Report: Market consolidation, manipulation driving up generic-drug prices

A recent report by the National Center for Policy Analysis (NCPA) found that drug wholesaler price manipulation, coupled with the relationships large drug companies have with drugstores and pharmacies, is having an adverse effect on competition and causing the prices of generic prescription drugs to rise.

The report's authors cautioned policymakers to avoid undermining such tools as Maximum Allowable Cost (MAC) lists.

The report cited possible reasons for the increase in the price of generic drugs, including:

--Market consolidation: The wholesale drug industry has seen major consolidation over the past few decades. In fact, three major companies now control close to 90 percent of the distribution of all wholesale drugs.

--Gray market: Some pharmacies are operating as small drug distributors, which leads to a wholesale gray market in which harder-to-find drugs become in even shorter supply.

--Legal loopholes: Some smaller pharmacies and distributors have used loopholes in state regulatory structures to their advantage.