Generic drugs have long been a staple of dermatology practice due to their broad availability and historically low cost to the consumer. Their prices have risen dramatically over the last 5 years. This steady, sometimes drastic, increase in prices has finally been noticed by Congress. However, those of us in the trenches could not help but notice the change much earlier. One of the most commonly used medications in dermatology, doxycycline, has seen its price surge. According to a congressional report, the average market price for a bottle of 500 pills went from $20 in October 2013 to an average price of $1849 in April 2014.1
These price increases have become such an issue that late last year 20 states filed civil suit against 6 drug companies for conspiring to artificially inflate the price of doxycycline hyclate, as well as a generic diabetes drug, glyburide. The suit brings to light that an investigation started in Connecticut, “uncovered evidence of a broad, well-coordinated, and long-running series of schemes to fix the prices and allocate markets for a number of generic pharmaceuticals in the United States.”2
Other factors contributing to increased prices include consolidation and mergers. Only 5 companies generate over 47% of the worldwide sales of generics.3 Shortages and high cost of raw materials that are mainly produced outside the United States have contributed to issues related to generic medication availability.
Under pressure and attention from patients and Congress, drugmakers that usually announce their pricing in January, have slowed the rate of increase this year with fewer price jumps of 10% or greater. This year there only 5.5% of drug prices increased at the 10% or higher level, down from 15% last year and 20% in 2015. While seeming like good news, the median drug price still rose 8.9% in 2017,4 outpacing the rate of inflation of only 2%. Most drug companies have adopted the strategy of keeping their increases in the high single digits to avoid public outcry over a dramatic price hike.
So, why do prices go up, even on older, more established drugs? The industry cites increases in raw materials, production, and recouping the costs of research. But what are the costs of research, production, and materials? We may never know these answers as companies are not required to disclose this information.
Consumers can exercise their free-market rights and refuse to pay the high prices. Large commercial health insurance plans have the power to negotiate prices with the manufacturers and get better prices on frequently prescribed drugs. Unfortunately, the largest health insurance plans in America,
Medicare and Medicaid, are unable to do this. Medicare, which insures more than 55 million people, and Medicaid which covers more than 70 million Americans are prevented by federal law from negotiating drug pricing with the pharmaceutical manufacturers. While other countries have this ability, we do not.
What can we do about the high generic drug prices? As consumers, we can become more aware and ask for prescriptions that are preferred by our insurance companies or inquire after promotions available from the branded drug manufacturers. As medical providers, we can help our patients by prescribing drugs that have the lowest costs, as negotiated by their insurers, or steer them to pharmacies with the best prices. As citizens, we can contact our elected officials when we experience drastic price increases and encourage them to support legislation that allows the Centers for Medicare and Medicaid Services to negotiate with manufacturers. Although these solutions are not simple, we are not as powerless as we may feel.
Mr Notabartolo lives and works in Las Vegas, NV. He is a past president of the Society of Dermatology PAs and currently serves as their legislative affairs chairman as well as current chairman of the board of trustees of the Dermatology PA Foundation.
Disclosure: The author reports no relevant financial relationships.
References
1. The Committee on Oversight & Government Reform. Ranking member Cummings and chairman Sanders investigate staggering price increases for generic drugs. https://democrats-oversight.house.gov/sites/democrats.oversight.house.gov/files/documents/Table%20on%20Generic%20Drug%20Price%20Increases%20FINAL.pdf. Published October 2, 2014. Accessed March 24, 2017.
2. Thomas K. 20 states accuse generic drug companies of price fixing. New York Times. December 16, 2016. https://www.nytimes.com/2016/12/15/business/generic-drug-price-lawsuit-teva-mylan.html?_r=0. Accessed March 24, 2017.
3. Palmer E. Top 20 generics companies by 2014 revenue. FiercePharma. https://www.fiercepharma.com/special-report/top-20-generics-companies-by-2014-revenue. Accessed March 27, 2017.
4. Rockoff JD, Loftus P. Facing criticism, drug makers keep lid on price increases. Wall Street Journal. February 26, 2017. https://www.wsj.com/articles/facing-criticism-drug-makers-keep-lid-on-price-increases-1488157893?tesla=y. Accessed March 24, 2017.
