HHS’ OIG Finds Many Generic Drug Price Increases Outpaced Inflation
Prices for 22% of the most popular generic drugs rose faster than inflation between 2005 and 2014, according to a report released Thursday by HHS' Office of Inspector General, Modern Healthcare reports.
The report was conducted in response to congressional investigations into recent increases in generic drug prices and the effect such prices have on Medicaid and Medicare drug spending.
According to Modern Healthcare, drugmakers must pay additional rebates to Medicaid when the price of brand-name drugs increase at a rate faster than inflation. The report found that if the 200 most-prescribed generic drugs had been subject to the same rebate requirements, Medicaid could have received $1.4 billion in rebates for the generic medications.
OIG did not make any recommendations in the report, but the agency noted that a budget agreement (HR 1314) passed by Congress earlier this year would extend such rebates to generic drugs beginning in 2017.
Erin Fox, director of drug information at the University of Utah Health Care's Drug Information Service, said applying the rebates to generic drugs could force drugmakers to rein in prices so they can avoid paying the rebates. However, Fox said drugmakers also could boost prices to compensate for the rebates.
John Rother, president and CEO of the National Coalition on Health Care, said the report reflects an ongoing problem in the generic drug industry. Still, Rother cited increasing brand-name drug prices as the larger issue.
Meanwhile, Dana Goldman, director of the University of Southern California's Schaeffer Center for Health Policy and Economics, said that competitors could be forced out of the market if rebates cut too much into generic drugmakers' profits, which could allow single suppliers to significantly increase generic drug prices.Further, Goldman said the report's findings demonstrate that the generic drug market is already working well. He noted, "You could say for 80% of the drugs, the price competition is quite thorough and robust" (Schencker, Modern Healthcare, 12/17). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.