Generic drug prices are spiking

  • Forty-five states and the Department of Justice are claiming that generic-drug prices are fixed and the alleged collusion may have cost U.S. business and consumers more than $1 billion.
  • The prices of some generic drugs, such as captopril (Capoten) and pyrimethamine (Daraprim), have risen substantially in recent years.
  • Pharma companies have raised the prices of 43 generic drugs by at least 10% so far in the first half of 2018.
  • Prior to going generic, many brand-name drugs see large increases in their cash price, with prices rising by as much as 50%.

It used to be that getting a generic drug meant huge savings for patients, but that’s not true anymore.

According to Market Watch “a new analysis, from the drug price-comparison platform GoodRx, is shining a light on an open secret in health care, that the prices of brand drugs often skyrocket right before new competition is expected. New generic drugs are still more inexpensive than the brand product — at that particular moment in time.  But because of the increases made on branded products, new generic rivals are sometimes priced at the same level that the brand was several months or a year earlier, the report found”.

The news that EpiPen will have generic competition is being received warmly, but the generic price could also be a shock to consumers.  Generic drug manufacturers are going to “game the system” and get as much money as they can for the generic version.  Patients are going to be shocked at the generic price which in turn is going to lead to more outrage over prescription drug prices.

Drug companies have invariably found ways to keep the generic version of their brand name product off the market for a longer period of time — to buy more time and delay market competition via the patent system.  Lyrica is a prime example.

Lyrica was set to go off-patent at the end of 2018 and the entry of generic competition would have quickly and markedly reduce Pfizer’s revenue from Lyrica by 70-90% in less than two years. But Pfizer had filed and was issued patents for an additional twenty year period on a controlled-release formulation of the product (Lyrica CR), meaning that patients would take a single pill instead of two or three pills daily. With these patents, Pfizer’s hold on the market will remain and, if history is a guide, they will continue major repeated increases in the price of the drug.

Then there is Humira. Over Humira’s lifetime, AbbVie has secured more than 100 patents to prevent anyone from attempting to copy the biologic, with $16 billion in annual sales. [inlinetweet prefix=”” tweeter=”” suffix=””]The more than 100 patents AbbVie has secured over Humira’s lifetime make it difficult for another company to replicate the drug without using processes and techniques to which the pharma giant continues to hold rights. [/inlinetweet] Many of those patents were issued over the past few years as the expiration of Humira’s main patent grew closer

The bottom line? [inlinetweet prefix=”” tweeter=”” suffix=””]Patients are going to pay more for generic drugs because generic drug makers have learned that there is a lot of money to be made from selling generic drugs.  [/inlinetweet]Sure, you might pay a little less, but the price gap between the branded drug and the generic is closing rapidly.