A potential $40.1 billion generic-drug merger already has Brad Arthur bracing for a blow to his family-run pharmacy in Buffalo, New York.
Arthur has been contending with rising generic drug prices for the better part of two years -- a trend that has drawn Washington’s attention and caused an outcry from consumer advocates. Now the pharmacist says he fears the proposed takeover of Mylan NV by Israel’s Teva Pharmaceutical Industries Ltd. could threaten businesses like his by reducing competition even further.
“They would control such a significant portion of the resources that they would be able to dictate price in the market and everybody would be forced to respond to that,” he said.
The increase in generic-drug prices has been a growing concern across the pharmacy industry, affecting mom-and-pop businesses and giant chains alike. The National Community Pharmacists Association, where Arthur is chairman, surveyed about 700 members and found that virtually all pharmacists have experienced a “large upswing” in the cost of buying generic drugs in the past six months. About 80 percent of respondents experienced price spikes at least 26 times -- equivalent to once a week.
Walgreens Boots Alliance Inc., the biggest U.S. drugstore chain, cut its fiscal 2016 profit forecast by about $2 billion last year in part because of rising generic drug prices.
Some 10 percent of generic drugs doubled in price between July 2013 and June 2014, and half of all generic drugs rose in price, according to an analysis of Centers for Medicare and Medicaid data cited by Senator Bernie Sanders, an independent from Vermont, and Representative Elijah Cummings, a Democrat from Maryland. They announced last week that the Department of Health and Human Services, at their request, would look into how spikes in generic drug prices are driving up the cost of government-supported health care.
Consolidation in the industry has been widely credited with driving up prices, along with closer regulatory scrutiny of generic drugs by the U.S. Food and Drug Administration.
Sanders and Cummings started a separate probe into the issue of rising generic drug prices last year, but have thus far failed to get “meaningful” records on pricing from companies, including Mylan and Teva.
For Mylan, the inquiry focused on drugs like albuterol sulfate, which treats breathing problems. That drug shot up about 4,000 percent -- or to $434 in April 2014 from $11 in October 2013 -- according to data from the Healthcare Supply Chain Association.
“I continue to be very concerned with rising generic drug prices,” Sanders said in an e-mailed statement, adding that Americans pay the highest prices for prescription drugs in the world. “We’ve got to get to the bottom of these enormous price increases. Market consolidation and less competition in the industry is a possible factor we need to take a look at.”
A spokeswoman for Cummings declined to comment, as did Mylan spokeswoman Nina Devlin. Teva spokeswoman Denise Bradley couldn’t be reached for comment.
Consumers Union, the policy and advocacy arm of product-testing magazine Consumer Reports, said it would oppose a deal like the one proposed by Teva because it reduces competition among generic drug makers.
“Generic drug prices have been going up, and some of it has to do with less competition,” said Lisa Swirsky, senior health policy analyst at Consumers Union. “Further consolidation would be problematic for consumers.”
Price rises of key drugs like heart drug digoxin or everyday antibiotics like tetracycline or doxycycline have been hurting Arthur’s business, Black Rock Pharmacy, to the tune of $3,000 a month -- the difference between turning a profit or not, he said.
“It hasn’t reached a plateau -- we haven’t seen examples of drugs that have gone down in price,” he said. “It’s very concerning.”