Why Have Generic Drug Prices Increased Two And Three Times Over The Last Year?

I used to have a firm policy— no drugs: grin and bear it. As I got older, my body laughed in my face. One of the drugs I take regularly now is Nystatin (oral suspension). Nystatin was discovered by two doctors working at the Division of Laboratories and Research of the New York State Department of Health; the “n-y-s” in Nystatin comes from that— and this drug hasn’t fallen into the avaricious hands of the big pharmaceutical predators. Although CVS sells it for $46/bottle and Walgreens charges $34, with my Medicare insurance I paid $2.55 yesterday. It varies slightly between $2 and $3 a bottle. I also picked up some Econazole Nitrate andf paid $55 for an 85 gram tube, which seemed gigantically high to me. When I got home, I saw that Target offers the same tube for $43.80 and Kroger for $47.40. You can buy it online for between $34.00 and $42.00 without issuance. That’s confusing.

Last week Bernie Sanders (I-VT) in the Senate and Elijah Cummings (D-MD) in the House announced they are launching a investigation into why prices of generic drugs have been soaring.

“We are conducting an investigation into the recent staggering price increases for generic drugs used to treat everything from common medical conditions to life-threatening illnesses,” Sanders, chairman of a Senate health care subcommittee, and Cummings, ranking member of the House oversight committee, wrote in letters to 14 pharmaceutical companies.

They pointed, for example, to the price hike for Albuterol Sulfate used to treat asthma and other lung conditions. The average cost for a bottle of 100 pills was $11 last October. The average charge by this April had shot up to $434. An antibiotic, Doxycycline Hyclate, cost $20 last October for a bottle of 500 tablets. By April, the price was $1,849.

The price data on those and other generic drugs came from the private Washington, D.C.-based Healthcare Supply Chain Association. It surveyed average prices paid by organizations that help hospitals, nursing homes and home health agencies negotiate with pharmaceutical companies and other vendors for discounts. The figures are akin to wholesale prices, not the amount patients are charged.

Cummings and Sanders cited a survey that found pharmacists across the country “have seen huge upswings in generic drug prices that are hurting patients” and having a “very significant” impact on pharmacists’ ability to continue serving patients. The study for the National Community Pharmacists Association also found some patients refused to fill needed prescriptions because of rising prices.

“It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs. Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescriptions to manage their health needs. We’ve got to get to the bottom of these enormous price increases,” Sanders said.

“Generic drugs have historically resulted in huge savings for consumers and for taxpayers,” said Cummings. “However, these outrageous recent cost increases are now preventing patients from getting the drugs they need, and they merit further investigation to better understand what factors are driving these price spikes.”

I’ve had some funky experiences with one drug maker, Dr. Reddy’s Laboratories and I asked my pharmacy to avoid ordering me anything they make. I noticed that they were one of the companies Sanders and Cummings wrote to. You can read the letter here, which singled out two generics they manufacture, Divalproex Sodium, which treats seizures, manic depression related to bipolar disorder, and epilepsy, and Pravastatin Sodium, which lowers cholesterol. As you can see from the chart below, over the last year the price has spiked from as low as $31 to $235, an increase of 736%. How does that happen— especially as an industry-wide trend?

Last week, the Wall Street Journal reported that “in some cases, price hikes exceeded 1,000% and even topped 17,000%.”

The reports added to growing concern about the increasing cost of prescription drugs, which has largely been confined to brand-name drugs— such as expensive new treatments for cancer, hepatitis C and certain rare diseases. A firestorm erupted earlier this year, for instance, over the Sovaldi treatment for hepatitis C that is sold by Gilead Sciences and costs $1,000 a pill, or $84,000 for a 12-week regimen.