The rising cost of generic prescriptions

In spite of federal efforts, the cost of healthcare continues to rise. A recent PricewaterhouseCoopers report predicts a 6.8% increase in costs in 2015, in part because of costly specialty medications, like the hepatitis C drug Sovaldi that costs $84,000 per treatment course.

But it’s not just breakthrough drugs accounting for escalated costs. Almost no part of the pharmaceutical industry is escaping the trend-including generics, formerly the go-to for low-cost care.

Soaring costs

The pharmacy technology provider Truveris recently released a report looking at current industry trends. Using a weighted analysis, the organization found that prices rose over the past several years across all therapeutic classes of medication, but not equally.

Overall, brand-name drug prices rose 14.8%, specialty drugs rose 9.7% and generics increased 4.9%. Some classes of generics saw dramatic price increases: more than 30% for drugs used to treat muscle pain and inflammation, while heart medicines rose 23%. Antibiotics and acne medications also saw big jumps in price.

According to the Healthcare Supply Chain Association, the cost for 100 albuterol sulfate pills rose from $11 in October 2013 to $434 six months later. Other dramatic jumps the organization has reported include doxycycline hyclate, which soared from $20 to $1,829 for 500 tablets, divalproex sodium, which went from $31 to $234 for 80 tablets and isuprel, which rose from $916 to $4,489, for 25 vials.

Related:Giving in to patient demands for brand-name drugs could be adding unnecessary costs to healthcare system

A handful of generic classes such as diabetes and allergy medications saw hardly any increase. But even slight growth in cost is new for the generic pharmaceutical industry, says Bryan Birch, Truveris president and chief executive officer.

“Over the years, it’s (generics) always decreased,” Birch said. “And now, some drugs have increased over 100%.”

NEXT: Supply and demand

Supply and demand

The price of generics has been rising for about two years, says Ronna Hauser, Pharm. D.,vice president of policy and pharmacy affairs for the National Community Pharmacists Association. Now it is reaching the consumer, and that has brought more widespread attention to the issue.

Though the causes are varied, many hypothesize it is a matter of basic economics. The issue was discussed at a Congressional hearing called by Sen. Bernie Sanders, I-Vt., and Rep. Elijah Cummings, D.-Md. in November, 2014. Hauser said experts who testified said the marketplace doesn’t make sense, leaving the hearing with a great many unanswered questions.

Some at the hearing argued that the rise in costs have been arbitrarily created by manufacturers. But it may be more a sign of the public’s desire to purchase medications at the lowest possible price, said Margaret Clapp, chief pharmacy officer for Signature Healthcare.

“Some of these medications have been around for a while and over time they have priced themselves too low,” Clapp said. “I am wondering if the market overall is righting itself.”

Related:Hospitals, drug costs and technology will increase healthcare costs in 2015

Clapp has begun to see a cycle in the industry that provides some insight into the cause. She used to be able to purchase vasopressin, a drug used as an antidiuretic, for about $3 a vial. Without warning, the medication disappeared from the market and returned later at $45 a vial.

Similarly, her organization used to provide naloxone, which reverses the effects of opiods, to ambulance drivers for patients who had overdosed on drugs. She used to purchase it for $20. It, too, saw a shortage and “the price went through the roof” upon returning to the market.

“These medications should be fairly cheap and have been plentiful, and all of a sudden we can’t get them,” she said. “And you can mark your calendar that when they come back they are going to cost much more.”

She said the increase is due to generic manufacturers being acquired by big organizations. When this occurs, it reduces the supply of the drug they produce, causing prices to increase.

The disappearance of drugs from the market may be caused by regulators, Birch said. In recent years the U.S. Food and Drug Administration (FDA) has increased its scrutiny of the manufacturing processes used by some of the companies importing generic medications into the United States. The increased scrutiny has created a backlog at the FDA, slowing the approval process for new generics.

The change also has hit smaller manufacturers who can’t keep up with the greater controls at their current price point, so they leave the market. “Generics tend to have made razor-thin margins historically and quality controls caused consolidation,” he said.

