(Bloomberg) — For all the recent backlash to drug price increases that have incited politicians' anger and roiled markets, a curious thing happened in the third quarter: Prices for generic drugs, which make up 85 percent of prescriptions, hardly increased at all.
That's according to an analysis from Bloomberg Intelligence analyst Jonathan Palmer, which shows inflation among generic drugs dropping from 4 percent two years ago to zero.
Prices of more expensive brand-name drugs have been increasing at more than 10 percent a year in that period.
Recommended For You
The analysis looks at the median year-over-year price changes of the most commonly prescribed medications in the U.S., including medications taken by millions such as atorvastatin calcium (the generic version of cholesterol drug Lipitor) or the diabetes drug metformin.
It is not intended to be a comprehensive measure.
Obscure drugs wouldn't have been counted, and the median doesn't reflect the most extreme increases or decreases.
Palmer says there are probably several explanations. Fewer drugs are losing patent protection, so there aren't as many new generic versions hitting the market as there were a few years go.
At the same time, consolidation among generic manufacturers has slowed, limiting their ability to raise prices. And the Food and Drug Administration has accelerated its process for approving new generic versions.
All these things influence how many manufacturers are making a particular copycat drug and what they can charge for it.
"It all does ebb and flow," Palmer said. "There might be 10 manufacturers in something, and then the returns don't look that great, so five of them exit and it's more profitable again."
The relatively stable prices in the generic market don't insulate patients or insurers from outlier price hikes. Companies such as Turing Pharmaceuticals and Valeant Pharmaceuticals have drawn scrutiny from lawmakers over the rising costs of older drugs. And slowing inflation doesn't roll back earlier price increases.
Still, it's worth noting that, for the moment at least, the acceleration of prices in the generic drug market seems to have paused.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
