Some low-cost generic drugs that have helped restrain health care costs
for decades are seeing unexpected price spikes of up to 8,000%, prompting
a backlash from patients, pharmacists and now Washington lawmakers.
A Senate panel met Thursday to scrutinize the recent, unexpected trend
among generic medicines, which usually cost 30% to 80% less than their
Experts said there are multiple, often unrelated, forces behind the price
hikes, including drug ingredient shortages, industry consolidation and
production slowdowns due to manufacturing problems. But the lawmakers
convening Thursday's hearing said the federal government needs to
play a bigger role in restraining prices.
"If generic drug prices continue to rise then we are going to have
people all over this country who are sick and need medicine and who simply
will not be able to buy the medicine they need," Vermont Sen. Bernie
Sanders, who chairs the Senate Subcommittee on Primary Health and Aging.
Sanders is a political independent who usually votes with the liberal
wing of the Democratic party.
Sanders introduced a bill that would require generic drug makers to pay
rebates to the federal Medicare and Medicaid programs when prices of their
medications outpace inflation. Those payments are already mandatory for
branded drugs, but have never applied to generics.
Last month, Sanders and House Rep. Rep. Elijah Cummings, D-Maryland, sent
letters to the makers of 10 generic drugs that have seen price increases
of over 300% or more in recent months. The price for one of those, the
antibiotic doxycycline hyclate, rose more than 8,280% during a six-month
period from an average of $20 per bottle to $1,849 per bottle. The increases
cited by the Senate subcommittee were calculated by the Healthcare Supply
Chain Association using the average prices of the drugs and other price data.
The Generic Pharmaceutical Association said in a statement Thursday that
the 10 drugs cited by lawmakers do not reflect the broader U.S. market,
which includes 12,000 generic medications that have reduced drug costs
But pharmaceutical experts testifying Thursday said the price spikes reflect
broader price increases for generics, which have traditionally fallen
An analysis of 280 common generic drugs by Professor Stephen Schondelmeyer
found that roughly a third recorded prices increases in 2013. The University
of Minnesota researcher said those numbers show that generic price increases
are not limited to a few isolated cases.
"The markets are broken and we need to do something to fix it,"
he told the panel. "I think the government needs to step in and develop
and monitor solutions."
Dr. Aaron Kesselheim of Harvard Medical School recommended several new
government policies, including allowing the Food and Drug Administration
to accelerate the clearance of generic drugs for which there are few manufacturers.
He also said that federal officials should be notified of all drug price
increases greater than 100%. In previous cases where drug shortages have
led to price spikes, FDA has approved emergency imports of extra supplies
from foreign sources.
The lower prices of generic drugs make them the first choice for both patients
and insurers. Generic drugs account for roughly 85% of all medicines dispensed
in the U.S., according to IMS Health. Typically, generic drug prices fall
as more companies begin offering competing versions of the same drug.
But recent examples suggest the market forces that have kept generic prices
low are not working properly.
The average price of albuterol sulfate, a common asthma treatment, shot
from an average of $11 per bottle in October 2013 to $434 per bottle in
April, an increase of over 4,000%, according to the Healthcare Supply
Chain Association's calculations.
Thursday's hearing followed requests for congressional action by the
National Community Pharmacists Association, which says independent pharmacies
are being squeezed by the price hikes. In some cases, pharmacists are
losing money on drugs that are purchased at new sky-high prices but are
still reimbursed at the older, lower rates by pharmacy benefit managers.
"Community pharmacies are put in the untenable position of having
to absorb the difference between the large sums of money that they spent
to acquire the drugs and the lower amounts that they are paid," said
Rob Frankil, who testified on behalf of the pharmacist group.