Generic Drugs Case Study

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Soaring price of generic drugs: Depriving consumers from better healthcare
Generic drugs prices are rising exponentially with every passing year. Generic drugs are regarded as a boon to mankind not only because they are comparable to their brand counterparts in terms of quality, safety and efficacy but also because they are affordable by all the people irrespective of their financial class. A survey revealed that generic drugs have saved US patient’s 1.3 trillion dollar in past decade. But with soaring price of generic drugs it’s getting difficult for consumers (especially lower class families) to meet their health care needs. Hence, it becomes very important to look into the reasons for the rise in price of generic drugs which is depriving
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Clobetasol a skin cream from $0.26 per gram in 2013 to $4.15 in 2015.

Root cause of soaring price of generic drugs
1. Consolidations within pharmaceutical industries: This is one of the biggest root causes of soaring prices of generic drugs. It is for this that when companies stop making drugs or when drug makers merge, the competition in market goes down. It happens like when 4 companies producing same generic drug merge into a single brand hence getting the monopoly power to market the drug at their price. As a result of which the consumers are bound to buy the drugs at expensive price.

2. Price Regulation: This is one of the other major causes of price rise. For instance in country like USA there is no price regulation on medicines. It’s a kind of free market where there is no concept of maximum or minimum price. As a result of which the generic manufacturers get the chance to raise the price of drug whenever they want.

3. Shortage of raw materials: Raw material shortage also drives the high price of generic drugs. This happens because of lack of transparency throughout the supply chain. Hence, when manufacturers do not get supply of raw material on time they look for alternative suppliers in emergency and to get the same raw material they need to pay high price to suppliers which directly affect the cost of
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The physicians should be asked to recommend the cheapest medicines to the patients available in market for the given disease, if it’s mechanism of action and effectiveness is similar to the available costly medicine.

3. New generic companies coming up with low price and good quality of drug that are already available in market at high price should be given support from government which in turn not only open the business for them but will also help the consumers to get medicine at lower price. This will in turn boost more generic companies to come up with good quality and cheap price drugs which certainly will bring competition in market and a significant reduction in price can be achieved.

4. Last but not the least all API manufacturers should be strictly warned to keep transparency in the supply of API. For same a tracking department should be set up within API manufactures premises and in companies receiving API’s. This will probably never let raw materials shortage for the company hence the production cost will be controlled so does the market

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