From Grants to Bills: The Hidden Economy of Medicine

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.