The Monopoly Behind Generic Drug Pricing

In a healthcare system where affordability equates to survival, the hidden mechanics of drug pricing reveal a troubling pattern. According to the National Library of Medicine, lifetime treatment for AIDS can cost between $71,143 and $424,763, enough to buy a car or small house almost anywhere in the United States [1]. But what if you were told this number was almost 1000% higher than it needed to be? An ongoing issue in the medical field is the monopoly behind generic drug pricing, in which a single generic firm monopolizes certain drugs to keep prices high. Connecticut et al. v. Teva Pharmaceuticals USA, Inc. et al., filed in 2019, alleges that 44 states were involved in price-fixing in the pharmaceutical industry by up to 1000%. Although the antitrust act should eradicate collusion that inhibits trade, pay-for-delay allows brand-name drug companies to retain sole control over a drug's pricing [2]. The Atlantic highlights this issue by exposing strange lawsuit settlements. Rather than forcing generic firms to pay for patent infringement, the brand-name companies are the ones who pay. These companies will compensate other generic firms for delaying the launch of the generic version of that drug, keeping the market uncompetitive for a while longer. Without competition, there is no downward pressure on drug pricing, and patents help by allowing drug manufacturers to monopolize production for up to 20 years.

In January of this year, ASPE's Office of Health Planning revealed that competition with three drug firms reduces drug prices by 20%, and prices can drop by up to 80% with 10 or more competitors [3]. In fact, current estimates indicate that this competition will have saved buyers over $2 trillion by 2028 [4]. So, when these name-brand companies pay off generic competitors, patients are greatly affected by the prices they must pay for their life-saving medication. Not only are FDA-approved generic drugs safe to consume, but they are often considered bioequivalent to the name-brand drug because they contain "identical active ingredients, dosages, forms, and routes of administration as do the branded reference drugs" [4]. By inhibiting competition from generic drugs, the only entity benefiting is Big Pharma, harming patients in the process. 

However, pharmacy benefit managers (PBMs) are also to blame. Earlier this year, the Federal Trade Commission found that the big three PBMs [Caremark Rx, LLC (CVS), Express Scripts, Inc. (ESI), and OptumRx, Inc. (OptumRx)] were behind the markups in pricing for specialty generic drugs that treat diseases like cancer, HIV, and multiple sclerosis [5]. For those unable to afford health insurance, these markups can be frightening, as not being medicated for these diseases can lead to death.

Unfortunately, these issues extend far beyond legal implications. This year, Gallup published a report stating that 29 million adults in the United States cannot afford healthcare [6]. One can only imagine the preventable devastating effects people will suffer due to involuntarily leaving chronic disease untreated. With monopolies behind generic drug pricing and pharmacy benefit managers driving prices up, it is no wonder so many people are struggling.

Although this information is alarming, it also presents a powerful opportunity: with informed advocacy, we can push for policies that dismantle monopolistic practices and restore fairness in drug pricing. Consider how your advocacy education equips you not just to understand these issues, but to lead change—starting in your own community.

Reviewed by: Abby Winslow

Designed by: Jimin Lee

References: [1] Graydon T. R. (2000). Medicaid and the HIV/AIDS Epidemic in the United States. Health care financing review, 22(1), 117–122.

https://pmc.ncbi.nlm.nih.gov/articles/PMC4194687/.

[2] Vaheesan, S. (2023). Antitrust Has a Generic-Drug Problem. The Atlantic. Retrieved from https://www.theatlantic.com/ideas/archive/2023/06/pharmaceutical-generic-drugs-pay-for-delay/674410/.

[4] Frank, R. G., McGuire, T. G., & Nason, I. (2021). The Evolution of Supply and Demand in Markets for Generic Drugs. The Milbank quarterly, 99(3), 828–852. https://doi.org/10.1111/1468-0009.12517.

[3] U.S. Department of Health & Human Services, Office of the Assistant Secretary for Planning and Evaluation. (2024). Drug Competition Series – Analysis of New Generic Markets: Effect of Market Entry on Generic Drug Prices (Issue Brief). Retrieved from https://aspe.hhs.gov/sites/default/files/documents/510e964dc7b7f00763a7f8a1dbc5ae7b/aspe-ib-generic-drugs-competition.pdf.

