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Don’t assume generic drugs are a good deal

Matt Rourke/AP/File

Generic drugs are supposed to save consumers a lot of money, and in most instances they do. According to the US Food and Drug Administration, a generic version of a prescription medicine is, on average, 80 to 85 percent cheaper than the brand-name equivalent. And, overall, generics prices have been falling while branded drugs keep getting more expensive. A recent AARP report found the retail cost of 280 popular generic medicines decreased by an average of 4 percent in 2013.

But puzzling increases in the price of some generics, punctuated by an uproar over the 5,000 percent rise in the cost of a 62-year-old pill to treat a parasitic infection, should serve as a consumer alert — don’t assume generic drugs are always a bargain. One example: A 100-pill bottle of albuterol sulfate, an asthma treatment, rose from $11 to $434 over just six months.

Such startling jumps highlight the need for the manufacturers of generics to be more forthcoming about how they price their products, especially since generics account for more than eight of every 10 prescriptions filled in the United States. The increases also beg for more investigation from outside the industry. Vermont senator and Democratic presidential candidate Bernie Sanders, along with Representative Elijah Cummings of Maryland, have been doing that for a while. So far, it appears to have been a frustrating exercise. As part of their investigation, Sanders and Cummings requested pricing data from more than a dozen generic-drug makers. None of them complied. In September, the legislators got more aggressive, by introducing a bill that would require Medicaid rebates on any generic-drug price increases that exceed the rate of inflation. The law also would outright ban so-called “pay-for-delay” deals. Under those arrangements, which have been challenged by the Federal Trade Commission, a drug company essentially pays a generic manufacturer to keep a discounted version of a medicine off the market.

Adding to the argument for greater transparency, the seemingly random increases are something of a mystery even to those who study drug pricing. “We really don’t know much about the generic industry,” said Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development. Some of the price hikes are “in many respects inexplicable,” he said. But Kaitin does have some ideas. He cites several possible reasons for higher prices, including “dramatic” industry consolidation that has reduced competition among generics makers; increased FDA scrutiny of manufacturing quality, which has led to shutdowns and supply shortages; and the enduring popularity of pay-for-delay.

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“Consumers are kind of stuck,” said Aaron Kesselheim, who conducts research on drug prices at Harvard’s T.H. Chan School of Public Health, When a generic treatment’s price skyrockets, he said, patients should “get in touch with their physician and try to figure out an alternative as quickly as possible.”

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Predictably, the Generic Pharmaceutical Association opposes the Sanders-Cummings bill, citing data that stress the relative affordability of generics compared with brand-name treatments. “Rather than targeting one of the few industries that has demonstrated success saving people billions of dollars, GPhA welcomes a constructive discussion on what can be done to keep prescription drugs affordable while balancing innovation and competition,” the group’s chief executive, Chip Davis, said in a statement.

But with $47.5 billion worth of name-brand drugs expected to lose their patent protection by the end of 2015 — and as patients pay more out-of-pocket every year — past savings on generics offer no assurance of reasonable prices in the future.