Why Are Generic Drug Prices Rising?

Why Are Generic Drug Prices Rising?

June 28, 2018 – Generic drugs are generally much cheaper than brand-name, but that doesn’t mean that generics are inexpensive (or fairly-priced).

Overall, prices for prescription generics have been declining since at least 2010, but high-profile exceptions pose a challenge to conventional wisdom. Generics are not necessarily cheap. Indeed, according Market Watch, between 2010 and 2015, more than 300 generic drugs had at least one price increase of 100% or more. As a result, generics now require as much (if not more) vigilance from payers as do brand-name drugs.

  • The price of digoxin (a commonly prescribed generic heart medication) increased by 2,800% in a single year.
  • Scripta identified a 348% spike in the cost of Olux, a generic topical corticosteroid. The price went from $38.71 to 134.80 (with a high of 169.56), in just 15 months.
  • Doxycycline, a generic antibiotic, went from $20 a bottle in October 2013 to $1,849 by April of 2014. That’s 380% in just six months.
  • Pfizer was fined by regulators in the United Kingdom for imposing a 2600% price hike for phenytoin sodium, a generic anti-epilepsy medication.

These are just the most high-profile cases, of course, and when it comes to drug prices, there are always many factors at play.

In addition to bad actors, collusion, market consolidation, and policy loopholes play a role, all of which puts payers—and patients—at the mercy of drug makers and shadowy middlemen (including drug wholesalers and, yes, quite possibly your PBM). And since payers don’t generally monitor transactions closely, dramatic, unexpected spikes for common generic drugs can cost hundreds of thousands of dollars before they are flagged.

Generic substitution is just one step towards a comprehensive pharmacy benefit savings plan. Contact one of Scripta’s savings experts to learn about the other five.

After the jump, we’ll take a quick look at the factors driving rising generic drug prices (note the graphic here: 3,500 generic drugs doubled in price between 2008-2015… and the situation hasn’t improved since):

Generic Drug Prices Rising

So… Why Are Generic Drug Prices Rising? And What’s to Be Done?

Back in 2015, Turing Pharmaceuticals famously jacked the price of Daraprim from $13.50 a tablet to $750 overnight, bringing the annual cost of treatment for some tuberculosis patients to hundreds of thousands of dollars. The price increase was rescinded following public outcry, and Turing’s then-CEO, pharma-bro Martin Shrkelli, is now doing time at Fort Dix Federal Correctional Institution on unrelated fraud.

Unfortunately, this is not an isolated incident. It illustrates the power that a single unscrupulous actor can have over drug prices in the current regulatory environment. Dramatic price increases for common generic drugs happen all the time—can happen overnight in some cases—and payers, patients and their doctors generally receive no warning.

The good news is that suspicion regarding these high-profile price spikes has led to state and federal inquiries into price-fixing. As NPR notes, forty-five states and the Department of Justice have claimed that generic drug prices are fixed, suggesting that the alleged collusion may have cost U.S. business and consumers more than $1 billion. In their complaint, prosecutors say that when pharmacies asked drug makers for their lowest price, the manufacturers would rig the bidding process.

Collusion is not the only problem with the generic drug market, which has seen shortages in the manufacturing supply chain and a wave of mergers and acquisitions, as well as market abandonment. Decreased competition can cause drug prices to rise significantly, according to a study published in Annals of Internal Medicine, and this trend appears likely to continue unless policies are enacted to stabilize generic drug markets.

Federal regulations generally favor drug makers, but there is hope!
Legislation is pending, as is the Trump Administration’s “American Patients First” plan, which was unveiled to widespread criticism but has yet to be revealed in full. The CREATES Act (stalled in the Senate) and FAST Generics Act (stalled in the House) could also help to close regulatory loopholes and potentially save up to $5.4 billion a year in reduced drug costs.

The FDA itself is aiming to patch a porous regulatory framework that has allowed branded drug manufacturers to block generic competitors. The agency has posted a list of branded drugs that are not under patent, in hopes of encouraging generic investment, and has said it will fast-track its review of generic-drug applications that have less than three competitors.

Generic substitution is just one step towards a comprehensive pharmacy benefit savings plan. Contact one of Scripta’s savings experts to learn about the other five.


About the CVS E-Prescription Initiative

About the CVS E-Prescription Initiative


A year ago, CVS Health announced a new e-prescription program to provide doctors and pharmacists with real-time medication cost information, including lower cost alternatives.

The CVS platform marries a clinical database and an “adjudication engine” to determine a patient’s out of pocket costs and prior-authorization status. Doctors and pharmacists whose electronic medical record (EHR) systems are connected with the CVS program will have an opportunity to change a prescription to a lower-cost alternative, with the patient sitting right there.

