Generic drug prices spiral up

Because they can, the majority of manufacturers of generic drugs have raised their wholesale prices over the last year – in some cases to soaring heights. Some common, long-term generics have gone from pennies to dollars per pill. Even for the insured, rising co-payments following in the wake of price increases of five hundred percent and more, are taking a huge bite out of health-care dollars.

Little Pharma (the generic drug makers) is offering the same sorts of reason for high prices that we’ve long heard from Big Pharma (the brand-name monopolies). They claim that increases in the price of raw materials and manufacturing problems (sometimes the result of plant closures for regulatory and safety reasons) are the main culprits, but industry representatives decline to provide facts to back up these claims. When pushed, they do admit that a prime ingredient for higher prices can be found in the laws of supply and demand.

Ironically, 2014 is the 30th anniversary of the Hatch-Waxman Act of 1984 that set out the rules for producing generic drugs in order to escape the high prices charged by brand-name monopolies and provide citizens with wider and fairer access to essential medicines.

Congressional hearings on the price hikes are underway, as is a Justice Department investigation. It is doubtful positive measures to ease generic drug pricing will develop. We will hear, however, about the new monopolistic practices of Little Pharma, which many will characterize as simple market economics rather than collusion.

The generic drug industry is much like most other industries – dominated by consolidations, mergers and takeovers. As such,  it is not unusual for these companies to stop manufacturing a given drug in favor of producing a more profitable one, thus leaving a single supplier in control of that market and a monopolistic ability to raise prices.

 Overall, this trend has left some of the older generics in the control of just a few suppliers. And as the trend strengthens, more and more individuals, particularly seniors, will be unable to afford the additional cost that won’t be entirely, if at all, covered by insurance. That will clear the path for homeopathic, natural and over-the-counter replacement products to emerge strong.


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