Report: Market manipulation, less competition drive up generic-drug prices

A new report recently released by the National Center for Policy Analysis (NCPA) that examined generic-drug price increases found that drug wholesalers and independent drugstores profit from higher generic prices.

The report said drug-wholesaler price manipulation and the relationship that large Fortune 30 companies have with drugstores are hurting competition and increasing costs.

"The wholesale drug industry has undergone tremendous market consolidation in the past few decades,” the NCPA report said. “Today, three large firms control nearly 90 percent of the distribution of wholesale drugs — resulting in less price competition. Drug wholesalers also have been accused of manipulating industry price lists to boost profit margins for themselves and pharmacies."

A recent report by the Philadelphia Inquirer also found that "wholesale distributors take a cut of drug prices, so higher prices mean a larger cut."

The NCPA said consumers and payers are hurt by policies pushed by drugstores that undermine competition and increase costs.

"If a drug plan was forced to pay whatever cost a drugstore paid for a generic drug, the drugstore would have little reason to look for competitive vendors of generic drugs,” the NCPA said. “In other words, attempts to limit the use of MAC lists inhibit a tool drug plans use to promote competition among pharmacies.”

The Pharmaceutical Care Management Association (PCMA) is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 210 million Americans, with health coverage provided through Fortune 500 employers, health insurance plans, labor unions and Medicare Part D.

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Pharmaceutical Care Management Association 325 7th St NW Washington, DC 20004