HHS Report: High Prices on Orphan Generics Have Little Impact on Overall Drug Market

Sharp price spikes for some orphan generics may be getting all of the attention today, but they have little real impact on overall prescription drug prices.

Evidence “strongly supports the conclusion that generic drug prices are not an important part of the drug cost problem facing the nation,” a HHS report issued Jan. 28 states.

This finding runs counter to public sentiment, which has inspired multiple congressional hearings on allegedly abusive pricing practices.

Public anger over rising drug prices for orphan generic drugs peaked in the early fall, when Turing Pharmaceuticals raised the price of Daraprim 5,000 percent and when Valeant Pharmaceuticals hiked the prices for Isuprel and Nitropress 500 percent and 200 percent, respectively.

The 15-page report concludes that — despite public fears — the overall generics market is “quite competitive,” and has been driving down the costs of prescription drugs, acting to “partially offset large increases in prices for brand drugs.”

HHS drew its conclusions from data culled from the Bureau of Labor Statistics, the PBM Express Scripts, the IMS Institute for Healthcare Informatics, CMS, AARP and others.

Drawing on Express Scripts’ internal prescription price indices, HHS notes that generic drug prices in 2014 dropped by 20 percent while branded prescription prices climbed 15.4 percent. The report adds that if the two categories were charted on a $100 baseline price between 2008 and 2014, generics overall would have dropped to $37.13 while branded drugs overall have risen to $227.39.

The report also uses Medicaid data to show that — despite the very large price swings in certain niche orphan drug markets — “the impact on overall Medicaid prescription drug expenditures is relatively small.” As an example, the report notes that acquisition costs for the skin infection drug tetracycline rose more than 17,000 percent between 2013 and 2014, but still represents only 0.001 percent of Medicaid prescription drug spending.

For those niche markets affected by these price spikes, HHS says that such moves “disadvantage particular patient groups” in troubling ways. It attributes much of this to a lack of competition in such markets, explaining that “demand for some drugs can be quite insensitive to price if users do not have very good alternatives from both clinical and economic perspectives.”

And because such markets “tend to attract fewer competitors,” there will continue to be an “increased risk for extreme price increases.”

Read the report here: www.fdanews.com/01-29-16-Report.pdf. — Cameron Ayers


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