Unpacking Drug Price Spikes: Generics

In December 2013, seven generic equivalents were introduced for the branded antidepressant Cymbalta, which had just gone off patent. At that time, Cymbalta carried a price tag of $538 for a 30-day supply. Within a month that price dropped 27 percent, and the addition of four more generic equivalents slashed the price in half by the end of 2014. This is a perfect example of how the generic drug market is supposed to work, and often has worked since the 1984 launch of the Drug Price Competition and Patent Term Restoration Act, aka the Hatch-Waxman Amendments. Generic drugs were originally introduced as a means to safely reduce consumer and payer overall drug spend. Ideally, new generics enter the market and almost immediately provide competitive friction to drive prices down, as we saw with Cymbalta. With the average cost of a generic drug 80 to 85 percent lower than the brand name option, it’s an approach that has proven to be successful more often than not. But the reality is the generics market has been in turmoil—shortages, price spikes, quality issues, compounding abuses—since 2008. That year, 81 U.S. patients died when a Chinese manufacturer contaminated the blood thinner heparin with a counterfeit raw material. The resulting scrutiny, which included a series of congressional hearings, led the Food and Drug Administration (FDA) to implement much more stringent quality inspections in both finished goods and active pharmaceutical ingredient (API) facilities. J...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Drugs and Medical Technology Featured Payment Policy Quality Cymbalta FDA generic drugs Hatch-Waxman Act priority review Source Type: blogs