JAMA: Less than 3 generic rivals could lead to rising drug prices

CHICAGO - According to a recent study published in JAMA Internal Medicine, an analysis of FDA new drug and generic drug applications since the Hatch-Waxman Act took effect revealed that more than one-third of 210 novel therapeutics tracked had only three or fewer generic approvals.

The finding points to a potential gap in competition that has allowed prices for some generics to climb.

Conventional wisdom suggests the U.S. market for generics, accounting for more than 85% of prescriptions, was energized by the Hatch-Waxman Act of 1984. Indeed, generic competition of more than four generic manufacturers has been shown to drive down the cost of the brand-name drugs by roughly 60%.

Oncological medications and orphan-designated drugs were especially likely to lack generic alternatives, due to smaller markets and the probability of smaller profits. The researchers concluded that FDA might want to give priority to applications for drugs with three or fewer generic versions to avoid escalation in generic pricing.