Many Generic Drug Prices Moving in Lock-Step

Data from the Centers for Medicare & Medicaid Services' (CMS) National Average Drug Acquisition Cost (NADAC) data set shows that many generic drugs across different manufacturers synchronized about the same time in 2015.

Costs for equivalent drugs from different manufacturers suddenly became the same price at the exact same time.

Many of the drugs in the NADAC set—which surveys drug prices at the time of purchase from pharmacies—then moved in lock-step up or down in price in the exact amount, down to the hundredth of a cent, multiple times.

The majority of these movements started occurring in September of 2015. Before then, prices from one competitor to the next could be differ substantially and price changes would happen at different times.

The generic drug industry has regularly pushed for more competition from the FDA by approving more drugs to help offset the steady increase in drug prices. Although multiple studies have shown that competition does not necessarily lead to price decreases.

Representatives Bernie Sanders (I-VT) and Elijah Cummings (D-MD) have led an investigation into the increasing price of generic drugs and the possibility of collusion between manufacturers or "shadow pricing"—where manufacturers automatically imitate the prices of their competitors.

The price moves occurred across manufacturers and for most of the drugs in the NADAC data. The manufacturers most associated with the lock-step price changes were also the same manufacturers with the most drugs: Mylan Pharmaceuticals Inc., Major Pharmaceuticals, Teva Pharmaceuticals USA Inc, Actavis Pharma, Inc., Sandoz Inc, West-Ward Pharmaceuticals Corp., Qualitest Pharmaceuticals.

The pharmaceutical industry has also seen a large amount of mergers and acquisitions in recent years as companies buy up their competition, although prices were previously out of sync for drugs from different manufacturers under the same parent company. A 2017 Government Accountability Office (GAO) report pointed to increased M&A in the pharmaceutical industry as a potential driver of price increases across manufacturers.