The generic drug marketplace continues to experience high levels of fluctuation. This fluctuation and the associated rate of generic price increases appear to be accelerating. It’s not going unnoticed.2 Health plans, pharmacy benefit managers (PBMs), media outlets, the Food and Drug Administration (FDA), members and even the federal government are closely monitoring the situation.
The antibiotic doxycycline hyclate (a bottle of 500, 100 mg tablets) increased in price 8,281 percent, from $20 to $1,894, from October 2013 to April 2014.3
Financial pressures are shrinking the manufacturing industry
The rate of brand-name drug patent expirations is slowing, and there are fewer brand drugs being approved.4 Generic drug opportunity is also limited as generic drug fill rates approach 85 to 90 percent. Generic drug manufacturers’ struggle to sustain growth appears to be pushing some drug makers to remove underperforming products from the market.
Mergers and acquisitions appear to be reducing competition — and creating consolidation among generic drug manufacturers. This contributes to changes in the competitive landscape and fewer competing sources of generic drugs.1
FDA challenges — slow approval of new generics continues
The rate of FDA approvals continues to slow. The backlog of drugs awaiting approval grows. The backlog at the FDA has grown from 2,866 files in 2012 to roughly 4,000 in 2014. The FDA has made significant efforts to address this, but this backlog will continue to grow for the near future.5
For years, the FDA declared that its premarket testing requirements had enough integrity to show that generics work as well as the brand-name drugs they seek to replace. But in 2012, after years of complaints, the FDA admitted that some strengths of the generic Wellbutrin XL® weren't therapeutically equivalent. Some generic drug companies were then forced to pull their products for retesting. Congress has since approved the Generic Drug User Fee Act and set aside $20 million to expand FDA testing of generic medicines.6
Drug shortages continue
Drug shortages can occur for many reasons: lack of raw materials, suppliers may exit the market if profit margins are low, or manufacturing glitches can cause supply disruptions. FDA crackdowns on plants with production lapses have also been blamed for shortages.7
The number of drugs in short supply in the United States has risen 74 percent from five years ago, to about 265, according to the University of Utah’s Drug Information Service.8
Working together to keep medicine affordable for all
Blue Cross and Prime work to help employers and employees manage drug costs. We continue to evaluate strategies to manage costs during the rapid rise of generic drug prices. In addition, we are working with other stakeholders to encourage the FDA to approve new generic drug applications more quickly. Reducing the backlog of drugs awaiting approval will boost competition and help to bring down prices.
Next story: First biosimilar in the United States launches
1. “Why are some generic prices rising?” Smart Retailing Rx: Insights for Better Pharmacy Health. 1/7/14. Accessed at: http://smartretailingrx.com/pharmacy-operations/generics-prices-rising/
2. “Blues Plans Can Use Various Tactics to Mitigate Generic Drug Price Inflation.” The AIS Report on Blue Cross and Blue Shield Plans. Volume 14, Number 7. July 2015.
3. “Ranking Member Cummings and Chairman Sanders Investigate Staggering Price Increases for Generic Drugs” Accessed at: http://www.sanders.senate.gov/download/face-sheet-on-generic-drug-price-increases?inline=file
4.. IMS Institute for Healthcare Informatics. The Global Use of Medicines: Outlook Through 2016. July 2012.
5. Fein, Adam. “Retail Generic Drug Inflation Eases, but the FDA Keeps Prices High.” Drug Channels. April 2015. Accessed at: http://www.drugchannels.net/2015/04/retail-generic-drug-inflation-eases-but.html
6. FDA Boosts Testing of Generic Drugs As Quality Concerns Mount. By Jonathan Block. February 27, 2014. © 2005 - 2015 Healthline Networks, Inc. Accessed at: http://www.healthline.com/health-news/fda-boots-generic-drug-testing-022714
7. Ed Silverman: “How Much? Some generic drug prices are skyrocketing: Analysis.” Aug 14, 2014. Pharmalot. Dow Jones & Company Inc. Accessed at: http://blogs.wsj.com/pharmalot/2014/08/14/how-much-some-generic-drug-prices-are-skyrocketing-analysis/
8. Loftus, Peter. “U.S. Drug Shortages Frustrate Doctors, Patients.” Wall Street Journal. 31 May 2015. Accessed at: http://www.wsj.com/articles/u-s-drug-shortages-frustrate-doctors-patients-1433125793