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Drug Costs Are Spiking and It's Not Clear Why Drug Costs Are Spiking and It's Not Clear Why Drug Costs Are Spiking and It's Not Clear Why Drug Costs Are Spiking an...

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Health Care

Drug Costs Are Spiking and It's Not Clear Why

Pharmacists want Congress to investigate a sharp increase in medicinal costs.

Generic drug prices are hurting consumers' and pharmacists' wallets, the National Community Pharmacists Association reports.(Justin Sullivan/Getty Images)

photo of Clara Ritger
January 31, 2014

Drug costs are rising, but in the opaque world of health care pricing, figuring out what's driving the increase has become difficult—if not impossible.

Nonetheless, pharmacists want Congress to try. Vexed by triple- or quadruple-digit percent increases in drug costs, the National Community Pharmacists Association is asking lawmakers to hold a hearing to find out why.

The problem, the group says, is that pharmacists are getting gouged. Pharmacists trying to get their hands on generic drugs such as Pravastatin, a drug for patients with high cholesterol, or the anitbiotic Doxycycline faced price spikes upwards of 1,000 percent in 2013, according to a survey by the group.

 

Some 77 percent of pharmacists surveyed by the association said in the last six months of 2013 they experienced 26 or more instances of a large upswing in the acquisition price of a generic drug.

An additional 84 percent said the price fluctuations impeded their ability to provide care and remain in business, as some community pharmacies could not fill prescriptions that would result in losses and some patients declined medication that would have emptied their wallets.

The findings are consistent with reports nationwide that generic-drug prices are experiencing bank-breaking price increases. Health care and pharmaceutical consulting firm Pembroke Consulting, for instance, found that within the last year, more than a dozen drugs hit prices 10 times their standard rate. NCPA wants Congress to hold a hearing to find out what's driving the price points and whether anything can be done by the feds to stop the trend.

But one primary-care doctor, David Belk, says he's suspicious that the fault lies with drug companies. The San Francisco-based blogger has observed price jumps in single doses of medication, where one size dosage of a drug was very expensive and the other dosages of that same drug were at a more reasonable cost.

Belk took a clip of the Costco website after he saw the generic drug Irbesartan, a medication for high blood pressure, hit nearly $300 for a 90-day supply of the 150 mg tablet. Yet for the 90-day supply of the 300 mg tablet, consumers paid only $30.

"If you ask the pharmaceutical company, they'll say 'Oh, we had a shortage,' " Belk said, "which makes no sense because they were making other milligrams. By the time the pharmacy has figured out the price spiked, it's dropped back down again."

That trend, Belk said, leaves pharmacies hanging out to dry with the extra cost.

"Most doctors are prescribing on the basis of the last drug rep they went to lunch with," he said. "I think you would fix a lot of it if everyone had to advertise their price."

While Belk proposes to turn patients into educated consumers by creating transparency about prescription drug costs at the doctor's office, the problem remains that pharmacists can't place their finger on why generic drugs seem to cost more than they used to--or at least, experience extreme price variations throughout the year.

Dan Mendelson, CEO of consulting firm Avalere Health, credits the effectiveness and popularity of generic drugs as one reason pharmaceutical companies are able to charge more.

"I think that as demand for generic drugs has gone up, it's not surprising to see that price has gone up as well," Mendelson said. "This is an unregulated market in the sense that no one is telling them what to charge. You're going to see them cozy up to the price of the brand name product for competition reasons."

Mendelson said his problem with getting Congress involved in the situation is that it suggests they should step into the market and impose price controls. Sometimes, he said, the spikes are easily explained, such as when Doxycycline experienced a manufacturing problem and had a temporary shortage.

"I think people will continue to use these generic products because they're cost effective and needed when prescribed," Mendelson said. "There's no question in my mind demand is going to go up because of the Affordable Care Act, and these markets respond to demand."

Even higher prices for generics could be on the horizon, as all health plans offered on the Affordable Care Act exchanges must cover prescription drugs, which could increase use and demand among consumers.

The Affordable Care Act, however, doesn't include any specific provisions to reduce the overall cost of drugs. But generics are still cheaper than their brand-name counterparts. And with more patents for blockbuster drugs set to expire by 2018, they'll continue to be a competitive option on the market.

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