As competition among generic drugs decreases, prices go up. That is the conclusion of researchers who studied the prices of more than 1,000 generic drugs between 2008 and 2013. Generic drugs were divided into four groups: those with high levels of competition, with moderate levels of competition, a near monopoly, and monopoly. For the drugs with a high level of competition, prices dropped significantly (-31.7%), while moderate competition led to a 11.8% drop in prices. However, a near monopoly resulted in a 20.1% increase in price, while a monopoly resulted in a 47.4% price increase. The authors concluded that market competition levels are associated with a change in generic drug prices. (Ann Intern Med 2017 Jul 4. doi: 10.7326/M16-1432. [Epub ahead of print])
High-profile cases of companies raising generic prices include Turing’s acquisition of pyrimethamine (Daraprim) in 2015, and a subsequent price increase from $13.50 per pill to about $750 per pill (a 5,000% increase). Increasingly, generic manufacturers are merging (such as Teva merging with Allergan), which may reduce levels of competition and drive generic prices higher for consumers.