Generic Drugs Prices, Diminishing Returns?

Yesterday, AARP published its latest Rx Price Watch report, which highlights generic prescription medication price changes from 2006-2013. Generic medication is considered the best avenue towards lower taxpayer and consumer drug costs. In the mid-1980s, passage of the Hatch-Waxman Act helped bring lower cost generic medication to the market faster and fueled intense price competition among generic manufacturers. The result was 1) much lower drug prices on medications that have lost their patents (often 90% lower) and 2) an exceedingly high generic penetration rate with generics comprising 85% of all medication use. AARP’s report suggests that generic drug prices continue to decrease, which is good, but at a much slower rate, “indicating that the era of consistent generic drug price decreases may be coming to an end.”

Stay calm. Generics are still usually much lower cost than the brand names and that will continue to be the case. AARP’s report notes that 2013 had the lowest average generic price decrease (4.1%) since 2006. However, AARP’s data also shows considerable fluctuation in this rate, enough to question whether or not we’re really experiencing a new normal in which generic drug prices no longer decline year after year. For example, the decreases in average generic drug prices that occurred in the prior two years, 2011 and 2012, 9.1% and 14.5%, respectively, were the highest since 2006. These numbers, however, most likely reflect what’s referred to as the “patent cliff” – a time when many patents on blockbuster brand name drugs, such as Lipitor and Plavix, lost their patents, thus allowing much lower cost generics to enter the market. As I see it, we don’t really know the future trend of generic drug prices.

Again, most generic drugs are way cheaper than their brand name counterparts and just as safe and effective. The big generic drug problem is that the cost of some generics has spiked outrageously over the past few years, sometimes beyond the reach of the American consumer. Usually when we talk about insane price increases of brand name drugs year over year the percentages are 10, 20, 30 or even 40%. But the increases for some generics have literally been in the 2000% range! One crazy example, reported by the People’s Pharmacy, showed that the cost of the antibiotic doxycycline skyrocketed from six cents ($.06) to $3.30, a 5500% increase.

In fact, directing you back to our research from November 2014, we found that even brand name versions sold in foreign pharmacies can be MUCH lower cost than the generics sold here! Please keep in mind that those same generics mentioned in our analysis may have already come down in price domestically. So before you buy from an international online pharmacy, check your local pharmacy first.

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PhRMA Criticizes Obama’s New Budget For Requiring More Rebates on Prescription Drugs

“President Obama just released next year’s budget proposal and it has already sparked fierce criticism from the pharmaceutical industry. That’s because the plan would require Big Pharma to give an additional $156 billion in drug rebates over the next decade.” 
 
This news comes from RxRight.org’s latest blog post, entitled Big Pharma balks at President’s proposed budget. Not surprisingly, as articulated by its president, John Castellani, the Pharmaceutical Research and Manufacturers of America is against the rebates and other reforms found in Obama’s budget. One point championed by Mr. Castellani as a reason to criticize President Obama is that the “Medicare Part D is working well for seniors.” While Part D has certainly helped many seniors afford needed medication, the RxRights post, and empirical data, show that millions of seniors still struggle to afford necessary, and sometimes life-saving, prescription drugs because of costs – despite Medicare Part D drugs plans. 
 
In fact, the failure of Medicare Part D is one reason that reputable international online pharmacies remain a lifeline for Medicare enrollees. It appears if Obama’s budget is approved, without changes to his prescription drug rebate requests, then more Americans will forgo the international option in favor of domestic pharmacies. 
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Candidate Rick Santorum Defends High Drug Prices In America

During a recent campaign appearance in front of a Tea Party crowd, as reported by ABC News, Republican presidential candidate Rick Santorum told a mother and her sick son that high drug costs are fair because they are determined by free market forces. It appears that Mr. Santorum doesn’t understand the crisis of prescription drug prices and that the market is failing to price prescription drugs within reach for 10s of millions of Americans.

