Huge Price Variations in Generic Drugs

A Wall Street Journal investigation showed great price variations in the marketing of some generic drugs in the U.S. For example, the so-called "average wholesale price" (AWP) for generic Prozac (fluoxetine), the most commonly prescribed generic in the U.S., was $2.66 a pill -- while in fact, pharmacies could actually buy the same pill for only 5 cents.

While most price differences are not this extreme, it has become standard practice for a handful of "pharmacy-benefit managers" to make big profits by exploiting secret price differences, which are usually not known even by large employers who are contracting for coverage of their employees. Although the article does not emphasize this point, the figures make it clear that the so-called "co-pay" (the $5, $10, $25, or other standard amount paid by the patient when picking up their medication) can actually be more than the full cost of the prescription -- suggesting that patients and their employers can unknowingly be paying for health insurance that actually charges more for certain medicines than if they had paid full price.

The article, "Hired to Cut Costs, Firms Find Profits in Generic Drugs," by Barbara Martinez, is on the front page of the March 31, 2003 Wall Street Journal.


Comment

At this time all antiretrovirals are patented in the U.S.; for them there are no generics, so the price issues are different. But HIV patients often need many prescriptions in addition to antiretrovirals.

A branch of treatment activism that develops expertise in the complex, irrational world of drug prices could educate the public about how to keep treatment available when it would otherwise be denied, in a country where drug prices are rising at a rate of about 15% per year. For example, it could help people in finding insurance, choosing among employer or other insurance plans, choosing among local, mail-order, and Internet pharmacies, knowing about discount-card programs, dealing with Medicaid and other public benefits, using patient-assistance programs, and knowing when it is better to fill a prescription out of pocket even if one has coverage. Such a movement could also advocate for needed changes in health plans, policies, and legislation.

Abusive drug pricing exists in part because when people need their medicine they may not have time and energy for price comparison. Today, when patients do have health care access decisions to make, they seldom have good advice available. That could change.