Some Generic Drugs Contribute to Rising Health Care Costs, too

Some Generic Drugs Contribute to Rising Health Care Costs, too
July 09 01:00 2014

Some Generic Drugs Contribute to Rising Health Care Costs, too

Those high-priced cancer medicines aren’t the only drugs hurting some pocketbooks.

In certain cases, generic medicines – which are largely credited with helping to lower health care spending – are also contributing to rising costs. Over the past year, prices paid by pharmacies for some widely prescribed generic medicines that are used to treat migraines and thyroid conditions have more than doubled, according to data from the EvalutePharma research firm cited by The New York Times NYT -2.50%.

Earlier this year, the National Community Pharmacists Association called for a congressional hearing and pointed to price hikes of 600%, 1,000% or more, according to a survey of pharmacists. And as the paper notes, these big increases affect smaller pharmacies, in particular, because they don’t have the clout of big drug-store chains to bargain for discounts.

There is irony in this. Thanks to low prices, 86% of all prescriptions filled in the U.S. are for a generic medicine, according to a recent report by the IMS Institute for Healthcare Informatics. Yet the story makes the point that rising prices, in certain instances, now threaten to unwind this increased reliance on copycat drugs.

The digoxin drug used to treat congestive heart failure was used to illustrate the issue. The three companies selling the drug in the U.S. increased the price they charge pharmacies, at least nearly doubling it since late last year, according to EvaluatePharma. And for patients, that meant the prices at pharmacies often tripled from last October to this June, the paper writes.

The average price tag at a pharmacy for a month of digoxin this year is about $50, Doug Hirsch, chief executive of a web site that tracks drug pricing to help consumers find good deals, tells the paper. But some patients now face monthly costs of more than $1,000, which can mean co-pays of hundreds of dollars, the paper adds.

Yet, digoxin was not on the FDA list of drug shortages, which might otherwise explain price hikes. The Times also says there was no new patent or formulation, and the drug isn’t hard to manufacture. But what did change, the Times writes, was the potential for profits as competition waned – late last year, several generic drug makers stopped making digoxin, which once sold for pennies a pill.

Only three companies continued to make the drug and one of them – it is not clear which one – instituted a price hike and the other followed suit, the paper explains. By this past January, the price pharmacies paid for a particular dose of digoxin ranged from about $1.10 to 40 cents a pill, about double than what was paid six months earlier, according to the Times.

As Aaron Kesselheim, a professor of health economics at the Harvard School of Public Health, tells the paper: “Studies show it is not until you have four or five generics in the market that the prices really are down.”

Indeed, price hikes can make a substantial financial difference to small generic-drug makers. Perhaps higher prices will tempt others to produce a drug, which would presumably drive down costs. But meanwhile, some people may find generics are unexpectedly contributing to rising medicine costs.

Read full story at Wall Street Journal (blog)
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