Lawmakers Should Ask the FDA, Not the Manufacturers, Why Generic Drug Prices are Skyrocketing

U.S. Representative Elijah Cummings and U.S. Senator Bernie Sanders have asked 14 manufacturers of generic drugs why prices for some of their products have multiplied hundreds or thousands of times in the last few years:

  • Albuterol Sulfate, used to treat asthma and other lung conditions, increased 4,014% for a bottle of 100 2 mg tablets.
  • Doxycycline Hyclate, an antibiotic used to treat a variety of infections, increased 8,281% for a bottle of 500 100 mg tablets.
  • Glycopyrrolate, used to prevent irregular heartbeats during surgery, increased 2,728% for a box of 10 0.2 mg/mL, 20 mL vials.

It’s a fair question, but it does not look like the line of inquiry is on the right track:

But there has been increasing concern that, in some cases, prices rise because of questionable business practices or market manipulation. In the last several years, the Federal Trade Commission and state attorneys general have taken aim at a practice called “pay for delay,” in which brand manufacturers pay generic drug makers to hold off entering the market.

Whether that is actually a bad thing, I’ll leave for another day. (It may be an efficient way to resolve patent disputes.) It cannot be an explanation for that which is described here. “Pay for delay” happens before a drug’s patent expires. These price hikes happen long after the

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generic market is established. If the manufacturers are engaged in dubious price manipulation in 2014, why weren’t they also doing it in 2012? A more likely explanation is that the FDA has driven competitors out of the market by over regulation of manufacturing facilities. I have previously identified this as the major factor in shortages of generic drugs for injection, and it would not surprise me to learn that the same development has emerged in manufacturing generic tablets.

Comments (6)

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  1. Patrick Evenson says:

    “the FDA has driven competitors out of the market by over regulation of manufacturing facilities.” Not to mention robust M&A activity in the industry to the same effect.

  2. bob hertz says:

    Thanks for the post.

    Do the massive price increases “stick”? Are there any other generic manufacturers ready to come in behind the price gougers and take business away from them?

    If not, maybe these so-called generics are really monopolies by now.

    And at long last, we should invoke anti-trust laws to control them.

    • John R. Graham says:

      I wrote about this in my study of generic drugs for injection. In those cases, the shortages do not “stick”. They last a few months until a new manufacturer can get a line approved.

  3. Barry Carol says:

    If there are more than three or four manufacturers of a specific generic drug, that should be sufficient to ensure adequate price competition. How many competitors are there making the drugs that have increased in price so drastically?

    • John R. Graham says:

      Yes, there should. However, my previous research on generic drugs for injection indicated that supply can depend on a single supplier for a significant period if a manufacturing line goes down.