updated 4/4/2006 1:43:21 PM ET 2006-04-04T17:43:21

Prescription drug prices soften dramatically even with moderate competition, the Food and Drug Administration said Tuesday in an analysis that shows the arrival in the marketplace of just two generic versions of a brand-name medicine can nearly halve the price consumers pay.

When a brand-name drug faces just one generic competitor, that challenger typically sells for 94 percent of the cost of its branded rival. More competition quickly widens that discount: Once a second generic manufacturer appears, the average price of a generic drug drops to just 52 percent of the brand-name version’s cost per dose, according to the analysis posted on the FDA Web site.

Prices continue to tumble, albeit more slowly but almost without exception, as more manufacturers join the market, the analysis shows. By the time nine manufacturers are producing generic versions of a drug, their products typically sell for just 20 percent of the price of the brand-name medicine, according to the federal analysis of 1999-2004 retail sales data on single-ingredient drug products collected by IMS Health Inc.

Release of the analysis comes amid ongoing criticism that the FDA is slow to approve generic versions of brand-name pharmaceuticals. The agency has a backlog of roughly 800 generic drug applications.

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