Last month, I noted that prices for some generic drugs have been rising to great heights, inexplicably, and that politicians are trying to find out why. Well, even though we don’t quite know why, politicians are considering very harmful legislation to put a stop to it.
Scott Gottlieb, MD, has prepared a sober analysis of the causes of these price hikes. Dr. Gottlieb notes that prices of most generic drugs remain low: Only about one third of generic drugs have experience price hikes, and only a very small number have experienced very large price hikes. Like me, Dr. Gottlieb suspects that the price hikes are associated with manufacturing problems caused by lack of ingredients or regulatory interference with production. This causes the number of competitors to shrink. Dr. Gottlieb also points to recent government action that will likely increase prices of generic drugs across the board, especially a new FDA labeling rule that exposes generic drug-makers to increased tort liability.