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As I described in a recent blog post (Peeking Behind the Curtain of Generic Medications), generic medications are not automatically less expensive than their brand equivalents. When a new generic drug is launched, there’s a period of exclusivity during which prices may still be fairly high, before they settle down to a more affordable price point.

Unfortunately there’s another trend that’s keeping generic medications from being as affordable as consumers and health plans have come to expect. In certain cases, generic medications that are made by more than one manufacturer, and have been on the market for years, are experiencing rapidly escalating costs. While some of these sharp price increases may be associated with shortages in raw supplies, other times the rising prices are related to generic manufacturer company strategies. This trend is eloquently described in a recent article from

At Lockton, we’re paying close attention to these changes in the medication marketplace. We ensure that our clients’ pharmacy benefit contracts require all generics, including those in short supply and those with sharp cost increases, are included in pricing guarantees and treated as generics for all purposes. This approach is crucial because when these drugs are excluded from pricing guarantees, there are no controls on what plan sponsors can be charged—something that hurts members and their employers.