Sounds like a plan. But Scripta Co-Founder Mindy Bradley has got a few insights (and a few questions) regarding the program:


  • Anything that provides more cost information to doctors and patients is a step in the right direction, but the technology that underpins the CVS application is provided by the Surescripts, and Surescripts has been communicating this same information to doctors for years. They didn’t create the problem of skyrocketing prescription prices, but in all these years they haven’t yet solved it either.
  • The CVS/Surescripts program is focused on sticker-shock. The goal is to improve patient adherence. There’s nothing to indicate that the program might bring overall prescription healthcare costs down for self-funded employers. Scripta’s therapeutic alternatives address both health plan costs and the costs to patients.
  • The CVS e-prescription program doesn’t account for the coupons that pharmaceutical companies use to market their drugs. Coupons are Big Pharma’s way of negating key PBM plan design elements like step therapy and formulary tiers. Their coupon programs have actually served to drive the aggregate cost of medicines up, even as they shift the burden from the patient to plan sponsor.
  • CVS is principally a pharmacy, of course. It would be interesting to know how they developed their clinical database, since pharmacists think about medications differently than the doctors who prescribe them. Scripta’s Medication Mapping Database is sourced from a group of 60 doctors, including primary care doctors and specialists in every medical discipline.
  • Don’t forget that pricing varies from pharmacy to pharmacy—sometimes dramatically. Scripta ensures that patients know where to shop for the best price for a given medication, even if that is at Walmart or other CVS competitors.
  • Finally, there is value in any conversation between a doctor and his or her patient about medications, but whereas CVS provides access only to doctors and pharmacists with connected EHR systems, at Scripta, we have found that it’s best to arm both the doctor and the patient with cost and co-pay information.

Click here to read our response to CVS’s latest marketing for the program.

Nice Try CVS, but We See You

Nice Try CVS, but We See You

May 31, 2018 –  What is the CVS e-prescription program? Is it a game changer for benefit advisers and their clients? Or is it just more of the same?

A year ago, CVS Health announced a new e-prescription program to help employees pay less for medications. The program provides doctors and pharmacists with real-time medication cost information, including lower cost alternatives. It’s a nice idea—Scripta’s program, which is similar, has been saving millions for clients for 10 years now—but when it comes to CVS, it is still a case of the fox guarding the hen house.

Back in April, Bruce Shutan provided a look inside the CVS program for Employee Benefit Adviser, and his article is no doubt worth your time. Benefit advisers should be aware of the CVS program. It’s probably better than nothing—and a step in the right direction. Just don’t expect it to “bend the cost curve” as cheer-leading CVS executives would have you believe.

The technology is interesting for sure. We know, because back in 2010 we deployed a similar program on behalf of a group of self-funded clients (each with a different PBM).

The CVS platform marries a clinical database and an “adjudication engine” to determine a patient’s out of pocket costs and prior-authorization status. Doctors and pharmacists whose electronic medical record (EHR) systems are connected with the CVS program will have an opportunity to change a prescription to a lower-cost alternative, if one is available, while the patient is sitting right in front of them.

This might or might not reduce the cost to that patient’s employer, and the issue, of course, is that CVS Caremark is subsidiary of the pharmacy super-chain, and both companies answer to the same shareholders. Here’s our big question: when it comes to pharmacy benefits, if CVS Caremark is doing all it can to save money for its customers, why does it cover drugs that it knows have cheaper alternative therapies?

Click here to read more from Scripta about the CVS e-prescription program.

Let the Innovators Lead the Way

Let the Innovators Lead the Way

May 17, 2018 – Scripta partner shares strategies for health care cost containment at the World Health Care Congress in Washington, D.C.

With specialty drug and other pharmacy costs soaring, controlling pharmacy benefits spending was the topic on everyone’s minds at the World Health Care Congress this year. A session entitled Your Health Plan Has a Drug Problem generated the most buzz. As Eric Levin of Scripta said, “The savings are in the data, and innovative companies like Scripta are taking action.”

The massive annual conference began with a keynote address by famed investor John Doerr of Kliener Perkins. He sent a clear message: the path to fixing our expensive, overly-complex health care system starts with, “liberating the data and letting the innovators take care of the rest.”

At Scripta, we know the savings are in the data, but we also know that it takes a great deal of expertise to mine the data put it to work. Indeed, at a conference where “best practices” are well understood by most, with experts overflowing the halls, the real question became how to make sure best practices yield results—both in the human dimension and at the bottom line.

As Tom McGuinness, Chief Strategy and Commercial Officer for GE Healthcare noted, at Massachusetts General Hospital, “3 petabytes of data are collected and stored annually, but only 3% is actually used… Big data overwhelms typical analytics.” And while AI may soon help increase the uses for all those bits and bytes, for now, innovators like Scripta are driving change in the health care analytics space.

