Generic-Pill Spending Dips in ‘Fierce’ U.S. Price War (Update3)
Dec. 10 (Bloomberg) -- American consumers and health
insurers saved about $1 billion on generic drugs this year as
“fierce” competition among drugmakers and pressure from
insurers lowered prices.
,
and other generic-drug makers fell 2.7 percent
to $33 billion in the 12 months ended in September, the biggest
decline in at least a decade, the health research firm
today. The average price manufacturers
charged wholesalers for the copycat pills fell 8 percent while
demand increased 5.4 percent, IMS said.
The surge in use was driven by a flood of new generic drugs
that entered the market this year after patents expired on
$16 billion worth of medicines. At the same time, insurers and
retail pharmacies are pressuring generics makers to cut prices as
they compete against each other. The trends are likely to
accelerate through 2012 as half the current 20 top-selling pills
get competition from generic copies, which can cost 70 percent
less than their brand-name counterparts.
“We are seeing a very significant intensification of price
competition among the generic competitors that has resulted in
this significant decline in the market,” said
,
senior vice president for health-care insight at IMS in a
telephone interview. “We haven’t seen this in the recent past.”
says he wants to expand health-
care coverage and reduce costs, partly by increasing the use of
generic drugs. Obama also wants to give Medicare, the U.S. health
program for the elderly, authority it now lacks to negotiate
prices with drugmakers, which Democrats in Congress say may lower
prices further.
antipsychotic
Risperdal, the world’s 11th best-selling medicine in 2007.
Patients have also been shifting to generics to save money during
the economic slump, Aitken said.
Brand-name and generic prescription spending accounted for
13 percent of the $2.1 trillion U.S. consumers and the government
spent on health care in 2006. Overall demand for prescription
drugs also keeps increasing because of the aging population and
rising obesity.
Sinking generic drug prices are contributing to a slowdown
in total spending on medicines. The U.S.
for
pharmaceuticals, including brand-name and generic drugs, is
projected to grow as little as 2 percent this year, the slowest
rate since 1961, according to IMS Health, based in Norwalk,
Connecticut.
Generic drugs are now 71 percent of all U.S. prescriptions,
up from 54 percent five years ago, IMS said.
Competing retailers are also driving down the generic-drug
price for consumers, said Frank Velez, an analyst for the U.S.
Bureau of Labor Statistics who tracks drug prices.
, the world’s largest retailer, two
years ago began selling prescriptions for more than 300 generic
drugs for $4 a month. Target Corp., the second-largest U.S.
discount retailer, and Safeway Inc., the third-largest U.S.
supermarket chain, later followed. Wal-Mart this year reduced the
price to $10 for a three-month supply.
Health insurers have also been pushing users toward generic
drugs. Insurers lowered co-payments on generics by an average of
53 percent over two years, to $5.95 in 2007, increased co-pays on
the top-tier of brand-name drugs by 8 percent to $40, according
to IMS.
that gives the first generic-maker to copy a
drug six months as the exclusive seller. The law also allowed the
Food and Drug Administration to approve generics without
requiring lengthy human tests to prove safety and effectiveness.
Patients taking brand-name drugs haven’t seen the same
savings. The prices for the most commonly prescribed patent-
protected drugs increased 7.4 percent last year, according to
AARP, the Washington-based group that says it represents people
older than 50. Brand-name drugmakers are hiking prices to staunch
their losses to generic competitors, the group said.
, based in New York, raised prices an average of
9 percent in 2007, led by a 17 percent increase for the
schizophrenia drug Geodon and a 12 percent boost for the
painkiller Celebrex, according to data complied by Bloomberg.
The price of specialty drugs, which include medicines
produced through biotechnology, increased 8.7 percent in 2007,
three times the rate of inflation, according to AARP. Members of
Congress have criticized biologics, as the biotechnology drugs
are often called, for their high prices.
Biologic drugs don’t face generic competition because U.S.
regulators have no legal authority to approve copies. Obama
supports making copies of biologic medicines available, and
Congress is expected to debate next year how to establish a
regulatory pathway to get the products on the market.
Last Updated: December 10, 2008 18:43 EST

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