[5] Federal Trade Commission. (2025, January 14). FTC releases second interim staff report on prescription drug middlemen. Retrieved from [https://www.ftc.gov/news-events/news/press-releases/2025/01/ftc-releases-second-interim-staff-report-prescription-drug-middlemen](https://www.ftc.gov/news-events/news/press-releases/2025/01/ftc-releases-second-interim-staff-report-prescription-drug-middlemen).

[6] Witters, D., & Maese, E. (2025, April 1). In the U.S., inability to pay for care, medicine hits a new high. Gallup. Available at https://news.gallup.com/poll/658148/inability-pay-care-medicine-hits-new-high.aspx

Mulcahy, A. W. (2019). Price-fixing case reveals vulnerability of generic drugs. RAND Corporation Commentary. Retrieved from: https://www.rand.org/pubs/commentary/2019/07/price-fixing-case-reveals-vulnerability-of-generic.html.

Public to Private: The Overwhelming Privatization of Hospitals Nationwide

Have you ever seen a hospital in financial distress suddenly change its name and transfer ownership to some other entity? This is, to put it simply, the concept of privatization in healthcare. All over the United States, hospitals are either labeled as “public” or “private,” meaning that they’re either government owned or owned by a private not-for-profit or for-profit company. 

Each and every day, more and more hospitals are becoming part of the private equity sector, where even 80% of physicians from the past year are employed by private systems/corporations; that being a 60% increase from 2019 [1]. From this, we have to consider two crucial questions: Is the level of care received better under privatization? And the other: Is hospital privatization a growing monopoly in the healthcare world?

Many say that hospital privatization provides care based on the ability to pay instead of medical need [2]. This leads to one of the biggest problems with privatization, as private, for-profit hospitals require higher payments for care. With the inability to pay, it’s practically impossible for some people to get the treatment and care they deserve. A disproportionate amount of U.S. privatized hospitals are located in rural areas that have a lower median household income and a lower patient experience score [3]. The lower patient experience score comes from the lack of income or refusal to accept government insurance (i.e., Medicare, Medicaid), which, in turn, leads to the inability of patients to pay for care.

The fact that the majority of privatized hospitals are located in rural, lower socioeconomic areas alone is cause for concern. These private-equity firms aren’t trying to maximize patient care, but to maximize return on their investment,hospital profit over an extended period of time. Today, some of the largest hospital chains are owned by private equity firms and not the U.S. government, those of which being Lifepoint Health and Ardent Health Services [4].  

These firms are completely monopolizing the hospital system across the U.S., but some people still argue that hospital privatization produces net positives in healthcare. More specifically, they say that privatized hospitals are more efficient than their public counterparts. On average, the length of stay decreased from 5.82 to 5.10 days after privatization for a sample of U.S. hospitals in a 2003 study [5]. These hospitals were able to become more efficient after privatization and care for their patients in a more efficient time frame, due to funds that privatized hospitals have that public hospitals lack. This increased funding helps with efficiency and provides up to date medical technology for patients, reducing their stay.

While privatized hospitals are able to care for patients more efficiently and in a smaller time frame, they still lack the ability to treat high severity cases like public hospitals can. In over 29 cities across the U.S., public hospitals are able to provide all levels of trauma care and also operate over 44% of burn care units nationwide [6]. That being said, public hospitals only make up 2% of overall hospitals in the country, so the fact that they provide the majority of these important health services is something worth highlighting. Without public hospitals, underrepresented patients, such as those who are uninsured or do not qualify for government programs like Medicaid, would be without care. With the growing frequency of private equity owned hospitals across the country, public hospitals are crucial in maintaining cost-effective care for underrepresented groups.

Considering all these factors, it’s still important to understand both sides in this argument. While privatized hospitals can be detrimental to underrepresented patients and prioritize financial growth over patient satisfaction and care, they don’t always fail in terms of providing sufficient healthcare. The fact that the average patient stay in a private hospital is less than that of a public hospital means that, for the most part, private hospitals are doing what’s necessary for their patients to be healthy again.

