The High Cost of Generic Health

Dec 27, 2002
George Anderson

By George Anderson

Pharmacy retailers and many others have been strong proponents of generics
as a means to lowering medical expenses for consumers and their own businesses.
The savings hoped for, however, may not be as a great as many anticipated as
the prices of generic drugs continue to climb.

The New York Times reports, “The average price of a generic prescription
drug rose 15 percent, to $14.70 from $12.79, from the corresponding period last
year, according to IMS Health, a pharmaceutical information company. Prices
of all brand-name drugs, including those with no generic competition, rose 8.8
percent, on average, to $77.02 from $70.79.”

There are two primary factors influencing generic drug pricing according to
the Times article.

  1. Drug manufacturers set prices higher when generics of previously patented
    medicines are introduced.

  2. Consolidation among generic drug manufacturing companies has reduced competition.

Moderartor’s Comment: Should the increase in the prices
of generic drugs concern retailers with pharmacies?

There is concern in some quarters that generic drug manufacturers,
wholesalers and pharmacy benefits managers are excessively profiting from the
current situation. The executive director of Families U.S.A., Ronald Pollack
told The New York Times, “Generic drugs provide a considerable economic benefit
to consumers. The benefit often turns out to be considerably less than it could
be.” [George
Anderson – Moderator

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