Increase in Generic Drug Prices

Dr. Einterz said something that really resonated with me last Monday. He said that even his practice at Eskenazi Health impacted global health. Global health is, of course, a global issue. What happens in the United States also affects what happens in other countries. Successful changes to our health care system may also be implemented abroad. Changes to the pharmaceutical industry in the United States impact the pharmaceutical industry of the entire world. This is especially true due to the fact that the United States manufactures and consumes the majority of the pharmaceuticals of the world. The power of the pharmaceutical industry in the United States is exemplified in the article on transnational corporations we read in class.

Recently, an article in the New York Times addressed the rising cost of generic drugs:

http://www.nytimes.com/2014/10/08/business/officials-question-the-rising-costs-of-generic-drugs.html?_r=0

It explains that in the last year, generic drug prices have increased over 1000%. Because of this, federal officials are investigating why. The increase in drug prices means that more taxpayer money is being spent on Medicare and Medicaid. The article mentions that one example of this is doxycycline, an antibiotic that has been used for many years. It has increased from $20 to $1849 for a bottle of 500 pills. There are many reasons why this may have occurred. One reason is that the one of the ingredients may be in short supply, so it costs the drug company more to make the medicine. Another reason is that other companies who had been making the drug stopped. This would have decreased competition, allowing pharmaceutical companies to charge however much they wanted for the essential medication.

The article also mentions a questionable business practice called “pay for delay.” This is where brand name manufacturers pay generic manufacturers to keep the generic drug off the market longer so that they may extend their time of exclusivity. When I interned at Perrigo, a generic manufacturer, they explained to me the importance of being “first to file.” This is an incentive to be the quickest generic manufacturer to file for approval by the FDA for a new generic drug. They race to be “first to file” with other generic manufacturers in order to gain exclusive marketing rights for the first year. This is a huge incentive for pharmaceutical generic drug manufacturers to get their drugs onto market. They begin working on the generic drug right when a brand drug enters the market.

There are also laws in place for generic drug manufacturers to charge the lowest price to the government. If they do not, they owe the government however much extra they charged the government in cash. While this law may help reduce the number of health care dollars spent on Medicare and Medicaid, it is not enough. There should be more laws in place to keep generic drug manufacturers from participating in business practices such as “pay for delay.” “Pay for delay” would be an example of how neo-liberalism can provide a disincentive to innovation. Laws must be in place to address situations where neo-liberalism fails.