August 6, 2017 – Out of public view, corporations are cutting deals that give consumers little choice but to buy brand name drugs – and sometimes pay more than they would for generics.
The standard advice for consumers – “Always ask if there is a cheaper generic!” – has for years saved patients big money at the pharmacy counter. Now, Big Pharma is fighting back. The conventional wisdom about how to lower drug costs is today often wrong as pharmaceutical companies cut deals with PBMs in order to squeeze the last profits from products that are facing cheaper generic competition.
Writing for the New York Times, Charles Ornstein and Katie Thomas offer a fascinating look at those deals – deals affecting drugs such as the cholesterol treatment Zetia, the stroke-prevention drug Aggrenox, and the pain-relieving gel Voltaren. In each case (and in many more) we see insurers and pharmacy benefit managers insisting that consumers forgo generics to buy brand name drugs that cost more – both for patients and for their self-funding employers.
The authors’ principal focus is Shire Pharmaceuticals. Adderal XLl had been for years the company’s top-selling product, bringing about 1/3 of its revenue in 2008. In order to protect that market share, Shire sued generic drug companies and then made deals to supply them with pills (to be sold as “generic” in exchange for a share of royalties). When it came time to make good on those agreements, Shire failed to supply its partners with enough pills to compete in the marketplace.
More recently, Shire has been “giving ever-larger discounts to pharmacy benefit managers and insurers for preferential treatment over the generics.” That did not mean lowering the list price of the drug, but rather negotiating rebates that were paid not to the patients [or their employers] but to insurers and middlemen such as United Healthcare and CVS Caremark.
These deals may benefit shareholders, but patients are feeling the pain. 29% of Americans with health insurance paid for by their employer now have a high-deductible insurance plan, and so they often must pick up the full sticker price of these medications – until they have paid out thousands of dollars.
Read the rest of this fascinating article in the New York Times: