US Drug Price Study Warns Of "Megafirms"

US drug companies show anti-competitive behavior and follow "arbitrary" pricing practices, says a report sponsored by the Community Retail Pharmacy Health reform Coalition. The study, prepared by the PRIME Institute affiliated with the University of Minnesota College of Pharmacy, says the industry is moving towards "megafirms" that feature higher prices and control over manufacturing and distribution.

The retail group used the report to bolster its call for manufacturers to offer retailers the same huge discounts that hospitals, insurance carriers and community health centers get. Phillip Schneider of the National Association of Chain Drug Stores said it asks only that all buyers in the same marketplace who meet the same criteria set up by each company have access to the same level of discount. Equal-access pricing is included in the House Democratic health care reform bill.

Competition Eroded As Manufacturers Buy PBMs Prices to community pharmacies and their customers generally rise when a brand comes off patent and faces generic competition, says the study; drugs usually come onto the market at a higher price than similar therapies, even when they do not represent an advance. While pharmacy benefit management firms and generics companies are starting to create some price competition, major drugmakers have been buying them out or starting their own companies, it goes on. In contrast, the retail pharmacy market is highly competitive, with declining profit margins. "Any discounts passed on to community pharmacies will be passed on to consumers because of the competition between retailers," according to the study.