Generic drugs: A bargain or sticker shock?

Generic drugs: A bargain or sticker shock?
January 05 01:00 2016

Generic drugs, normally a bargain alternative to name-brand pharmaceuticals, are providing some sticker shock of their own.

Prices of generic drugs rose more steeply than inflation for 22 percent of the top-selling generics on the market, according to a recent report by the Department of Health and Human Services.

The review examined the top 200 generic drugs, as ranked by Medicaid reimbursement each year between 2005 and 2014. A total of 869 drugs were in the top 200 list at least once during the 10 years.

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The report did not identify drugs by name or provide individual prices, but the top-selling generics treat a wide range of conditions from asthma to diabetes.

The Generic Pharmaceutical Association, the trade group that represents many of the nation’s generic drugmakers, said its members are subject to cost and supply fluctuations in materials. Even so, it said, generics usually sell for a fraction of the price of name brands, saving Americans $1.68 trillion during the past decade. Generic drugs now make up 88 percent of total prescriptions filled in the U.S. but account for only 28 percent of pharmaceutical spending, the group said.

“It’s hard to imagine another sector that can claim nearly 90 percent of a market while delivering it at nearly a quarter of the total cost,” Chip Davis, the association’s president and CEO, said in a statement.

Congress has been pushing to halt the rise of generic-drug prices. In November, it passed a law requiring generic drugmakers to pay rebates if prices rise faster than an inflation-adjusted baseline known as the Average Manufacturer Price.

The labels on generic drugs

The law will require generic-drug manufacturers to sign rebate agreements with the federal government as a condition for state Medicaid coverage of the manufacturer’s drugs. Rebates will be paid quarterly and shared between the federal government and the states. The rebates for generic drugs will take effect next year. Brand-name drugmakers are already required to pay such rebates to Medicaid.

The generic trade association fought that legislation, saying it would constrict generic-drug development and offer Medicaid beneficiaries less access to cheaper generic drugs.

Read full story at Chicago Tribune
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