Drug Prices Aren't Falling Despite More Generics, Report Finds

(Bloomberg) -- More generic drugs are being approved in the U.S., but those copycat treatments likely aren’t having a big impact on prices, according to a new report.

  • Many Food and Drug Administration approvals were for medicines that already had generic rivals, making the effect on prices less pronounced than when a brand-name drug first faces competition, according to the study by the Pew Charitable Trusts.

Key Insights

  • FDA Commissioner Scott Gottlieb has touted a brisk pace of generic approvals as a way to lower drug prices. “FDA had an all-time record number of generic drug approvals in 2017 at 1,027 -- bringing more low cost, high quality competition to the market and promoting access,” he tweeted in January 2018.
  • The Pew report, released Monday, found that the FDA approved 2,700 generic drugs from fiscal 2013 through fiscal 2017, up almost 17 percent from the previous five years.
  • “The increase in approved drugs was largely driven by approvals of the fourth, fifth, sixth and even later versions of generics,” Pew’s report said. “Costs generally decline most significantly once second and third generics enter the market, but versions after the third generic usually reduce prices less effectively.”

Know More

  • Top drug executives are set to appear at a Senate panel hearing on drug prices on Tuesday. Pew recommended Congress look beyond the FDA to bring prices down via generics, including addressing barriers that inhibit generic-drug development.
  • Gottlieb has said the agency would prioritize approving new versions of drugs with fewer than three generic options.
  • Read the full report

©2019 Bloomberg L.P.