Developments: The Rapid Increase in Generic Prices in the UK: A Failure of Competition or Regulation?

Abstract

There have been steep rises in the price of some generic drugs since September 1998. These rises have been the subject of an inquiry by the House of Commons Select Committee on Health. This article comments on the pricing of generic drugs and suggests possible solutions to the recent price rises. A fall in the price ofgenerics in the five years prior to September 1998 was a result of regulatory action, rather than strong price competition. However, this regulatory system has now been shown not to have the incentives to encourage suppliers to meet the Government’s objective of cheaper generic drugs. This raises the question of whether cost control strategies for primary care prescribing based on the greater use of generics are reasonable.