Unlike other countries, the U.S. does not regulate prescription drug prices. Instead, policy makers some 40 years ago came up with another idea to make prices more affordable: harnessing the power of the free market.
They thought if they make it easier for companies to copy brand name drugs and sell them at a much cheaper price, generic drug manufacturers will pour in and drive prices down.
And that’s worked for a long time. It’s saved Americans trillions of dollars over the past few decades.
But there are signs that this system may be in serious trouble.
The Checkup’s question is: Why is that and are policy makers doing anything about it?
Side Effects Public Media’s Community Engagement Specialist Lizzy McGrevy spoke to Leslie Walker, a senior producer at the health policy news organization Tradeoffs. Tradeoffs released a special series called Race to The Bottom, which explores the vulnerabilities in America’s generics supply system.
This transcript has been edited for length, style and clarity.
McGrevy: Hey Leslie, so, how critical are generic drugs for our health care system and why are they in deep trouble now?
Walker: These medicines really are the backbone of American health care.
They now fill 9 out of every 10 prescriptions we take. They lower our cholesterol, manage our diabetes, depression –– you name it.
But this essential industry is now being squeezed on two sides.
On one hand, you’ve got these often very old generic drugs –– critical stuff like antibiotics and cancer treatments that economists told me have almost gotten too cheap.
That’s forcing some companies to cut corners or exit the market altogether, causing shortages and quality problems.
And then on the other hand, you’ve got some newer, really pricey brand-name drugs that are going 15, even 20 years with no generic competition at all, and that’s hurting patients too.
McGrevy: And I can’t help but think, this is 100% bad for consumers but it may not be such bad news for big pharma –– those brand name drug manufacturers. Do they have a hand in any of these problems?
Walker: Definitely, when it comes to those newer, really pricey brand drugs, big pharma has honed some pretty ingenious strategies for stifling competition.
Playing games with patents, paying the middlemen who buy drugs on behalf of insurers and employers to favor their products over cheaper generics, just to name a couple.
McGrevy: And Leslie, let’s talk for a second about the other big issue you highlighted … shortage and quality problems with these cheaper generics.
We hear about shortages in the U.S. all the time, especially since the pandemic. Are there signs that this is about to get worse?
Walker: You’re right, Lizzy, that drug shortages have been a perennial problem for a while now but there are signs it’s getting worse.
One recent report found the number of drugs in shortage is at a 10-year high and that shortages are also lasting longer –– three years on average.
Plus, the supply chain for these drugs is also getting more fragile.
Those very low prices are pushing companies to cut more corners and move more manufacturing to countries like India and China.
Economist Marta Wosińska with the Brookings Institution said that’s raising a whole new mess of quality and reliability concerns for the U.S.
“Are we prepared for supply chain disruptions from natural disasters? What could happen if there’s a conflict with China? We have not really truly grappled with these kinds of vulnerabilities,” Wosińska said.
McGrevy: Are policy makers doing anything to try to shore this vital industry up?
Walker: There is a lot of action in Washington. The Federal Trade Commission is trying to crack down on some of those games brand companies play to fend off competition.
And in Congress, there’s a draft bipartisan bill targeting those cheap drugs prone to shortages, basically trying to make those shaky markets more attractive and reliable for manufacturers.
That said, most of the moves we’re seeing are pretty modest.
And some experts told me they think more sweeping reforms are needed.
That includes Alfred Engelberg, one of the original architects of the 40-year-old law, known as the Hatch-Waxman Act, that gave birth to the modern generic industry.
“It was the right thing at that time,” Engelberg said. “We derived a lot of public benefit from it, but we put it on this perch and made it some kind of an untouchable law. But times have changed. You have to figure out a new paradigm for new times.”
McGrevy: Thank you so much for this valuable information, Leslie. You can listen to Leslie’s special series for Tradeoffs. It’s called Race to The Bottom and it’s available wherever you get your podcasts.
The Checkup by Side Effects Public Media is a regular audio segment on WFYI's daily podcast, WFYI News Now.
Side Effects Public Media is a health reporting collaboration based at WFYI in Indianapolis. We partner with NPR stations across the Midwest and surrounding areas — including KBIA and KCUR in Missouri, Iowa Public Radio, Ideastream in Ohio and WFPL in Kentucky.
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