— After calling for a routine prescription refill,
Craig Elliott got a rude shock: His bill was going up
44-year-old piano tuner and guitar instructor, who has
health insurance, used to pay $20 for a three-month
supply of his generic epilepsy drug as a member of
Walgreen’s Prescription Savings Club. But recently,
the price shot up to more than $100, forcing him to
order month by month.
get by … (but) I don’t like now having a larger bill
every month," Elliott said.
other Americans are feeling the same sticker shock at
the drug store. Historically costing pennies on the
dollar compared with a brand-name drug, generic drugs
have long been considered a vital weapon in the fight to
contain soaring health care costs. But in the past year,
the price of many generics is disconcertingly moving in
the wrong direction, drawing the attention of Congress
and pinching the wallets of consumers as well as
pharmacies and insurers.
are talking about the need of the American people to be
able to afford the medicine that their doctors
prescribe," U.S. Sen. Bernie Sanders, I-Vt.,
chairman of a Senate health care subcommittee, said at a
hearing on the issue on late last week. "There
appears to be now a trend in the industry where a number
of drugs are going up at extraordinary rates … We
wanted to know if there was a rational economic reason
as to why patients saw these price increases or whether
it was simply a question of greed."
say raw material shortages, consolidation in the
industry and medical advancements that make replicating
brand-name drugs more expensive have all contributed to
to Catamaran, a pharmacy benefit manager that
administers prescription drug programs, consumers and
insurers paid an average of $41.88 for a generic drug
prescription in recent years, up from a four-year
average of $14.21 between 2005 and 2009. Today, more
than a third of available generics cost insurers and
consumers more than $100 per prescription, company data
who don’t have insurance, they’re picking up the
full fare of these drugs," said Catamaran’s Chief
Medical Officer Dr. Sumit Dutta. "And they’re
often not in the best place to handle the cost of these
Pembroke Consulting analysis of federal data shows that
the price pharmacies pay for generics over the past year
has soared, too, by as much as 17,700 percent. One in 11
generic drugs have more than doubled in acquisition cost
for pharmacies over the past year.
cope, insurance companies have introduced co-pay tiers
to their plans to offset rising generic prices, Dutta
Co., which cited the skyrocketing generic drug prices as
an obstacle for 2015 profits, has a similar tiered
system with its Prescription Savings program, a
membership plan that offers discounts on services and
drugs. The generic epilepsy drug that Elliott takes,
Carbamazepine, had previously been on its list of
value-priced generics but was removed when the price
increased, a Walgreen spokesman said. According to
Pembroke Consulting, the average pharmacy acquisition
cost of that drug increased about 22 percent between
July 2013 to July 2014.
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spokeswoman for Teva Pharmaceuticals, one of six
manufactures of the epilepsy drug according to the U.S.
Food and Drug Administration website, declined to say
why the price of Carbamazepine has been rising.
is committed to ensuring access and providing
high-quality, affordable medicines to U.S.
patients," the spokeswoman said in an emailed
response. "While it is possible to find examples of
generic medicines that have increased in price, these
select instances are not indicative of the overall
largest price increase from 2013 to 2014 was a 500
milligram capsule of Tetracycline, an antibiotic used to
treat bacterial infections. That dose went up in price
17,714 percent, from 5 cents per pill to $8.59. An FDA
spokeswoman said a more than two-year shortage due to
unavailability of raw materials to make the drug, as
well as manufacturing issues, was resolved in March.
raw material shortages are one factor behind price
increases, health analysts say that market competition
— or lack thereof — also plays a role. Sometimes,
drug manufacturers opt to discontinue a line because the
presence of other manufacturers results in pricing
pressures, which cut into profits. They also feel
pressure to specialize product lines and consolidate
through mergers and acquisitions, creating even more
pricing power for remaining manufacturers.
as medicine advances and drugs become more expensive and
difficult to imitate, fewer companies are willing to
invest in making generic versions of brand-name drugs
that move off patent protection.
chemotherapy drug Xeloda moved off patent in December
2013, a generic version, Capecitabine, came to market.
Today, it costs just $40 less per prescription than it
did when it was a branded drug — $2,660 instead of
$2,700, a 1.5 percent decrease, according to Catamaran
rising prices have caught the attention of Congress and
last month Sanders and Maryland’s Rep. Elijah Cummings
requested financial documents from 14 pharmaceutical
companies across the country.
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Pharmaceuticals is among those being investigated.
makes drugs for rare diseases and is the only company
manufacturing two drugs that are used for heart diseases
— Isuprel and Nitropress, a spokesman said. The price
of those drugs increased nearly five times from November
2012 to September 2014, according to the Health Care
Supply Chain Association, a group that represents large
group purchasing organizations for hospitals.
said it doesn’t think it should have been included in
the investigation, even though the two drugs it makes
are no longer covered by patents. The company did not
dispute the roughly 400 percent increase in the price of
the two drugs, but said it has spent more than $200
million on the drugs, including purchasing intellectual
property from Hospira last year and investments in the
drugs, a cost not usually incurred by generic drug
Hospira spokeswoman declined to elaborate on why the
company sold the drugs beyond saying they were divested
"for business reasons."
it’s a drug that someone owned that we had to buy, we
had to pay for it," Marathon General Counsel Pat
Morris said. "And we have to do this in the face of
(the fact that) a generic drug could come in tomorrow
and take all of our sales."
experts have said prices will come down when other
pharmaceutical companies recognize an opportunity to
share in the profits of some of the drugs that have
skyrocketed in price. Buyer consolidation should help,
too, they said.
year, CVS Caremark announced a partnership with Cardinal
Health, giving it more generic drug buying power.
Walgreen Co. works with AmerisourceBergen and Alliance
Boots and McKesson announced its acquisition of Celesio
in January. Those three groups wield a huge amount of
purchasing power, which should keep generic drug prices
the American people are entitled to know," Sanders
said, "is why there are a number of generic drugs
that have seen a huge increase in prices in recent
DRUG QUICK FACTS
is a generic drug?
drugs are chemically identical to brand name drugs,
equally effective and prescribed for the same purposes.
do generic drugs come to market?
companies submit an application to the U.S. Food and
Drug Administration for approval to make and sell a
generic drug, but those applications can’t be approved
until the all patents and exclusivity for the brand-name
drug have expired. Patents expire after 20 years and
exclusivity can last up to 7 years.
were generic drugs introduced?
drugs help combat the rising cost of health care and
allow market competition for brand-name drugs.
makes generic drugs?
top five U.S. companies by unbranded generic
prescriptions dispensed are Teva Pharmaceuticals USA,
Mylan Labs, Actavis, Sandoz, and Lupin Pharma,
respectively, according to the Generic Pharmaceutical
U.S. Food and Drug Administration, Generic