A federal investigation has been launched amid a new bill presented to a Senate subcommittee that calls for an explanation in rising generic drug costs. Senator Bernie Sanders (I-Vt.) is chairman of the senate subcommittee and notes, “more than one in four American’s do not fill their prescriptions because they cannot afford the cost”.
About 1 in 10 generic drugs have seen their prices double or more from July 2013 to July 2014. In that same period, more than 1,215 generic drugs increased in price by 448%. This increase in price can be attributed in part to a loophole in current policy that does not penalize generic drug companies for increasing prices faster than the inflation rate. Brand name drug companies currently provide rebates to Medicaid if the price increases in such a manner. The committee aims to close this loophole.
Speculation has arisen that costs of doing business are higher for drug companies. Sen. Richard Burr (R-N.C.) opposes the bill and claims Obamacare is responsible for higher regulatory burdens on drug companies, and thusly for the increase in costs. Others claim that the invisible hand of the market has not yet had the chance to stabilize prices.
While some of these factors may explain small price increases, Stephen Schondelmeyer, PharmD, PhD, professor and director of the PRIME Institute at the University of Minnesota College of Pharmacy in Minneapolis posits that the markets are indeed faulted an cannot attribute the increases to the aforementioned factors solely. For this reason, he calls for more government regulation of generic drug prices.