Generic drugs have long been a staple of dermatology practice due to their broad availability and historically low cost to the consumer. Their prices have risen dramatically over the last 5 years. This steady, sometimes drastic, increase in prices has finally been noticed by Congress. However, those of us in the trenches could not help but notice the change much earlier. One of the most commonly used medications in dermatology, doxycycline, has seen its price surge. According to a congressional report, the average market price for a bottle of 500 pills went from $20 in October 2013 to an average price of $1849 in April 2014.1
These price increases have become such an issue that late last year 20 states filed civil suit against 6 drug companies for conspiring to artificially inflate the price of doxycycline hyclate, as well as a generic diabetes drug, glyburide. The suit brings to light that an investigation started in Connecticut, “uncovered evidence of a broad, well-coordinated, and long-running series of schemes to fix the prices and allocate markets for a number of generic pharmaceuticals in the United States.”2
Other factors contributing to increased prices include consolidation and mergers. Only 5 companies generate over 47% of the worldwide sales of generics.3 Shortages and high cost of raw materials that are mainly produced outside the United States have contributed to issues related to generic medication availability.
Under pressure and attention from patients and Congress, drugmakers that usually announce their pricing in January, have slowed the rate of increase this year with fewer price jumps of 10% or greater. This year there only 5.5% of drug prices increased at the 10% or higher level, down from 15% last year and 20% in 2015. While seeming like good news, the median drug price still rose 8.9% in 2017,4 outpacing the rate of inflation of only 2%. Most drug companies have adopted the strategy of keeping their increases in the high single digits to avoid public outcry over a dramatic price hike.
So, why do prices go up, even on older, more established drugs? The industry cites increases in raw materials, production, and recouping the costs of research. But what are the costs of research, production, and materials? We may never know these answers as companies are not required to disclose this information.
Consumers can exercise their free-market rights and refuse to pay the high prices. Large commercial health insurance plans have the power to negotiate prices with the manufacturers and get better prices on frequently prescribed drugs. Unfortunately, the largest health insurance plans in America,
Medicare and Medicaid, are unable to do this. Medicare, which insures more than 55 million people, and Medicaid which covers more than 70 million Americans are prevented by federal law from negotiating drug pricing with the pharmaceutical manufacturers. While other countries have this ability, we do not.
What can we do about the high generic drug prices? As consumers, we can become more aware and ask for prescriptions that are preferred by our insurance companies or inquire after promotions available from the branded drug manufacturers. As medical providers, we can help our patients by prescribing drugs that have the lowest costs, as negotiated by their insurers, or steer them to pharmacies with the best prices. As citizens, we can contact our elected officials when we experience drastic price increases and encourage them to support legislation that allows the Centers for Medicare and Medicaid Services to negotiate with manufacturers. Although these solutions are not simple, we are not as powerless as we may feel.
Mr Notabartolo lives and works in Las Vegas, NV. He is a past president of the Society of Dermatology PAs and currently serves as their legislative affairs chairman as well as current chairman of the board of trustees of the Dermatology PA Foundation.
Disclosure: The author reports no relevant financial relationships.
References
1. The Committee on Oversight & Government Reform. Ranking member Cummings and chairman Sanders investigate staggering price increases for generic drugs. https://democrats-oversight.house.gov/sites/democrats.oversight.house.gov/files/documents/Table%20on%20Generic%20Drug%20Price%20Increases%20FINAL.pdf. Published October 2, 2014. Accessed March 24, 2017.
2. Thomas K. 20 states accuse generic drug companies of price fixing. New York Times. December 16, 2016. https://www.nytimes.com/2016/12/15/business/generic-drug-price-lawsuit-teva-mylan.html?_r=0. Accessed March 24, 2017.
3. Palmer E. Top 20 generics companies by 2014 revenue. FiercePharma. https://www.fiercepharma.com/special-report/top-20-generics-companies-by-2014-revenue. Accessed March 27, 2017.
4. Rockoff JD, Loftus P. Facing criticism, drug makers keep lid on price increases. Wall Street Journal. February 26, 2017. https://www.wsj.com/articles/facing-criticism-drug-makers-keep-lid-on-price-increases-1488157893?tesla=y. Accessed March 24, 2017.
