Posted by Michael Wonder on 17 May 2018
Addressing generic drug market failures - the case for establishing a non-profit manufacturer
17 May 2018 - Robust competition usually keeps the price of generic drugs well below that of brand-name drugs. When there is little or no competition, however, generic-drug manufacturers can substantially increase prices, and drug shortages may occur.
Such market failures can compromise care and negatively affect patients, health care providers, government insurance programs, and private health plans.
One strategy for generic-drug manufacturers seeking to maximize profit is to enter a market where they have the capacity to produce enough of a drug to meet market demand and the power to dictate the drug’s price. In 2010, for example, Valeant acquired the rights to Syprine (trientine hydrochloride), a drug invented in the 1960s to treat Wilson’s disease, a rare condition, and subsequently raised its price by more than 3000% for a monthly supply, from $652 to $21,267.
