Generic Drugs Pressure Prices

Photograph by Joe Raedle/Getty Images

An elderly man reaches for a medicine bottle as he takes his prescription pills in Florida.

In recent days, the Supreme Court, regulators and members of the Senate have railed against flaws in the health-care market and the high cost of drugs.

Maybe the system is beginning to fix itself. Americans actually spent less on medicine last month, the Labor Department reported today. Drug costs fell 0.7 percent in May, the biggest one-month drop on record, driven by reduced outlays on prescriptions, which fell by the most since 2006.

Generic drug makers, who have touted the consumer benefits of their industry for more than a decade, claim some of the credit. The rise of generics, which began with a 1984 law easing market access and is accelerating as patents expire on blockbuster brands, saved consumers $1 trillion in the past decade, according to a 2012 report from the Washington-based Generic Pharmaceutical Association. The Affordable Care Act, when implemented, may lower costs even further, the group predicts.

“I’m reminded of the old adage `If it ain’t broke, don’t fix it,”’ association CEO Ralph Neas said in an interview. “When something is working extraordinarily well, do everything possible to sustain it.”

Total U.S. spending on prescription medicines fell last year on a real, per-capita basis for the first time since 1957, the IMS Institute for Healthcare Informatics reported last month. Expiring patents contributed $28.9 billion to that reduction, a record, the research group found..

Still, prescription expenditures have skyrocketed over time as drugs command a bigger share of health-care spending.

And regulators and policy makers continue to find problems in the market. This week, the Supreme Court said regulators, retailers, insurers and others could sue brand-name drug makers that pay generic rivals to put off sending their lower-cost drugs to market. Such pay-for-delay contracts cost consumers as much as $3.5 billion a year, according to the Federal Trade Commission.

Senate Finance Committee Chairman Max Baucus, in a hearing today, drew attention to consolidation among health-care providers and the opacity of medical bills, which makes it difficult for patients to shop for lower-priced care.

“Some hospitals I’ve seen are pretty fancy,” Baucus said. “They have fountains. They’re Taj Mahals. And I wonder why.”

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