What could be done to lower the cost of expensive generic drugs

I’m mostly asking about generics within the US market, drugs that have recouped the cost of initial investment and that are not priced high to recoup initial development and testing.

  1. Make it easier for competitors to enter the market. Full size producers, compounding pharmacies etc. I think it costs seven figures to set up facilities to produce a generic drug. During the daraprim scandal, a compounding pharmacy said they could sell it at a profit for $1 a pill while pharambro wanted $750 a pill (the drug costs a nickel a pill overseas). Reduce initial capital costs for a new competitor to enter the generic market.

  2. Make it easier (or hell, even legal) for individuals in the US to import drugs from overseas.

  3. Pass government laws to keep generic prices reasonable. what this would entail, I do not know.

It seems like point one and two should fix the issue. Anything else?

I doubt the government does anything, but shouldn’t points one and two mostly fix the issue?

I think 1 and 2 are part of the same idea.

Fair enough, yes. However 1 is for domestic competition, 2 is for international competition. So the methods would be different (for method 2 all you have to do it stop making it illegal to buy drugs from overseas suppliers).

But both increase competition to drive down prices.

Not sure I understand … if a company patents a drug, only they can manufacture it until the patent expires. Once the patent expires then anybody can produce it. Once everybody is allowed to produce it, theoretically you will see the lowest price possible for that drug. I imagine we couldn’t lower that price any further without compromising safety or purity standards.

I’m pretty sure it is legal to import drugs from overseas, as long as the overseas manufacturer meets US safety and purity standards, although granted it is not “easy” to do.

The problem with gobbermint price controls is that if they are set to low, and the maker doesn’t make a profit … then no one will manufacture the drug. I don’t think that’s the solution you’re looking for.

I’ve heard talk about shortening the patent protection time, allowing generics to hit the market earlier … but again that’s not the solution you’re looking for.

One solution to this problem is to require new drugs to be evaluated on how effective they are. As I understand, today they need only be shown to be effective, without comparing to existing drugs for the same ailment.

As a hypothetical, drug company has a new, profitable drug to treat some ailment ABC that’s been proven to be effective. Through a massive advertising campaign they convince the general public they should use this new drug for ABC. May well turn out the generic drug that’s been around for 50 years at a hundredth the price is actually more effective. However, the general public is convinced so no one will use the old drug, so no one will make it. Those few that do will charge an arm and a leg.

So … require new expensive drugs to be better than the old cheap ones …

Yes, but the OP is about generic drugs.

Anyone can produce it, but you need approval to sell it. And we’re seeing prices of some generic drugs 100x what people pay for them in other countries. Perhaps you’ve seen epinephrine autoinjectors (EpiPen) and pyrimethamine (Daraprim) in the news?
Getting approval isn’t easy. We’re talking an average of four years for approval, and FDA has a backlog a few thousand deep. Compared to a backlog of 24 and an average approval of one year in Europe.

What does this have to do with the price of generic drugs?

World’s best practice in this field comes from Australia’s Pharmaceutical Benefits Scheme(PBS).

Of course it’s a key component of the socialised medical scheme here (Medicare) which the US have an inordinate difficulty coming to grips with.

Medicines are evaluated by an expert panel, selects those which represent efficacy, safety and cost effectiveness in comparison to equivalent therapies and these are provided through the PBS at subsidised prices.

The PBS doesn’t work for the maximum benefit of Big Pharma, but then they aren’t working for the maximum benefit of us either.

I was in France when my SO became ill, a Dr visit + 3 prescription drugs cost less than $100, a specialist and 2 additional prescription drugs jsut topped the $100 mark (euro corrected)

I don’t believe the high prices are anything except the US system for unrestrained greed.

Unless you tell us the drugs in question, it’s impossible to evaluate your belief.

It is illegal for US citizens to import drugs from overseas. The government doesn’t really penalize it though just as long as you are importing non-scheduled drugs for personal use. But it is illegal.

As far as generic manufacturers, there is a lot of red tape. Like I said in my OP, it can cost over a million dollars to get permission to manufacture a generic, and then there are all the equipment costs.

The drugs whose prices have skyrocketed are supposedly generics that have a small market. Drugs like that do not invite many competitors because there isn’t enough market to justify new suppliers entering the field.

FWIW, a pair of epipens is $85 in France and $600 in the US. France spends almost 12% of GDP on health care, the US spends 18%. Daraprim costs $750 a pill here, it is a dime or less in places like India or Brazil.

Ironically, France is one of the most expensive OECD nations. The US is far and away the most expensive, but other than the US France is pretty high cost too compared to some neighbors.


Mark Dayton, while a US Senator from Minnesota, donated his salary to fund “Rx Express” bus trips for Minnesota seniors into Canada to buy prescription drugs, and bring them back into the US.

The US Customs & FDA once stopped one of these buses on the way back, and insoected the occupants. But they did not confiscate the prescription drugs they were importing, and the agency eventually wrote a letter apologizing for this action.
P.S. Nearly 20 years later, seniors have never forgotten this action by Mark Dayton, and continue to vote for him in large numbers. Their votes helped him win the Primary over the endorsed Democratic candidate, and they have voted for him in subsequent elections.

