Cost of Generic Drugs Soaring Due to Increased Demand from
Obamacare
by Dr. Susan Berry 1 Feb 2014,
6:30 AM PDT
The pervasive use of generic over
brand-name medications was anticipated to be a money-saver, but recently prices
are soaring, even up 6,000 percent for some common drugs that were once fairly
low-cost.
As National Journal reports,
pharmacists are perplexed about the huge price hikes in many drugs and are
asking Congress to hold a hearing to look into the matter.
Generic drugs such as Pravastatin,
which treats high cholesterol, and the antibiotic Doxycycline spiked upwards of
1,000 percent in 2013, according to a survey by the National Community Pharmacists
Association.
According to the survey, 77
percent of pharmacists said they experienced 26 or more instances of a large
increase in the acquisition price of a generic drug within the last six months
of 2013.
The survey found an additional 84
percent of pharmacists said price fluctuations prevented them from providing
care and remaining in business due to the fact that filling prescriptions
resulted in losses when some patients refused their prescriptions because of
costs.
In addition, the National Journal
report indicates that health care and pharmaceutical consulting firm Pembroke
Consulting found that within the last year more than a dozen drugs increased
ten times their standard rate.
Some pharmacists and physicians
are pointing a finger of blame at drug companies for the price hikes.
For example, Dr. David Belk wrote
in his blog in December that he observed price hikes in single doses of
medication, where one dosage of a medication was very expensive, but other
dosages of the same drug were more reasonable.
At Costco, for example, at one
given time the generic high blood pressure medication Irbesartan was nearly
$300 for a 90-day supply of the 150 mg tablet, yet the cost of the same supply
of the 300 mg tablet was only $30.
“If you ask the pharmaceutical
company, they’ll say, ‘Oh, we had a shortage,’ which makes no sense because
they were making other milligrams,” Belk wrote. “By the time the pharmacy has
figured out the price spiked, it’s dropped back down again.”
However, Dan Mendelson, CEO of
consulting firm Avalere health, says prices of generic drugs have gone up
because demand for them has risen.
“This is an unregulated market in
the sense that no one is telling them what to charge,” Mendelson said. “You’re
going to see them cozy up to the price of the brand name product for
competition reasons.”
Mendelson objects to getting
Congress involved in the price hikes because it suggests lawmakers should step
into the market and impose price controls.
“I think people will continue to
use these generic products because they’re cost effective and needed when
prescribed,” Mendelson said. “There’s no question in my mind demand is going to
go up because of the Affordable Care Act [ObamaCare],
and these markets respond to demand.”
Since ObamaCare requires all
health insurance plans in the exchanges to cover prescription drugs, the new
health reform law may increase demand for drugs, causing prices for generic
medications to rise even higher in the future.
Writing at The Motley Fool, Todd
Campbell, owner of E.B. Capital Markets, has been observing the trends of the
big drug manufacturers as they face the loss of patent protections.
Campbell notes, for example, that pharmaceutical giant Eli Lilly is facing significant
challenges this year:
The company's blockbuster
antidepressant drug Cymbalta, which generated sales of $4 billion in 2012 faces
generic competition for the first time this year. And another $1 billion in
sales goes up for grabs when Lilly's Evista loses patent protection in March.
Those high profile expirations
will mean Lilly will have to rely more on its diabetes drugs and cost cutting
to protect earnings this year. However stiff competition from diabetes drug
makers AstraZeneca, Novo Nordisk, and Sanofi
means there will plenty of obstacles to overcome for Lilly in 2014.
Pfizer, Campbell observes, is also going through a
major transition. The “patent cliff” took its toll on the drug company when it
lost protection for its bestseller Lipitor in November of 2011. Consequently, the
percentage of prescriptions written for generics across the industry rose from
70 percent in 2011 to 77 percent in 2012:
That generic prescription growth
took a heavy toll on Pfizer as U.S.
sales dropped 17% and international sales fell 7% in 2012. But closing plants
and cutting headcount in response to falling revenue likely better positions
the company as year-over-year comparisons become easier.
Campbell writes that Pfizer has adapted by selling off its
nutrition business to Nestle for over $11 billion in 2011, and spinning off its
animal health business, Zoetis, early in 2013. Now the drug industry giant is
restructuring its remaining business into three new units: one which focuses on
immunology and metabolic disease; another on vaccines, oncology, and consumer
products; and a third on drugs that have lost or will lose patent protection
through 2015.
Campbell observes the significance of the patent cliff for a large
pharmaceutical like Pfizer.
“After a breather in 2013, the
patent cliff steepens this year and next year and Pfizer won’t escape
unscathed,” Campbell
writes. “As much as 20 percent of its sales is in jeopardy from generic
competition over the next three years, including Celebrex and Enbrel.”
