Do generic drugs cost too little?

Much of my blog discusses the value of new, innovative treatments.  In the current patent environment, drug patents expire and low cost generics enter the market.  This results in huge surplus value accruing to consumers.  However, those benefits only occur if the supply of effective, low-cost generic medication reach patients.  Unfortunately, that is not always…

Competition matters

While the high price of branded drugs often gets a lot of attention in the public, few realize that after patent expiration, prices often plunge dramatically and high quality treatments are available for extremely affordable prices.  Granlund and Bergman (2018) estimate the size of this price reduction using data from Sweden. In the long term,…

How to prevent another EpiPen controversy

Dana Goldman–my colleague at PHE and a professor at USC–offers three suggestions on how to prevent generic products from increasing their prices drastically as occurred in the EpiPen saga.  In Stat News, he makes three recommendations: First, Congress should mandate that the Federal Trade Commission report on the availability of all such drugs and devices…

All-or-Nothing P4P

Many of Medicare’s value-based purchasing (VBP) initiatives offer a continuum of rewards based on provider performance.  Whereas all-or-nothing VBP initiatives only grant bonuses to providers who exceed a single threshold, the Medicare VBP programs–such as its hospital VBP program–reward hospitals based a value-based modifier that is proportional to its quality score. One of the reasons…

Should Generic Industry Payoffs be Outlawed?

GoozNews reports that “the Senate Judiciary Committee…passed legislation prohibiting brand name drug manufacturers from paying off generic manufacturers in patent disputes.  They get the money in exchange for not bringing the cheaper drug to market.” Is this a wise move for Congress? The main question one should ask is why brand name manufacturers pay off generic…