Generic Prescription Drug Prices Increased by 3.7% in 2004, Pharmacy Group Says
Prices for generic prescription drugs increased by 3.7% in 2004 and by 1.7% in the first three months of 2005, according to the National Association of Chain Drug Stores, USA Today reports. The increases are "far below the double-digit gains of earlier years," and a 12% rise in prices for brand-name drugs in 2004, according to USA Today.
In addition, the proportion of generic drugs used to fill prescriptions has increased, with 56% of prescriptions in 2004 filled with generics, compared with 49% in 2000, according to IMS Health.
Greater competition in the generic market -- stemming in part from a growing number of generic drug makers -- is the main reason why prices are not increasing as rapidly as in previous years, USA Today reports. Another reason for the rise in competition is that brand-name companies are launching more generics in order to retain revenue as patents expire, according to Adam Greene, an analyst at First Albany Capital. Foreign companies also are contributing to increased competition in the generic drug market.
Herman Saftlas, an analyst at Standard & Poor's, said, "Everybody is chasing the same opportunities. All you can do is compete on price" (Schmit, USA Today, 6/27).