The high cost of generic medicine

Some drugs that were cheap to get just a few years ago have skyrocketed


Pharmacist Larry Cowan can flip through his records and spot the generic drugs that have taken big price jumps in the past year or so.

There’s digoxin, a heart medicine that he used to buy for pennies a pill.

“Now the price is close to 10 times that,” said Cowan, owner of Glenview Professional Pharmacy in Richland Hills, Texas.

There’s doxycycline, a decades-old antibiotic that went on the Food and Drug Administration’s shortage list in 2012 and became the poster child for generic price spikes. Cowan said a tablet of doxycycline went from about 6 cents in late 2012 to $3.65 in late 2013, a 6,100 percent increase.

Another drug, captopril, a high blood pressure medication, went from 2 cents to 79 cents each in the same period, he said.

Dramatic increase
While the FDA in the past month removed doxycyline from its shortage list, it still costs U.S. pharmacies an average of $3 a tablet, according to a weekly survey conducted for the federal Centers for Medicare and Medicaid Services. The same survey puts the average cost of digoxin at $1.08 for a 0.125 mg pill, a common dosage.

“For many years, generics went down and down,” said Joe Harmison, owner of DFW Prescriptions in Grand Prairie, Texas.

“Within the last six to 12 months, they’ve been going up, some really drastically,” said Harmison, who said he has operated his pharmacy for 30 years.

Factors behind the unusual price spikes, experts say, include a wave of industry mergers and decisions by some manufacturers to stop making certain drugs.

Some decline
Not every generic drug that Americans take has gotten more expensive. Most have not.

On average, the price of generics — medicines that are not protected by a patent and can be produced by FDA-licensed manufacturers — declined 15.9 percent last year, according to Express Scripts, a big prescription-management firm. Prices on brand-name drugs rose 13.9 percent. Both are years-long trends.

In all, U.S. spending on medicines rose 3.2 percent in 2013, Express Scripps said.

Another analysis of the CMS data, by Pembroke Consulting, found that from November 2012 to November 2013, two-thirds of the 16,000 different generic drugs and dosages saw a price decline while a third rose in price. Six percent more than doubled, and a dozen increased by 20 times or more.

All 12 of the biggest gainers were various forms or dosages of just four drugs, led by doxycycline. The others were: albuterol, used in asthma inhalers; clomipramine, a 1960s-era antidepressant; and captopril.

“Drug shortages appear to be the primary culprit,” Pembroke President Adam Fein wrote at the time.

Obamacare not blamed
David Whitrap, director of corporate communications at Express Scripts, said the price increases “for a handful of generic medications” were due largely to “natural market factors, including shortages of active ingredients and a reduction in the number of manufacturers.”

“The market tends to correct itself when instances like this occur,” Whitrap said.
Like Fein, most analysts don’t think the Affordable Care Act has played much of a role in the higher costs of some generic drugs.

“There tends to be a strong relationship between shortages and pricing. I haven’t heard that ACA has exacerbated shortages,” said Jenna Stento, a senior manager at Avalere Health, a consultancy.

Marv Shepherd, professor of pharmacy at the University of Texas-Austin, agreed.

“The Obama program has increased demand somewhat, but I don’t think that’s the main reason,” Shepherd said. What’s more important, he said, is the number of competitors making a drug.

Merging of competitors
Those numbers have fallen for two main reasons, Shepherd said. One is because manufacturers have abandoned some markets when they’re not profitable enough. The other is because two former competitors merged.

“At one point 12 companies made doxycycline” for sale in the United States, Shepherd said. “The managed-care companies are only going to buy the cheapest one, since there’s no difference in the active drug. So some firms end up getting out of the business, and when they do, the number of suppliers decreases.”

In 2012, Teva Pharmaceutical Industries, by most counts the world’s biggest generic drugmaker, told the FDA it intended to stop selling doxycycline in the U.S., a notice required by the agency. It dropped the drug, in use since the 1960s, in 2013.

Even if a sudden price jump makes the drug more attractive to manufacturers, it’s not as easy as simply firing up a production line “and popping out more M&Ms,” Shepherd said. Makers “have to get FDA approval to market a drug,” and that can take six months or more, he said.



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