Scripta is bringing discipline to one of the most perplexing components of most employers’ benefits spend—pharmacy. Mr. Levin put it this way, “If an employee forgets to include a receipt for parking, their expense report is immediately rejected… meanwhile, PBMs send us bills that are hundreds of pages long, after a cursory glance at some pie charts and bar graphs… we just pay in full!” Woud you handle any other expense in this way?

At Scripta, we think it’s time to take action to control skyrocketing prescription drug costs.  Our software makes use of all the data. Every employee. Every transaction. And we make it easy for benefits advisors and their clients save millions on pharmacy spending.  Don’t believe us?  Just give us a try.  It is free to get started.

Empathy Is a Healthy Workforce

Empathy Is a Healthy Workforce

Most executives agree that business success is tied to empathy in the workplace. Scripta offers companies one more way to show that they care.

Most any HR professional will tell you that skyrocketing healthcare and prescription drug prices are necessarily complicating benefit plan design—this at a time when polling shows that only 31% of employees are engaged at work. Cause and effect? Who knows. But there is no question that companies are urgently looking for new ways to engage and motivate employees and to signal empathy in the workplace.

Katie Kuehner-Herbert, writing on behalf of Benefits Pro, notes that according to Businessolver’s 2018 State of Workplace Empathy study, most CEOs and 79% of HR professionals see a link between financial performance and empathy in the workplace. It makes sense: demonstrating empathy draws people together and creates an esprit de corps. Plus, engaged workers work better, and that can yield benefits for an entire organization.

Businessolver surveyed 1,850 workers across a range of industries, virtually all of whom (96%) consider it important for their employers to demonstrate empathy. It’s not just warm fuzzies. Empathy is about the day-to-day. It means communicating to employees in more personal ways, yes, but empathy should also drive business and benefits policies that reflect an employer’s thoughtful investment in all of those covered lives.

The problem for HR professionals today is that employees dealing with high deductibles and ballooning out-of-pocket costs and co-pays aren’t looking to Big Pharma for answers. Your PBM doesn’t feel the heat. Current employees look to HR and to the boss for answers, and meanwhile their job performance may suffer. Their health may suffer, leading to absenteeism. (New recruits, of course, are free to look around for a better deal.)

Now, Scripta is making a difference.

Our technology solutions help employers save up to 30% on their pharmacy benefit spend… but we agree with Businessolver’s conclusions: technology can only unite and engage employees if it is designed in an empathetic way. That’s why we’re so proud of our Employee Engagement programs. By helping your employees make informed prescription spending decisions—and saving them money—Scripta drives both workplace wellness and workforce productivity. Everybody wins. (And isn’t that what empathy is all about?)

Read the Benefits Pro article:
The role of employer empathy in employee engagement.

Contact Scripta, The Pharmacy Benefits Savings Experts  
Yes, I would like to provide my employees a tremendous new benefit…
(and save up to 30% on my pharmacy spend. 

Pharmacy Data Analytics Can Help You SAVE

Pharmacy Data Analytics Can Help You SAVE

March 7, 2018 – If you are trying to control health benefits costs, the best place to start is with the data — and good pharmacy data analytics can improve plan design and save money.

With the Benefits Pro Broker Expo due up next week in San Diego, we thought we’d take a moment to comment on Scott Woolridge’s excellent article, “Using Big Data to design better health care plans.” As he points out, data analytics—just the phrase itself—may make your eyes glaze over, but there’s money to be saved by finding a broker who can dig into every aspect of your benefits spend.

We know that Big Data means big opportunity. In fact, Woolridge cites a 2016 report by the National Institutes of Health that concluded, “Other industries such as astronomy, retail, search engines and politics have developed advanced data-handling capabilities to convert data into knowledge. Health care needs to follow their lead so that decisions regarding organizational objectives and goals can be met.”

Scripta here to tell you that that day has come. And while it may seem that pharmacy data analytics are most appropriate for large employers, according to Woolridge (and we agree), “Brokers also see benefits for self-funded companies with relatively small workforces.” Yes, that’s right, your employee health data could be the key to addressing cost and quality issues, and it might just save you money on your pharmacy spend.

Woolridge notes that you need a good, reliable broker if you want to delve into this area of technology and save money.

To that we would add that your broker must have access to technology that enables them to analyze large amounts of pharmacy data, not to mention alliances with experts in the complex world of prescription drugs. Given the right partnerships, however, your broker can use your employee data to reveal huge cost disparities for the same procedure (for instance, MRIs can vary from $300 to $5000) and/or devise plan designs that will better fit your employee population.

As the article points out — benefits tomorrow are about creative data analytics that improve every aspect of healthcare for your covered lives. That means every procedure… and every pharmacy transaction. (Come talk to us at Booth #225 in San Diego if you are interested in saving as much as 30% on your pharmacy spend next year).

Read Scott Woolridge’s artitcle at BenefitsPro.com: 
Using Big Data to design better health care plans