According to ABC News, “Santorum told a large Tea Party crowd here that he sympathized with the boy’s case, but he also believed in the marketplace,” and that companies wouldn’t be making the life-saving drugs if they didn’t believe they would turn a profit doing so. The former senator from Pennsylvania seemed to be lecturing the American people when he said: “People have no problem paying $900 for an iPad…but paying $900 for a drug they have a problem with — it keeps you alive. Why? Because you’ve been conditioned to think health care is something you can get without having to pay for it.” (more…)

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Average Americans Show Compassion for their Fellow Citizens Who Can’t Afford Medication – What About Our Elected Officials?

Two years ago, ABC News ran a segment (What Would You Do?) that showed Americans going out of their way to help strangers who could not afford their medication. Actors visited local pharmacies pretending they could not afford to pay for their much-needed prescription drugs – something that happens frequently in the U.S. Some people offered to help pay for part or all of the drug orders, and one man even left the pharmacy to get money from an ATM. In addition to financial assistance, these individuals also offered words of solidarity against the outrageous costs. Karen Wenberg (real person) told the woman (actress) she was helping: “Don’t be embarrassed. You know what? Medication is so f***ing expensive. There is no reason to be embarrassed… Sometimes we just pass on the good that’s been given to us.”

As we write this, Congress is marking up a new law, Stop Online Piracy Act (SOPA), one supported by the Obama administration that could effectively block Americans from acquiring safe and affordable medication from online pharmacies outside the U.S. As the government seeks to rein in spending, why do they want to stop consumers from getting non-tax-payer funded, affordable medication? When people go without medication, they can become sick or get sicker, putting a great burden on the health care system. To see what the government is doing, read RxRight.org’s guest post on techdirt. (more…)

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In Medicare “Doughnut Hole” 3.4 Million Stop Taking Their Medication

New research shows that the Medicare drug plan “doughnut hole” seriously endangers not only the pocketbook, but also the health of our nation’s seniors and other Medicare enrollees. Two separate studies released this month show that patients who reach the coverage gap are more likely to stop taking their medication than they are to switch to a cheaper drug: the Public Library of Science published Changes in Drug Utilization During a Gap in Insurance Coverage: An Examination of the Medicare Part D Coverage Gap, and the Kaiser Family Foundation Program on Medicare Policy published Understanding the Effects of the Medicare Part D Coverage Gap in 2008 and 2009.

The putative reason for the coverage gap is that the threshold will teach consumers to be aware of drug costs. Jennifer Polinski, ScD, MPH, the author of PLoS study says, “there is an expectation that people will seek less expensive drug options when they enter the donut hole.” However, these studies reveal that this is clearly not the case. Research from 2006 and 2007 shows that beneficiaries were 40% less likely to switch a drug if they did not receive financial assistance, as opposed to those beneficiaries who did. Likewise, the Kaiser study reveals that about 3.4 million, or 12%, of Part D enrollees who reached the gap in 2008 and 2009 discontinued their medication. (more…)

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Besides the obvious – access to cheap generic alternatives for once exorbitantly priced prescriptions – this year’s patent expirations on blockbuster brand-name drugs means even more good news for American consumers. A U.S. News and World Report article suggests the Patent Cliff as one of the reasons for the forecasted Medicare savings. Access to low-cost generics on popular drugs like Lipitor cuts spending significantly for plan sponsors, and U.S. officials have announced that enrollees paying for prescription drugs through Medicare Part D will not see an increase in premiums, in contrast with prior years. Rather, the yearly fees will decrease slightly – from an average of $30.76 in 2011 to $30.00 in 2012. All current plan premiums can be found on MedicareDrugPlans.com – Compare Costs and Features.

Moreover, plan enrollees are now receiving a 50% discount on brand name drugs purchased through the coverage gap. However, brand name drug prices continue to increase, which means the discount’s importance is less pronounced. (more…)

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PharmacyChecker.com was mentioned this week in a U.S. News and World Report article entitled How to Cut Your Drug Costs. Listed among other effective ways to save money on prescription drugs, the article notes that PharmacyChecker “compares prices of mail-order pharmacies, and can help you find the lowest posted prices.