NEXT: Solutions for dealing with the increasing prices of generics

Solutions

Regardless of the reasons for increases in the prices of generics, it appears they may be here for a while. At some point, this may impact the way physicians practice. Doctors have been encouraged to write prescriptions for generics whenever possible, said Wanda Filer, MD, FAAFP, president-elect of the American Academy of Family Physicians, partly as a way to make treatment available for patients who can’t afford brand-name drugs.

“We asked, ‘Why would we want to waste patients’ money if generics are truly equivalent?’” said Filer, who works at Family First Health, a federally qualified health center in York, Pennsylvania. “We have been conditioned and encouraged to order them by our practices and insurance companies for some time.”

But now physicians may have to find other ways to help patients struggling to afford their medications.

Filer said she has a list of generics for sale for $4 at larger pharmacies so patients can use those when possible. Websites like Rxpricequotes.com are a good way to find cost information for patients. Filer looks up pricing information and prints out coupons to give to patients when available.

The AAFP encourages its members to help patients seek out prescription assistance. Companies producing brand-name pharmaceuticals typically offer some sort of financial assistance for patients in need. The website Rxassist.com has a comprehensive listing of free and low-cost assistance programs with information for both patients and physicians.

Physicians also can offer their patients alternatives for drugs that have increased in price when possible. Over-the-counter drugs may be an option for conditions such as pain, allergies or acid reflux.

“We always try to see if there is a substitute, if there is another medication to use – maybe one that isn’t quite as good, but still works,” Clapp said.

But sometimes there is no alternative. No substitute for doxycycline is available for a patient with Lyme disease. When this is the case, it is time to get more creative.

Discounts are sometimes available from pharmacists for patients paying cash. Some pharmacies offer reduced-cost prescriptions for a small annual fee.

It may also be wise to look at prices at discount pharmacies such as Costco or Sam’s Club. These larger organizations can offer better pricing than smaller chains or independent groups.

Online pharmacies also can be a valid alternative. According to Pharmacychecker.com, the cash price of budesonide at a New York pharmacy is $1,625 for 90 pills. Entocort, the brand-name medication, can be found for $155.70 from an international online pharmacy.

Drug samples are another option, particularly when a patient is worried about side effects, is uninsured for a short period or concerned about the efficacy of the medication. They can also be good for patients in distress. Filer stocks some generics such as albuterol for patients who come to the office in emergency situations.

Related:Diabetes drug spending declines with greater use of generics

But offering samples is problematic for a variety of reasons. To begin with, samples typically are of higher-cost, brand-name medications. If a patient can’t afford a generic medicine, there is no reason to start them on a brand name one.

Samples may work for someone with an acute problem, but are not a good idea for someone with a chronic condition. The medication isn’t documented on a chart and the days of lining closets with samples of medication are over, Clapp said. Physicians simply don’t have the quantity of samples they once did, so trying to manage a chronic condition this way is “crazy,” she says.

NEXT: Trickle down

Trickle down

As the price of medications has risen, insurers have been attempting to shift more of it onto consumers. One way this is happening is through tiering generic formularies, Hauser explains.

Historically, generics have automatically been placed in the bottom tier of formularies because of their lower prices. Brand-name medications were split into preferred and nonpreferred-where the highest-priced drugs reside.

Insurers have begun splitting generic medications into preferred and nonpreferred tiers as well. Generic medications in the nonpreferred category come with higher co-pays. This can cause problems, particularly with medications that are use commonly as the first line of defense for conditions such as diabetes, asthma and HIV, leaving patients without lower-cost options.

Another way insurers are complicating the use of generics is through requiring prior authorizations. While Filer has not experienced this first-hand, she has heard from physicians who see this move as a “slap in the face.”

Related:Strategies for primary care physicians to handle prescription medication requests

On the AAFP listserv, physicians from all over the country complain about the additional busywork prior authorizations create even for run-of-the-mill generics. The result, Filer says, has been a mild revolt on the part of physicians, with some family physicians refusing to request prior authorization for generics.

Hauser is seeing more and more of the cost fall to the patient as well. As the price of drugs increase and reimbursements from insurance companies remain static, payments to pharmacies aren’t keeping up with the costs.

“What happens is members with co-insurance will end up paying the difference,” she said. “It will end up landing on the patient, unfortunately.”