Generic Drug Prices Over Time: Year-by-Year Changes and What It Means for You

Every year, millions of Americans rely on generic drugs to manage everything from high blood pressure to thyroid issues. They’re supposed to be cheaper-sometimes way cheaper-than brand-name pills. But if you’ve noticed your prescription cost jumping from $4 to $45 in a year, you’re not imagining it. Generic drug prices don’t move in a straight line. They spike, crash, and sometimes vanish entirely-year after year-with little warning.

Why Generic Drugs Are Supposed to Be Cheaper

Generic drugs contain the exact same active ingredients as brand-name drugs. They work the same way. They’re just sold without the marketing, the fancy packaging, or the patent protection. When a brand-name drug’s patent expires, other companies can make copies. More competitors usually mean lower prices. That’s the theory, anyway.

In reality, the savings aren’t always steady. In 2022, generics made up 90% of all prescriptions filled in the U.S., but only 23% of total drug spending. That sounds great-until you realize that a small number of generics are driving up costs for everyone else. While most generics stay stable, about 15% see wild swings-some jumping over 100%, even 500% in a single year.

How Competition Drives Prices Down (When It Works)

Price drops happen fast when multiple companies start making the same generic. The FDA found that when the first generic hits the market, prices often fall by 90% within a year. Add a second manufacturer? Prices drop another 25%. By the time you have four or more companies making the drug, prices can be as low as 15% of the original brand-name cost.

For example, generic levothyroxine (used for hypothyroidism) dropped 87% between 2013 and 2018 because dozens of manufacturers entered the market. But that’s not the whole story.

The Dark Side: When Fewer Companies Mean Higher Prices

Here’s where things get ugly. When only one or two companies make a generic drug, prices don’t fall-they rise. And they can rise fast.

In 2013-2014, 8.2% of generic prescriptions saw price hikes between 100% and 500%. A single pill of nitrofurantoin (a common antibiotic) jumped 1,272% over five years. Why? Because the manufacturers that made it either shut down, got bought out, or stopped producing it. Suddenly, only one company was left. No competition. No pressure to lower prices.

By 2018, the top 10 generic drug makers controlled 70% of the market. Today, the top five control over half. That’s not competition-it’s consolidation. And it’s why 78% of all generic price spikes over 100% happen in markets with three or fewer manufacturers, according to Harvard Medical School research.

Year-by-Year Price Trends You Can’t Ignore

On paper, generic drug prices have been falling overall. But that’s an average. The real story is hidden in the outliers.

Between January 2022 and January 2023, about 40 generic drugs saw price increases averaging 39%. One of them? Lisinopril, a common blood pressure pill. GoodRx data shows its cash price at Walmart jumped 247% in that same period-from $4 to $45. That’s not inflation. That’s market failure.

Meanwhile, the overall list price of generics only rose 4.9% in 2023, down from 5.2% in 2022. That sounds good-until you realize it’s masking dozens of drugs that cost double or triple what they did just a year before. The FDA says 60% of generics stay stable. But the other 40%? That’s where the pain lives.

Why Prices Jump Even When Nothing Changes

You’d think if a drug has been around for 10 years, its price would settle. But that’s not how it works.

Manufacturers don’t set prices based on cost. They set them based on what they think they can get away with. If a drug has only one or two makers, and patients have no alternatives, the manufacturer can raise prices without losing customers. And they do.

Supply chain problems make it worse. In 2023, the FDA found quality issues in 23% of foreign generic drug factories. When one factory gets shut down for not meeting standards, production drops. Prices spike. Sometimes, the shortage lasts six months or more. And during that time, the few remaining makers raise prices to cover lost volume.

Even pharmacy reimbursement systems add to the chaos. Pharmacies get paid based on something called Average Wholesale Price (AWP)-a number that often has nothing to do with what they actually paid for the drug. The gap between what pharmacies pay and what they get reimbursed? On average, 22%. For small pharmacies, that’s a death sentence when a generic’s price suddenly doubles.

Who Gets Hurt the Most

It’s not just patients. Pharmacists, insurers, and even Medicare are feeling the squeeze.

In 2024, 37% of Medicare beneficiaries taking generics said they skipped doses or cut pills in half because of cost. Nearly 3 in 10 said they went without medication entirely. These aren’t rare stories. They’re routine.

Independent pharmacies report that 42% of them had to absorb price hikes on 15% of their generic inventory. One day, a drug is profitable. The next, it’s a loss leader. Many can’t afford to keep stocking it. Patients then get told, “We don’t carry that anymore,” and have to go elsewhere.

And here’s the irony: the people who save the most money on generics are the ones using discount tools like GoodRx. Their average savings? $112.50 per prescription. But if you’re on Medicaid, Medicare, or just paying cash without a coupon, you’re at the mercy of the market.

What’s Being Done-and What’s Not

The government knows this is a problem. The FTC has 12 active investigations into unjustified generic drug price hikes. The FDA is trying to speed up approvals for generics made by fewer than three manufacturers. The Inflation Reduction Act removed a cap on Medicaid rebates, which led to some brand-name price drops in early 2024-but generics barely budged.

The real fix? More competition. More manufacturers. Less consolidation. But that’s easier said than done. Building a drug factory costs tens of millions. Regulatory hurdles are high. And if you’re a manufacturer, why risk investing in a drug that could crash in price overnight if someone else enters the market?

What You Can Do Right Now

You can’t control the market. But you can control how you pay.

• Use GoodRx, SingleCare, or RxSaver before you pay at the pharmacy. Prices vary wildly between stores-even within the same chain.
• Ask your doctor about therapeutic alternatives. Sometimes another generic in the same class is cheaper.
• Switch to a 90-day supply if your plan allows it. Bulk discounts often kick in.
• Call your pharmacy and ask if they have a cash price. Sometimes it’s lower than your insurance co-pay.
• Report sudden price spikes to your state’s attorney general. Consumer complaints trigger investigations.

The Bottom Line

Generic drugs are still the best way to save on prescriptions. But they’re no longer the predictable, low-cost option they used to be. Prices are no longer tied to production cost or competition. They’re tied to market power-and when power is concentrated, prices rise.

The system isn’t broken. It’s working exactly as designed-for the companies that control it. For everyone else? It’s a gamble. One that’s getting riskier every year.