On the other hand, the idea that privatized hospitals aren’t a part of a monopoly, solely due to positive performance, is another misconception. These private hospitals exist in “mixed markets,” where they’re created to increase patient care/make themselves desirable, as a way to maximize their profit [7]. 

Overall, the privatized hospital system is a monopoly that’s like a two sided coin. By prioritizing monopoly profit, privatization offers efficiency that the public hospital system does not. However, the tradeoff for efficiency is filtering out undesirable consumer patients who frequent hospitals and need extensive care. The only way to deal with the U.S. hospital monopoly is to understand that it is something constantly growing and innovating, although it negatively impacts a government-funded system.

Reviewed by: Amber Sun

Designed by: Maya Rachlin

References: [1] Physicians Advocacy Institute. (2024). Updated Report: Hospital and Corporate Acquisition of Physician Practices and Physician Employment 2019-2023. Avalere Health. https://www.physiciansadvocacyinstitute.org/Portals/0/assets/docs/PAI-Research/PAI-Avalere%20Physician%20Employment%20Trends%20Study%202019-2023%20Final.pdf?ver=uGHF46u1GSeZgYXMKFyYvw%3d%3d

[2] Angell, M. (2008). Privatizing health care is not the answer: lessons from the United States. Canadian Medical Association Journal. 179(9), 916-919. https://www.cmaj.ca/content/179/9/916.short

[3] Bruch, J., Zeltzer, D., & Song, Z. (2021). Characteristics of Private Equity-Owned Hospitals in 2018. Annals of internal medicine, 174(2), 277–279. https://doi.org/10.7326/M20-1361.

[4] Private Equity Stakeholder Project. (2025). Private Equity Hospital Tracker. https://pestakeholder.org/private-equity-hospital-tracker/#_ftn5

[5] Villa, S., Kane, N. (2013). Assessing the Impact of Privatizing Public Hospitals in Three American States: Implications for Universal Health Coverage. Value in Health, 16(1), S24-S33.

https://www.sciencedirect.com/science/article/pii/S109830151204154X

[6] American Hospital Association. (2017). The Value of Membership - Public Hospitals. AHA. https://www.aha.org/2017-05-11-value-membership-public-hospitals

[7] Levaggi, L., Levaggi, R. (2023). Competition in the provision of hospital care: Are mixed markets a valid alternative? Economic Modelling, 127. https://www.sciencedirect.com/science/article/pii/S0264999323002845

Access Denied: The Ethical Fallout of America’s Medical Deserts

The United States of America is often viewed as the hub for groundbreaking medical innovations and economic prosperity; however, the reality behind healthcare access for many Americans in under-resourced communities is less than ideal. Across rural towns and low-income neighborhoods, hospitals are shutting down, and access to adequate healthcare is decreasing at a significant rate. These closures leave millions of Americans with little to no nearby access to trauma care, creating what public health researchers now call “medical deserts.”

According to the International Journal of Health Policy and Management, medical deserts are geographical areas where populations have limited access to qualified healthcare providers and quality healthcare services [1]. In these areas, the difference between life and death comes down to transport time. A stroke patient who once reached care in ten minutes might now face a forty-five-minute drive. For heart attacks, car crashes, or childbirth complications, that gap can be fatal. Since 2010, more than 150 rural hospitals in the U.S. have closed, and many more remain at risk [2]. The common thread among these hospital closures isn’t medical quality or an overall lack of practicing physicians—it’s money. Health centers serving low-income or underinsured patients operate on budgets so minute that one year of low reimbursements can put them in a deficit. When these hospitals close, the communities they serve don’t just lose access to emergency care, but also essential resources for chronic disease management and basic trust and reliance on the healthcare system as a whole.