Sanofi
Sidley Austin
LLP was the lobby firm for the Eli
Lilly and Company, Sanofi-Aventis,
Pfizer Inc., and is the lobby firm
for the Pharmaceutical Research and
Manufacturers of America.
Note: Barack Obama was an
intern at Sidley Austin LLP.
Michelle
Obama was a lawyer at Sidley Austin
LLP.
R.
Eden Martin is counsel at Sidley
Austin LLP, and the president of the Commercial
Club of Chicago.
Newton
N. Minow is a senior counsel at Sidley
Austin LLP, and a member of the Commercial
Club of Chicago.
W. James
McNerney Jr. is a member of the Commercial
Club of Chicago, and the chairman & president & CEO for the Boeing Company.
Boeing Company
is a contractor for the National
Security Agency (NSA).
Barbara G. Fast
was a VP at the Boeing Company, and
a VP for the CGI Group Inc.
CGI Group Inc.
was the Obamacare contractor that
developed Healthcare.gov web site.
Obamacare
is Barack Obama’s signature policy
initiative.
Donna
S. Morea was the EVP for the CGI
Group Inc., and a trustee at the Committee
for Economic Development.
Foundation
to Promote Open Society was a funder for Committee for Economic Development, and the Brookings Institution
(think tank).
George Soros
was the chairman for the Foundation to Promote Open Society.
Frederick W.
Telling is a trustee at the Committee
for Economic Development, and was the VP for Pfizer Inc.
Ellen R. Marram is
a trustee at the Committee for Economic
Development, and a director at the Eli
Lilly and Company.
Jeffrey N.
Simmons is the SVP for the Eli Lilly
and Company, and a director at Chiquita
Brands International, Inc.
Cyrus F.
Freidheim Jr. was the chairman & CEO for Chiquita Brands International, Inc., a managing director at Booz Allen Hamilton, is a member of the
Commercial Club of Chicago, and an
honorary trustee at the Brookings
Institution (think tank).
Valerie B. Jarrett
is a member of the Commercial Club of
Chicago, the senior adviser for the Barack
Obama administration, and her great uncle is Vernon E. Jordan Jr.
Vernon E. Jordan Jr. is Valerie B. Jarrett’s great uncle, an
honorary trustee at the Brookings Institution (think tank), a director
at the American Friends of Bilderberg (think tank), a senior counsel for
Akin, Gump, Strauss, Hauer & Feld,
LLP, and a 2008 Bilderberg conference participant (think tank).
Akin,
Gump, Strauss, Hauer & Feld, LLP is the lobby firm for the Pharmaceutical Research and Manufacturers
of America.
Robert S. Osborne
is a member of the Commercial Club of
Chicago, and the EVP & general counsel for Booz Allen Hamilton.
Booz Allen
Hamilton is a contractor for the National
Security Agency (NSA).
Edward Snowden was
an employee at Booz Allen Hamilton,
and leaked information about National
Security Agency (NSA).
Keith B.
Alexander is the director for the National
Security Agency (NSA), and a friend of Barbara
G. Fast.
Boeing Company
is a contractor for the National
Security Agency (NSA).
Barbara G. Fast
is a friend of Keith B. Alexander, was
a VP at the Boeing Company, and a VP
for the CGI Group Inc.
CGI Group Inc.
was the Obamacare contractor that
developed Healthcare.gov web site.
Obamacare
is Barack Obama’s signature policy
initiative.
Donna
S. Morea was the EVP for the CGI
Group Inc., and a trustee at the Committee
for Economic Development.
Foundation
to Promote Open Society was a funder for Committee for Economic Development, and the Brookings Institution
(think tank).
George Soros
was the chairman for the Foundation to Promote Open Society.
Frederick W.
Telling is a trustee at the Committee
for Economic Development, and was the VP for Pfizer Inc.
Ellen R. Marram is
a trustee at the Committee for Economic
Development, and a director at the Eli
Lilly and Company.
Sidley Austin
LLP was the lobby firm for Pfizer
Inc., the Eli Lilly and Company,
Sanofi-Aventis, and is the lobby
firm for the Pharmaceutical Research and
Manufacturers of America.
Barack
Obama was an intern at Sidley Austin
LLP.
Michelle
Obama was a lawyer at Sidley Austin
LLP.
R.
Eden Martin is counsel at Sidley
Austin LLP, and the president of the Commercial
Club of Chicago.
Newton
N. Minow is a senior counsel at Sidley
Austin LLP, and a member of the Commercial
Club of Chicago.
Commercial Club of Chicago,
Members Directory A-Z (Past Research)
Tuesday, December 17, 2013
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