The True Cost of Generic Drugs?

The growth of the generic drug industry was fueled by the promise of increased competition and lower prices for needed medications, but recent changes not only challenge that perception, but raise concerns about skyrocketing prices as well as drug shortages.

We contacted a variety of healthcare professionals to ask:

Have prices and or availability of generic drugs created clinical concerns in your practice?

If so, how have you dealt with this challenge?

Do you think it is appropriate to seek regulatory relief through the FDA or the FTC?

The participants this week are:

H. Robert Silverstein, MD, FACC, medical director, Preventive Medicine Center in Hartford, Conn.

John P. Higgins MD, MBA, MPhil, associate professor of medicine at the University of Texas Medical School at Houston, chief of cardiology at Lyndon B. Johnson General Hospital, and director of exercise physiology at the Institute for Sports Medicine and Human Performance at Memorial Hermann

Parag P. Patel, MD, a family medicine specialist at Silver Pine Medical Group, part of Beaumont Health System, in Sterling Heights, Mich.

Walid F. Gellad, MD, MPH, associate professor, medicine and co-director, Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh

Problems for Patients

H. Robert Silverstein, MD: “The availability of medications and their price have created important problems in my practice, simply putting some medications out of reach for patients. Quoting Newton, for every action, there is [can be] an equal and opposite reaction. There are businesses involved on both sides of this conflict. Those people/corporations with positions like insurance companies and Medicare (CMS) should negotiate with the manufacturers what they will or will not pay for medications. I was astounded at the incredible cost increase when colchicine was taken from being a generic to a trade medicine. Apparently that has been somewhat amended by appropriate howling.”

John Higgins, MD: “Different price-points have a major impact when deciding which antiplatelet drug I use for those price-sensitive patients. However, with this cost constraint, it makes the decision more difficult given that the brand name medications may have advantages in certain patient subsets, eg, I may want to use ticagrelor for its greater platelet inhibition, yet I cannot use it because the patient will not fill their prescription. So, I fall back to clopidogrel which I know they will more likely take. But it is concerning that the largest range in price variation is for clopidogrel which, being generic, you would expect to have a similar price in various pharmacies. The fact that the generic price can be as low as $9.82 indicates the cost of manufacturing the drug is even lower. This implies the high end of this range, $91.03, is charging an unreasonably high price and thus generating a large profit margin.”

Parag Patel, MD: “There’s definitely been a surge in the last few years of very inexpensive drugs and a lot of common drugs that patients take for blood pressure, for cholesterol, for diabetes, things that are very common, have gone down in price. That’s made their availability to patients a lot better. We even have some patients who won’t use their health insurance and just pay cash because it’s cheaper than using their health insurance for certain medications. Other medications, even though they’re generic, sometimes do remain high in price, and that does make for some difficult situations.”

Walid Gellad, MD: “Patients, insurers, employers, and even state governments have come to rely on generic drugs as a proven way to save money while maintaining quality. Patients, especially, are being caught off guard by these price increases, but each of these other groups will feel the pinch soon if the trends don’t reverse. For some of these generic drugs (like antibiotics, or blood pressure medicines like captopril, or cholesterol drugs like pravastatin), there are alternatives that have not increased as much in price and may be an option for patients. For others, like digoxin for example, there may not be alternatives and patients are stuck. In some cases, drugs that used to be on the low-cost generic lists at places like Walmart are no longer on the list because of price increases.”

Creative Cost Solutions

Patel: “We handle each situation differently. We try to find alternatives for the patients, we use the Internet and other resources, like local pharmacies to try and find the best price for them-perhaps even applying to the company for some aid so when we run into those situations; it’s tough, but you’ve got to get creative. It’s kind of a case-by-case situation, but it does happen.”

Higgins: “Some of the pharmaceutical companies as well as insurance companies, Medicare, and Medicaid offer free trials or prescription assistance to certain indigent groups, which helps. At our facilities, we often involve the patient, the pharmacist, and social worker to help facilitate this process. We also search online for the best price locally for a generic for a particular patient, switch patients to different lower-priced generics or those that are on the $4-a-month plans that various pharmacies have, as long as they are equivalent or provide very similar safety and efficacy and the patient consents to the change and substitute medications that combine two drugs or use a combined generic. In the case where the price of the generic or brand name medication is too high, there is no alternative to the medication, and the patient will go without and thus incur greater morbidity and mortality from their medical condition, I think it would be useful to seek regulatory relief.”

The Many Aspects of Regulation

Gellad: “The causes of these price increases are multiple, intertwined, and hard to fix-they include raw material shortages, manufacturing problems, industry consolidation and resulting monopolies, or simple business decisions. The FTC can only do so much in the absence of illegal behavior-if companies legally obtain a monopoly or near-monopoly they can charge the price they want. Typically, higher prices would bring additional manufacturers into the market, and that is where FDA may have a role in lowering barriers to entry.”

Patel: “In any industry, there’s always somebody or a company or a situation where somebody is probably doing something that isn’t the best for everyone, and so you see situations of abuse wherever it is, so having some regulation there is appropriate. The flip side to that is in certain situations the prices have gone down a lot, so if you have a lot of manufacturers making a certain generic, the price drops below where you even think it could be, so I think some regulation is helpful, but not total regulation.”

Higgins: “If help from the FDA, Federal Trade Commission, and the Generic Pharmaceutical Association will help increase choice and competition in the development and pricing of generic prescription drugs, and more of my patients will receive the medication that will benefit them most, then I am in favor. In a market economy, providing incentives for competition among various choices generally will ensure value added to the product (generic drug), and avoid price hikes which the consumer (patient and/or insurance company) will not accept if an alternative at a better price point exists.”

Silverstein: “We must/should accept with the joy of freedom that this is a capitalist economy, but that does not mean that we are powerless to respond to these virtually intolerable rising prices. The FDA should not make it so onerous to bring medications to the market, and therefore the costs of new medications could be reduced. The FDA should combine with the European version of itself (EMA) to make decisions of what medications and procedures can be brought onto the market: Europe is generally much faster and more efficient at this, again allowing the cost reduction of medications. Perhaps encouraging patients to evaluate legitimate and biologically safe Canadian, European, and vetted Indian medication manufacturers/pharmacies could be a help by increasing competition.”

This article was first published on MedPageToday and reprinted with permission. Free registration is required.