Market Entry of Generic Versions Reduces Prices
The market entry of at least two generic versions of a medication can reduce the price of the treatment by almost half compared with the price of the brand-name version, according to an FDA analysis released on Tuesday, the AP/Seattle Times reports.
For the analysis, FDA examined retail data from 1999 to 2004 on single-ingredient medications collected by IMS Health. According to the analysis, the market entry of one generic version of a medication can reduce the price of the treatment by 6% compared with the price of the brand-name version, and the market entry of a second generic version can reduce the price by 48% (AP/Seattle Times, 4/4).
In addition, the market entry of nine generic versions of a medication can reduce the price of the treatment by 80% compared with the price of the brand-name version, the analysis finds.
"It's purely the economics of supply and demand," Ivan Feinseth, director of research at Matrix USA, said, adding, "All it takes is one competitor to have a price war."
FDA recently has received criticism from lawmakers over concerns that a backlog of more than 800 applications for generic medications has led to higher prices for consumers (Bloomberg/Los Angels Times, 4/5).