with prices on generic medications increasing that argument is pretty much out the window.  Remember that generic manufacturers don’t have to do any clinical studies or research.

Another downside is that when a medication goes generic DTC marketing stops .  This means consumers are not aware of certain medication benefits and doctors aren’t aware of better patient outcomes.

The idea that generic medications would save consumers money was a good one, but profit and greed got in the way.  Why discount generic medications 60-80% when companies can charge up to 90% and make a lot more money?  Once again “for profit” reigns and patients suffer.

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