By Victoria Colliver
The widespread use of generic medications is supposed to save the health care system money, but huge price spikes in certain common, previously low-cost drugs is putting some of that savings in question.
Nosebleed-level price increases of more than 100 percent, 1,000 percent and, in some cases, 6,000 percent and above are making it difficult for pharmacists to fill some prescriptions because insurance companies have been slow to adjust their reimbursements to reflect the price spikes. Large chain pharmacies have felt the pinch, but it’s been especially hard on independent pharmacists.
“I had to turn away several patients for some pain medications,” said Benson Toy, a pharmacist at Marin Medical Pharmacy in San Rafael. He directed them to Costco, CVS/pharmacy and other retailers that can more easily absorb the costs.
Nearly 80 percent of all the drugs dispensed in the United States are generics, which are required to have the same active ingredients as the original brand-name versions, but are usually sold at reduced prices without patent protection. Generic drugs save consumers $8 billion to $10 billion a year, according to estimates from the Congressional Budget Office.
But pharmacists, patients and other health experts are alarmed by the cost hikes in generic drugs they’ve seen over the past year, and the acceleration in the number of drugs affected in recent months.
At Toy’s pharmacy, the cost of a bottle of the generic heart medication digoxin shot up from $131 in September to $989 a month later for the same dosage. He said tetracycline, an antibiotic used to treat bacterial infections, rose from $31 for a specific dosage to $450 over the past year.
No explanation for cost
In some cases, the increases can be explained by a manufacturing problem that puts the drug in short supply or a shortage of a key raw material used to make the medication. But in many of the cases, observers say, the extreme jump in price comes without an explanation and seems to make no sense.
Dr. David Belk, an Alameda internist who hosts a website called the True Cost of Healthcare, said he’s noticed that some generics will experience a price hike in a specific dosage of a drug, while the same drug at a different strength will stay the same. In other cases, he said, prices will shoot up and then drop in a short period of time.
For example, Belk said, irbesartan, a blood pressure drug, cost about 15 cents a pill in October. But when he checked the price of the 150-milligram dosage about a month later, it had shot up to about $3 a pill while the 300-mg and 75-mg dosages remained unchanged. He said he’s seen the price of levothyroxine, used to treat an underactive thyroid, fluctuate wildly.
“It’s sort of just a sucker punch,” Belk said. “You sell a few at a really high price for a few weeks, and then that just disappears.”
The Generic Pharmaceutical Association, which represents the generic drug manufacturers but has no role in setting prices, would not respond directly to questions about the spiraling prices of these drugs.
“As with many manufactured products, pricing reflects supply and demand,” said Ralph Neas, the association’s president and chief executive office, in a statement. “But, unlike for many other types of products, generic drug manufacturers cannot simply ramp up production immediately.”
Generics save billions
The pharmaceutical industry group released a study last month that showed use of generic medicines saved the U.S. health system $217 billion in 2012 and about $1.2 trillion from 2003 to 2012.
A new study by Philadelphia research firm Pembroke Consulting found that only about a third of generic drugs have gone up in price between November 2012 and November 2013, and most went up less than 25 percent in that period. But a small percentage saw huge price increases — in the 6,000 percent range, the study said.
Adam Fein, president of Pembroke Consulting, said why prices are jumping that much remains a mystery.
“I’ve talked to a lot of pharmacists and wholesalers and asked them about this, but have not been able to nail down a single cause,” he said. “We do have a more fragile supply chain for a lot of generic drugs.”
That means some generic drugs have such low profit margins that only one or two manufacturers produce the medication, he said. So if there’s a regulatory issue, a problem in production or a lack of raw materials, the price shoots up due to the laws of supply and demand.
A survey released in December by the National Community Pharmacists Association showed that 77 percent of pharmacists saw an upswing in generic drug prices 26 or more times over the previous six months.
“It’s really crazy. It seems to be growing as far as the number of drugs impacted,” said Kevin Schweers, spokesman for the community pharmacists’ group.
The most common generic increases reported in the survey were benazepril for high blood pressure; the antidepressant clomipramine; digoxin to control heart rate; divalproex for seizures and psychiatric conditions; the antibiotic doxycycline; budesonide for asthma; haloperidol for psychotic disorders; and levothyroxine, which is used to treat hypothyroidism.
Most people with health coverage are shielded from the cost increases because their co-payments are set contractually. But that’s not the case for people who have to pay cash.
Patients are also affected if they are sent to an unfamiliar pharmacy because their regular pharmacist can’t afford to fill the prescription.
Nina Murphy, of San Rafael, had been picking up a generic painkiller at Marin Medical Pharmacy for the past four years. So she was shocked when she learned in October that her pharmacist could no longer fill the prescription.
“It went up way more than just double,” said Murphy, 62, who declined to reveal the medications she takes. “Now I have to go to a big chain to get the pills.”
Murphy has chronic pain due to multiple car accidents and said going to different pharmacies is physically difficult for her.
“It’s a horrible thing that’s happening to the industry,” she said. “They’re not thinking about the inconvenience that this is causing to the patients.”
— Reach Victoria Colliver at email@example.com