A lack of competition and a dearth of alternatives to hundreds of brand-name drugs are to blame for the skyrocketing costs of medicines for the central nervous system, infections and heart disease says a federal watchdog agency.

 

The Government Accountability Office identified more than 400 “extraordinary” price increases for over 300 brand-name drugs since 2000. The number of outsize pricing jumps doubled each year from 2000 to 2008, with most increases ranging between 100 percent and 499 percent, the agency says.

 

Out of 357 drugs illustrating extraordinary price increases, 26 brand-name drug products had price increases greater than 1,000 percent—a tenfold increase.

 

The culprits according to the GAO: limited availability of therapeutically equivalent drugs—both generics and other brand-name drugs used to treat the same condition—as well as patent protection and market exclusivity. The findings come just as Congress works to reconcile the House and Senate versions of monumental health care reform legislation.

 

“We’ve seen prescription prices increase year after year, while drug companies keep affordable generics off the market and rake in huge profits,” says Minnesota Democratic Sen. Amy Klobuchar, who requested the analysis along with New York Democrat Sen. Charles Schumer.

 

Klobuchar is fighting against the legality of financial settlements between patent holders and generics makers that she says delay generic drugs entry into the market nearly 17 months longer on average than agreements without payments.

 

Other factors behind price increases cited by the report are the simple lack of therapeutic equivalents for orphan drugs and overall pharmaceutical industry consolidation. Drug pricing in the private sector is not subject to federal regulation, but drug companies are subject to antitrust enforcement, the report notes.

 

Ken Johnson, senior vice president for the Pharmaceutical Research and Manufacturers of America criticized the GAO report, saying that "unfortunately, the GAO report focuses only on a small number of selected brand medicines rather than the entire prescription drug market."