Essentially, Americans facing socioeconomic barriers tend to experience these cumulative disadvantages when it comes to access inequity. This is primarily because rural and low-income areas tend to have the highest population of patients who are uninsured or on Medicaid [3]. Because rural hospitals tend to have lower occupancy rates and operate in states with limited Medicaid reimbursement, they generate far less revenue per patient. That financial reality is what drives many facilities into deficit and eventual closure– not a lack of community demand.

While distance remains a significant barrier in rural communities, proximity does not guarantee equitable healthcare. Even in urban settings where hospitals are geographically more easily accessible, low-income individuals face several obstacles that can make attaining care difficult. When Philadelphia’s Hahnemann University Hospital closed in 2019, patients from surrounding low-income neighborhoods had to take multiple bus transfers to reach the next ER. Even though the distance is under five miles to this hospital, the journey can often take hours [4]. So even in large cities with many hospitals, closure of a safety-net facility can systemically create a healthcare desert as the remaining options can be harder to reach, more crowded, or disconnected from the patient’s prior care network.

So how do these underfunded rural hospitals respond to these financial pressures? Although it varies by state, many hospitals are trying to balance financial sustainability and community necessities by narrowing the scope of specialty care these facilities access. For example, since Grantsburg, Wisconsin has an aging population, the low birth rates led to several local hospitals choosing to close their OB/GYN units. While the expensive upkeep of an obstetrics unit at the Grantsburg Hospital was deemed unjustified, this closure made it so that women had to travel nearly 40 minutes if they required pre- or post-natal care [3].

Furthermore, the American Hospital Association says that the “lack of health insurance coverage in rural areas results in high uncompensated care costs for hospitals,” showing that Medicaid and Medicare policies typically correlate with hospital sustainability [2]. 74% of recent hospital closures happened in states without Medicaid expansion policies, which clearly demonstrates how important Medicaid expansion is for financial viability in rural hospitals. However, recent policy proposals, such as the Big Beautiful Bill, project rural hospitals to lose up to $70 billion in federal Medicaid funding, pushing more of these facilities towards closure [5].

The growing number of medical deserts across the United States reveals a deeper moral issue in how the country allocates its healthcare resources. When a hospital’s ability to stay open depends more on insurance reimbursement rates than on community need, ethics and economic policies collide. These closures are not simply logistical inconveniences; they are serious ethical problems that determine who receives care in time to survive and who does not. The communities most affected are those already burdened by poverty, inadequate insurance coverage, and systemic neglect. Every closed hospital represents a silent moral failure as a nation, as well as an opportunity to reimagine and advocate for a system that prioritizes equity.

Reviewed by: Vedant Patel

Designed by: Vedant Patel

References:

[1] Flinterman, L. E., González-González, A. I., Seils, L., Bes, J., Ballester, M., Bañeres, J., Dan, S., Domagala, A., Dubas-Jakóbczyk, K., Likic, R., Kroezen, M., & Batenburg, R. (2023, December 1). Characteristics of medical deserts and approaches to mitigate their health workforce issues: A scoping review of empirical studies in western countries. International Journal of Health Policy and Management. https://www.ijhpm.com/article_4458.html 

[2] American Hospital Association. (2022, September). Rural Hospital Closures Threaten Access: Solutions to preserve care in local communities | AHA. https://www.aha.org/2022-09-07-rural-hospital-closures-threaten-access 

[3] Ramesh, T., & Gee, E. (2019, September). Rural hospital closures reduce access to emergency care - Center for American Progress. https://www.americanprogress.org/article/rural-hospital-closures-reduce-access-emergency-care/ 

[4] Brubaker, H. (2020, June 25). The loss of Hahnemann resonates a year later as covid-19 and black lives matter protests roil Philadelphia. WHYY. https://whyy.org/articles/the-loss-of-hahnemann-resonates-a-year-later-as-covid-19-and-black-lives-matter-protests-roil-philadelphia/ 

[5] Estimated Impact on Medicaid Enrollment and Hospital Expenditures in Rural Communities. National Rural Health Association. (2025, June 20). https://www.ruralhealth.us/getmedia/f79547dc-19b6-4f39-ac95-4f24ba0e0a84/OBBB-Impacts-On-Rural-Communities_06-20-25-final_v3-(002).pdf