How to Cut Your Drug Costs reminds readers that buying drugs from Canada – and elsewhere overseas – is technically illegal, but it quotes AARP: “Over the past decade millions of Americans have ignored U.S. law to seek cheaper prices from Canada, most often by mail order.” Notably, AARP found Canadian prices for Lipitor to be about a third less than they are here in the U.S. The fact that the FDA has (to our knowledge) never prosecuted an individual for importing a three-month supply of personal, non-controlled drugs with a valid prescription, means that they too understand the importance of access to safe and affordable medication. (more…)

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Generic prescriptions are on the rise, as doctors are prescribing them, and pharmacies are filling them, now more than ever. We recently wrote that the percentage of generic scripts being dispensed rose to 78% last year. But the popularity for generics – attributed to the significantly lower price tag compared to brand name drugs – is expected to take on a whole new meaning, as the patents for some blockbuster brand name drugs expire this year; this is also known as the “Patent Cliff”.

The biggest prize, Pfizer’s Lipitor (for Cholesterol), the number one selling drug in the U.S., goes generic later this year (November 2011); and Plavix (a blood thinner) and Actos (for Diabetes) will follow (May 2012 and August 2012, respectively). As patents run out, these and other popular prescription drugs will be far more affordable in the U.S., since generic drug prices tend to be lower here than in other countries. (more…)

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Generic Use Increase Means Spending Decrease for Consumers; But No U.S. Drug Price Relief on Brand Name Drugs in Sight

A new study published this month finally offers positive news about prescription drugs. Findings from The Use of Medicines in the United States: Review of 2010, by the IMS Institute for Healthcare Informatics, show that 78% of all prescription orders filled are for generic drugs, up from 75% in 2009. Aside from Lipitor, which comes in at number 12, the top 21 most widely used drugs, recorded by filled prescription, are all generic. This is good news because it means that even as brand name prices continue to rise, consumers can still save money on generics.

Consumers need not look past our borders for low priced generic medication since the U.S. usually has the lowest prices. You can find U.S. generic drug prices by comparing prices on www.pharmacychecker.com.

Despite the good news about generic drug utilization, uninsured Americans are too often deprived of access to affordable brand name drugs in the United States where there is no generic alternative. The problem is getting worse, as evidenced by brand name drug price increases of 8.3.% last year and rising numbers of Americans not taking their medication due to cost. Indeed, this is the reason millions of Americans are seeking affordable medication from outside the U.S.

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Prescription Drug Prices Across the Pond – Wishing Our Medical Establishment Would Speak Up!

We’ve recently reported on actions by foreign governments that lowered drug prices in other countries during the recession – a period in which U.S. drug prices increased. Despite much lower drug costs in other wealthy countries, there are voices of discontent regarding drug prices within these countries as well. This week we decided to take a look at drug prices in the United Kingdom.

This month in England, National Health System (NHS) prescription prices will raise 20 pence (approximately $0.33). This is occurring the same week that Scotland announced it will no longer charge for any NHS prescriptions – a move already in effect in Wales and Northern Ireland. About the increases, patient advocate experts are echoing the same concerns we often write about here. Katherine Murphy, Chief Executive of the Patients Association says:

At a time when many patients are struggling to make ends meet, another increase on charges they must pay is not acceptable. Some patients put off going to their doctor because they do not want to have to pay for their prescriptions. It is essential all patients feel they can access healthcare when they need it and not be deterred by costs.

When looking at the numbers it’s hard to see how such tiny increases on already low drug prices cause great concern. In stark contrast to drug prices in America today, the current cost per prescription in the United Kingdom is £7.40 – or $12. This price is for any written prescription, regardless of quantity, or if it is brand name or generic. And, medication administered in the hospital, at walk-in clinics, or by a general practitioner, plus prescribed contraceptives, are almost always free of charge.

Health organizations in the UK, such as the Patients Association and British Medical Association, view a 2.7% increase, on meds that already cost so little, as a public health issue. Compare that number with brand name drug price increases, reported by AARP, of 8.3% in the U.S. last year – on products that can cost hundreds or even many thousands of dollars a year – and we’re led to wonder, why is the whole American medical establishment not up in arms here?

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