The Food and Drug Administration (FDA) has approved a record number of generic drugs to go to market during President Donald Trump’s tenure, but drug pricing experts say it isn’t doing much to lower drug prices for consumers overall.
In an interview with Fox Business, Secretary of Health and Human Services Alex Azar said flooding the market with generics will force drugmakers to lower prices across the board.
“[Trump] said, approve these drugs because competition lowers prices,” Azar said. “We’ve had historic levels of [generic] drug approvals, almost 3,000 [in three years].”
But drugmakers are hiking drug prices higher than ever before, and even generic drugs are becoming increasingly expensive.
According to a report from CBS News, drugmakers raised the prices of 3,400 drugs by 17 percent during the first half of 2019, and the average price hike was 10.5 percent, which is five times the rate of inflation.
The Institute for Clinical and Economic Review (ICER) found that price hikes on just seven drugs — which averaged around 20 percent — cost Americans more than $5 billion a year.
According to 2019 research from the Generics and Biosimilars Initiative, generic drug prices increased by an average of more than 38 percent in 2014. However, generic drug prices tend not to increase as quickly as brand-name drugs.
The Office of Statewide Health Planning and Development (OSHPD) found that the wholesale acquisition cost (WAC) of generic drugs increased on average 31-154 percent over the last three years, while the WAC of brand-name drugs increased on average 23-37 percent.
This week, health insurer Humana sued 37 generic drug manufacturers, accusing them of “engaging in a far-reaching conspiracy” to “blatantly fix the price” of their drugs.
Robert Laszewski, president of Health Policy and Strategy Associates, told InsideSources that generics help lower prices somewhat, but aren’t a cure-all solution for lowering sky-high drug prices.
“If you increase the number of competitors, particularly generics, it’s going to have an impact on cost,” he said. “But approving generic drugs by itself is probably not enough because you’ve got these other cross-currents going on. When you bring generics to market, two things can happen, competition can bring down the prices of brand-name drugs and it can also bring down the cost of prescription drugs. The bigger impact is probably on the cost of pharmaceuticals, not necessarily the prices.”
For example, Pfizer’s drug Lipitor, which doctors prescribe to treat high cholesterol, is the third-most prescribed drug in the U.S. and competes with a variety of generics, but the price of Lipitor has only gone up over the years. Last year, Pfizer raised the price by almost 10 percent to more than $1,400 for 90 tablets.
“It’s had generic copies out there for many years, for $30 a month, and Lipitor is still up there at a very high price,” Laszewski said. “Even though it has generic competitors, the prices have not come down and the drug company has raised the prices.”
But more generics in the market is still a good thing, he added.
“It’s clearly good that the FDA is approving generic drugs at a faster clip,” Laszewski said. “That said, there are still issues with the drug industry raising prices on brand name drugs that have generic equivalents and raising prices on generics. We still haven’t brought this thing under control.”
In House Speaker Nancy Pelosi’s bill to bring down drug prices, there’s a provision to ease access for generic drugmakers to brand-name drugs so they can imitate them and bring their generic versions to market faster, which Laszewski said would help. The bill would also reimburse generic drugmakers 8 percent of the original brand-name drug’s average price, again to encourage generic drugmakers to bring more generics to market.
“There’s nothing wrong with the Democratic proposals, nothing wrong with the Trump administration approving generic drugs, these are all positive things,” Laszewski said. “But just having a generic equivalent on the street doesn’t mean the consumer is going to have a better price. There just isn’t an easy solution here.”