Generic drug prices rise, but may slow

April 23, 2015

While generic drug prices continue to rise, analysts say they may not continue their rapid growth rate.

While generic drug prices continue to rise, analysts say they may not continue their rapid growth rate.

Generic drug prices paid by retailers rose 4.7% in the fourth quarter, which was nearly in line with the 5.1% average price increase over the past 2 years, according to Sector & Sovereign Research, The Wall Street Journalreported.

In addition, Pembroke Consulting’s estimate found that the media increase in price during the first quarter of this year was 5.3%, according to the WSJ article. “This shows that generic drug prices have gone up and stayed high, but that the rate of increase is slowing,” Pembroke Consulting President Adam Fein told the WSJ.

The price hike may be slowing because payers and Congress are putting more of a spotlight on rising drug costs. In addition, the Office of the Inspector General of the U.S. Department of Health & Human Services plans to review price increases on the Medicaid drug rebate program, according to Fein.

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Plus, as FDA succeeds in working down the number of outstanding new drug applications, generic prices should decline, Fein said.

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Still, prices are up currently because generic drug makers that have charged little in the past increased prices toward the median for all drugs and generic drug makers that were already charging median prices, but not selling much product, also increased prices, Richard Evans with Sector & Sovereign Research, told WSJ.

“If inflation is explained largely by strapped generic manufacturers cooperating [on pricing], then it can’t last very long,” Evans wrote in a report. As manufacturers’ financial results improve, “the number of manufacturers required to cooperate is far too large for the cooperative spirit to remain stable.”

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