What Is Increasing the Cost of Generic Drugs? (Part I: The Supply Chain) | NCPA

Compared to spending on doctors and hospitals, prescription drug therapy is a bargain. Generic drugs are especially cheap; accounting for 88 percent of prescriptions filled but only 28 percent of expenditures. Within a year after a brand drug faces competition from generics, the average price falls 80 percent or more. Whereas the average cost of a name-brand prescription was $268 in 2011, it was only about $33 for a generic drug.  Intense competition usually holds generic drug prices in check. Oddly, during the past few years, many generic drugs that have been on the market for decades have suddenly become more expensive. The price of more than one-fourth of generic drugs rose 10 percent to 100 percent or more in 2014. In other cases, older generic drugs have become scarce and hard to procure. Some of the reasons for drug price increases fall within the supply chain — the path a drug follows from raw ingredients to the consumer — and are discussed below.

Source: What Is Increasing the Cost of Generic Drugs? (Part I: The Supply Chain) | NCPA

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