Are Generic Medicines Really a Cost Effective Alternative?
The cost of prescription drugs in the U.S. rises about 12% every year, which is why so many people have begun turning to generic medicines. However, are these cost-effective solutions that much more affordable?
According to a new analysis from Pembroke Consulting, a firm that tracks prescription drug distribution, half of all generic drugs that were sold through retailers actually became more expensive over the past 12 months, with the prices paid by pharmacies more than doubling for one in 11 generics.
The price of some notable generic medicines like tetracycline antibiotic increased by over 17,000% in fact.
“This is widespread,” said Adam Fein of Pembroke Consulting. “This is not an isolated incident concerning a few drugs affecting just some patients. It’s an industry wide phenomenon and it’s not only going to become big enough to move the needle on the earnings reports for some companies, it’s a national health care issue. Because if [prices continue to increase], it’s going to touch every one of us.”
Although the reason for such increases isn’t quite clear, many believe that raw material shortages are responsible.
“Suddenly the market has dried up. Certain milligram amounts we ask for we can’t even find,” said Pharmacist Bill Nabors.
It’ll be consumers who feel the sting of increased prices first, with companies that have self-funded health insurance plances that pay claims as they’re submitted by employees following shortly after. After all, prescription drugs make up about 10% of health care costs.
“We’ll see it in the claims down the road,” explained Tom Finneran, vice president, employee benefits at Mount Washington brokerage TJ&S Inc.. “It could affect rates due to utilization.”
When push comes to shove and the cost of generics becomes too expensive, Nabors said that patients can speak to their pharmacists to see what could possibly be done.
“We can try to shave costs here and there as best we can and help you transition into the new cost structure.”