Generic drugs have long been a staple of dermatology practice due to their broad availability and historically low cost to the consumer. Their prices have risen dramatically over the last 5 years. This steady, sometimes drastic, increase in prices has finally been noticed by Congress. However, those of us in the trenches could not help but notice the change much earlier. One of the most commonly used medications in dermatology, doxycycline, has seen its price surge. According to a congressional report, the average market price for a bottle of 500 pills went from $20 in October 2013 to an average price of $1849 in April 2014.1
These price increases have become such an issue that late last year 20 states filed civil suit against 6 drug companies for conspiring to artificially inflate the price of doxycycline hyclate, as well as a generic diabetes drug, glyburide. The suit brings to light that an investigation started in Connecticut, “uncovered evidence of a broad, well-coordinated, and long-running series of schemes to fix the prices and allocate markets for a number of generic pharmaceuticals in the United States.”2
Other factors contributing to increased prices include consolidation and mergers. Only 5 companies generate over 47% of the worldwide sales of generics.3 Shortages and high cost of raw materials that are mainly produced outside the United States have contributed to issues related to generic medication availability.
Under pressure and attention from patients and Congress, drugmakers that usually announce their pricing in January, have slowed the rate of increase this year with fewer price jumps of 10% or greater. This year there only 5.5% of drug prices increased at the 10% or higher level, down from 15% last year and 20% in 2015. While seeming like good news, the median drug price still rose 8.9% in 2017,4 outpacing the rate of inflation of only 2%. Most drug companies have adopted the strategy of keeping their increases in the high single digits to avoid public outcry over a dramatic price hike.
So, why do prices go up, even on older, more established drugs? The industry cites increases in raw materials, production, and recouping the costs of research. But what are the costs of research, production, and materials? We may never know these answers as companies are not required to disclose this information.
Consumers can exercise their free-market rights and refuse to pay the high prices. Large commercial health insurance plans have the power to negotiate prices with the manufacturers and get better prices on frequently prescribed drugs. Unfortunately, the largest health insurance plans in America,
Medicare and Medicaid, are unable to do this. Medicare, which insures more than 55 million people, and Medicaid which covers more than 70 million Americans are prevented by federal law from negotiating drug pricing with the pharmaceutical manufacturers. While other countries have this ability, we do not.
What can we do about the high generic drug prices? As consumers, we can become more aware and ask for prescriptions that are preferred by our insurance companies or inquire after promotions available from the branded drug manufacturers. As medical providers, we can help our patients by prescribing drugs that have the lowest costs, as negotiated by their insurers, or steer them to pharmacies with the best prices. As citizens, we can contact our elected officials when we experience drastic price increases and encourage them to support legislation that allows the Centers for Medicare and Medicaid Services to negotiate with manufacturers. Although these solutions are not simple, we are not as powerless as we may feel.
Mr Notabartolo lives and works in Las Vegas, NV. He is a past president of the Society of Dermatology PAs and currently serves as their legislative affairs chairman as well as current chairman of the board of trustees of the Dermatology PA Foundation.
Disclosure: The author reports no relevant financial relationships.
References
1. The Committee on Oversight & Government Reform. Ranking member Cummings and chairman Sanders investigate staggering price increases for generic drugs. https://democrats-oversight.house.gov/sites/democrats.oversight.house.gov/files/documents/Table%20on%20Generic%20Drug%20Price%20Increases%20FINAL.pdf. Published October 2, 2014. Accessed March 24, 2017.
2. Thomas K. 20 states accuse generic drug companies of price fixing. New York Times. December 16, 2016. https://www.nytimes.com/2016/12/15/business/generic-drug-price-lawsuit-teva-mylan.html?_r=0. Accessed March 24, 2017.
3. Palmer E. Top 20 generics companies by 2014 revenue. FiercePharma. https://www.fiercepharma.com/special-report/top-20-generics-companies-by-2014-revenue. Accessed March 27, 2017.
4. Rockoff JD, Loftus P. Facing criticism, drug makers keep lid on price increases. Wall Street Journal. February 26, 2017. https://www.wsj.com/articles/facing-criticism-drug-makers-keep-lid-on-price-increases-1488157893?tesla=y. Accessed March 24, 2017.
