London based drug manufacturer Hikma is in the news in the US news for hiking the price of its liquid form of diarrhoea drug by 430 percent. While the drug is an old one and has no patent protection, it seems to be immune from possible competition. This is because it is harder for a new entrant to get regulatory sign-off and set up production facilities for liquid drugs than it is for pills.
Added to this, monetary gains for a new entrant would be relatively negligible. In the US this sort of monopoly or oligopoly of non-patented drugs is seemingly widespread, limiting patient choice, especially the vulnerable. Swiss incorporated cancer drug manufacturer Turing with offices in the US raised the price of its cancer drug by 55-fold. American company Mylan raised the price of its drug for bee allergies by over 500 per cent in a span of six years. It seems like a win-win situation for non-patented drugs with a small captive audience and hard for new players due to high entry costs. The other dilemma is that US laws also make it hard for new businesses to import drugs which might bring down prices, thus making the monopoly stranglehold even stronger.
The drug industry in the US seemingly benefits from the largesse offered by rules and regulations. According to the drug industry, lower drug prices will inhibit innovation which experts say need not be the case. Calling it a false dilemma, a recent report in the Financial Times argued that patients in the US need not choose between fair prices and innovation. It said, “Competition can only thrive when those who ultimately pay can decide which products are interchangeable and negotiate with manufacturers on that basis. The law should allow that to happen.”
