http://www.nytimes.com/2014/10/08/business/officials-question-the-rising-costs-of-generic-drugs.html 2014-10-08 01:11:53 Officials Question the Rising Costs of Generic Drugs Lawmakers are investigating why the prices of some generic drugs have soared. === The price of some generic drugs have soared more than 1,000 percent in the last year, and federal officials are demanding that generic drug makers explain the reasons for the increases or potentially face new regulation. The increased use of generic drugs has been one of the rare success stories in national efforts to curb the nation’s $2.8 trillion medical bill, since generics have historically been far cheaper than name-brand versions. More than eight in 10 prescriptions are filled with generic drugs, according to the But prices of some generic drugs have risen sharply recently, prompting the new congressional investigation, led by Representative Elijah E. Cummings, the ranking member of the House Committee on Oversight and Government Reform, and Senator Bernard Sanders, chairman of the Senate Subcommittee on Primary Health and Aging. They said they undertook the investigation because of recent complaints from constituents, pharmacists and in the media. They are focusing on 10 drugs whose large price increases came to their attention. “Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescriptions to manage their health needs,” Senator Sanders said in a statement. “We’ve got to get to the bottom of these enormous price increases.” Some of the rises have been huge, Some or all of such price increases are passed on to patients. Late last week, the lawmakers sent letters to 14 drug makers that make or distribute the 10 generic drugs, requesting explanations for price increases. They may hold hearings depending on the response, which is due by Oct. 23. Some manufacturers have already promised cooperation. “The first thing we need to understand is why these drug companies are raising their prices so dramatically in such a short period of time, which is why we asked for information about the costs to produce these drugs compared to the prices they are now charging,” Representative Cummings said this week. “Once we receive that information, we will be in a better position to evaluate the root causes of these massive increases and, if necessary, consider reforms.” In a statement, Ralph G. Neas, president and chief executive of the Generic Pharmaceutical Association, said that facts about generic drug prices had been “mischaracterized,” focusing on a handful of drugs with big price increases, among the thousands of “safe, affordable” generic medicines. Generic drug prices are generally lower than brand-name drugs because manufacturers are competing to sell medicines that are essentially interchangeable. But studies have shown that for competition to bring price down significantly, four or five companies usually need to be making a drug. Drug prices can rise for several reasons related to normal shifts in supply. Companies can leave the market, resulting in decreased supply and less competition. A factory producing the drug may be temporarily closed for violations. But there has been increasing concern that, in some cases, prices rise because of questionable business practices or market manipulation. In the last several years, the Federal Trade Commission and state attorneys general have taken aim at a practice called “pay for delay,” in which brand manufacturers pay generic drug makers to hold off entering the market. This summer, after In September, the company said its internal review concluded that it had “acted in compliance with applicable laws and regulations with regard to the pricing.” The attorney general’s office said the investigation was continuing.