Blaming high prices on greed is like blaming plane crashes on gravity, technically correct but not helpful.
Generally the reason drug prices are high is that it is illegal for companies to sell alternatives, leaving one company with a monopoly. In the recent Epipen kerfuffle the facts were that several companies had spent millions trying to get an alternative approved but so far no one has been able to get one past the FDA. On the other hand europe has approved several alternatives and as a result their prices are a fraction of what the US is charged for Epipens.
One solution that would work for many drugs is for the US to recognize European drug approvals so that if a drug is legal to be sold in Europe it is presumed to be safe and can be legally sold in the US. This would bring costs down on drugs that have European alternatives and save many lives because of the new treatments.

No, this is generally NOT true. Yes, this is the issue with drugs still under patent (eg. Solvadi), but that is the expectation despite a few clear abuses of these government granted monopolies. The issue that has come up more recently is that GENERIC drugs are becoming expensive as well.

Again, that’s only part of the issue. Epinephrine, the drug the Epipen delivers, is really cheap. There are already cheaper ways to deliver this drug. For example, a syringe or other devices like Adrenaclick which is about 1/4 the price of Epipen. Yes, some companies with generics were denied, but we have no idea why, so it’s hard to speculate it’s a current problem with the FDA.

Even granting that the FDA is highly imperfect, you are ignoring the obvious market incentives here. Generics became more expensive because investors saw an opportunity to make money, and lax regulation and legal bribery makes it easy to exploit the public. It’s legal to pay doctors to essentially prescribe a given drug rather than it’s cheaper alternative. It’s legal for one drug maker to buy another that might think of undercutting their price on a drug they make. It’s still probably legal to pay a competitor to delay manufacturing a generic rival drug. It’s legal to make the price of your drug as opaque as possible. It’s legal to pay pharmacy benefit managers and others along the supply chain to ensure you sell lots of your drug. The list goes on.

It’s also commonsense that ever smaller number of drug makers realize that a small market is often not worth entering into. This is why small, rural areas have fewer phone, cable, and internet providers, and why those providers can essentially charge what the market will bear. Daraprim is a case-study in that dynamic. There used to be multiple producers, then they slowly consolidated, or stopped making the drug because it’s not worth their time. Then the remaining company can jack up the price until they can’t (eg. public outrage, government intervention, or competition). The issue is though that a competitor has little reason to enter or re-enter given they know the collective market value cannot hold, and they are competing against an entrenched competitor with a tightly controlled supply chain who will fight dirty to maintain their effective monopoly. Why spend millions to make a medicine for pennies on the pill and a low volume?

Greed is a perfectly fine synopsis here. And it’s not just drug makers. In the Epipen example, we saw the following.

Everyone has their hand in the pot, and the main reason is because they can.

That might help some, but cost controls and collective bargaining has been more helpful.

I could cook up some Daraprim this afternoon. Is it legal for me to sell it tonight?

Good old price elasticity; it depends on the idea of substitutes that consumers can opt for if prices are too high.

If there’s no substitute, and the demand is inflexible, then the situation is ripe for the supplier to jack the price up through the ceiling- you HAVE to have the daraprim, and there’s no substitute medication.

The flip side is say… OTC pain meds- you have multiple substitute drugs, and both brand-name and generic variants of each. This tends to keep prices fairly low- barring some medical reason, most people aren’t going to spend 3x the amount for ibuprofen over aspirin, acetaminophen or naproxen- they’ll just buy one of the others and make do, since they’re substantially interchangeable for simple pain relief purposes.

If there was a similar alternative to the Daraprim (i.e a generic), there wouldn’t be any way that the makers could effectively jack up the price like they did; doctors would merely prescribe the other in most cases, and the mfgr would have to drop the price to be competitive again.

Is anyone suggesting no regulation at all including home brew pharmacies? If not, then what is your point

You wrote that it’s not illegal for companies to sell alternatives. But I can’t sell it tonight. I have a company.

It is legal to make generic drugs, but they still need to be approved by the FDA. A company with no FDA approved generic competitors has just as much of a monopoly as a company with a patent on a drug. In the US Epipen has one competitor in europe they have eight competitors and of course Europe has cheaper Epipens. Companies have been trying to sell generic Epipens for at least 7 years but no one has been able to get it through the FDA. The FDA currently has 4,036 generic drugs awaiting approval and the average wait time is almost 4 years. In contrast the EU’s drug agency has 24 generics awaiting approval. It seems very clear that the problem is the FDA.
There is plenty of money to be made in generics for small populations as long as the burden to service that market is not too great. Most drugs are cheap to manufacture and the real cost is in creating the drugs and getting them approved. Generics don’t have to create the drugs and if approval was cheap there would be a profitable market for almost any drug. The only reason Daraprim’s strategy worked is that it is so hard to get approval to sell a drug. If it were easy to get a drug approved then trying to corner the market in any particular drug would be pointless.

Three companies (Teva, Adamis and Sanofi) tried to make an epi pen competitor and failed. Two didn’t get FDA approval and one was recalled when it failed. Anyone reading this thread is welcome to take a stab (see what I did there?) at it if they think there is a way to do it.

I think the solution is that the process of drug approval needs to be streamlined and made less expensive; there would be at least one of those companies devices on the market as an alternative if the process was simplified a bit. Of course, the general public will have to accept that this may come at a sacrifice of safety to some extent.