HHS to investigate price spikes for generic drugs

April 20, 2015

The Office of Inspector General of the U.S. Department of Health & Human Services (HHS) recently announced it would investigate price increases for generic drugs in the Medicaid drug rebate program.

The Office of Inspector General of the U.S. Department of Health & Human Services (HHS) recently announced it would investigate price increases for generic drugs in the Medicaid drug rebate program.

According to a letter sent last week to U.S. Sen. Bernie Sanders (I-Vt.) and U.S. Rep. Elijah Cummings (D-Md.), HHS will compare generic price increases between 2005 and 2014 to the inflation rate.

Generic drug price hikes cause hardships for pharmacies, patients

“We are developing a plan to update our previous review of generic drug price increases under the Medicaid drug rebate program. In that review, we examined the quarterly average manufacturer prices (AMP) for the top 200 generic drugs…We compared each quarterly AMP to an inflation-adjusted baseline AMP to determine the extent to which generic drug price increases exceeded the specified inflation factor,” wrote Inspector General Daniel R. Levinson.

“We will also determine the amount of additional rebates that the Medicaid program would have received if the specified statutory inflation factor has been applied to generic drugs,” Levinson noted.

Last September, Sanders and Cummings began a congressional inquiry into what they called “soaring” price increases for generic drugs. The pair sent letters to 14 pharmaceutical companies requesting justification for the price increases. The companies targeted included Actavis, Dr. Reddy’s Laboratories, Endo International, Mylan Laboratories, Heritage Pharmaceuticals, Sun Pharmaceutical, and Teva Pharmaceuticals.

 

The lawmakers used albuterol sulfate and doxycycline hyclate as examples of the escalating prices. According to the Healthcare Supply Chain Association, the average cost for a bottle of 100 albuterol sulfate pills increased from $11 in October 2013 to $434 by April 2014. Average prices for the doxycycline hyclate increased from $20 for 500 tablets to $1,849 during that same period.

"Generic drugs were meant to help make medications affordable for millions of Americans who rely on prescriptions to manage their health needs," Sanders said in a statement. "It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs."

Sanders and Cummings have introduced a bill that would require generic drug makers to pay additional rebates to state Medicaid programs for drugs that increase in price faster than the inflation rate.