At least eight pharmaceutical companies sell a decades-old drug that treats gallstones, but the competition has done little to keep its price down.
Instead the price has skyrocketed.
Two years ago, ursodiol's wholesale price was as low as 45 cents a capsule. Then in May 2014, generic drug manufacturer Lannett Co. hiked its price to $5.10 per capsule, and one by one its competitors followed suit – with most charging nearly the same price.
Experts say this is not how a competitive marketplace is supposed to work.
"When you have a generic drug with eight suppliers you would expect the prices to go down," said Dana Goldman, director of USC's Leonard D. Schaeffer Center for Health Policy & Economics.
Unlike nearly every other developed nation, the U.S. allows drug manufacturers to set their own prices, a policy that has resulted in overall medicine costs being far higher than elsewhere. Increasingly, insurers are passing the cost along to patients through higher deductibles.
Robert Frankil, the owner of Sellersville Pharmacy in Pennsylvania, said ursodiol is just one of dozens of generic drugs that he has found to spike in price in the last couple of years.
"Why are these companies raising their prices?" asked Frankil. "Because they can."
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