A new study by The University of Iowa Tippie College of Business researcher Amrita Nain finds that mergers of pharmaceutical companies that manufacture generic drugs actually lower the prices of affected drugs by 6%. Her study finds that mergers lower prices through reduced overhead in staffing, marketing, and distribution costs.

The study found that mergers of companies that develop new and innovative drugs raise prices by 5.8% because of increased costs in marketing and research and development.

Nain points out that since 70% to 80% of prescriptions written in the United States are for generic drugs, mergers of the companies that produce them could actually be beneficial for consumers.

“Their business model is really different,” Nain told Radio Iowa’s Matt Kelley, “They’re focusing on high volume sales of low-price drugs. It’s a very competitive market, and these firms tend to use mergers as a way of cutting costs, getting more efficiency, and then passing these cost cuts onto prices so they can be more competitive in the generic drug market.”