JustCare

Tag: Generic drugs

  • Tariffs will likely drive drug prices higher and create drug shortages

    Tariffs will likely drive drug prices higher and create drug shortages

    Most prescription drugs Americans take are manufactured outside the United States. President Trump has not imposed tariffs on these imported drugs yet, but, if he does, prescription drug prices are likely to rise even more. Rebecca Robbins reports for the New York Times on what could happen to drug prices.

    Since taking office, President Trump has said that he will put tariffs on prescription drugs. And, he talks about putting 25 percent tariffs on these drugs. He believes that by doing so he can move prescription drug manufacturing back to the United States. But, many experts disagree.

    Only a small number of prescription drugs Americans take are manufactured here. Some of our critical drugs–such as Keytruda and Zepbound–are manufactured in Ireland, a tax haven for pharmaceutical companies. We rely heavily on China, India and Europe for our drugs or many of their ingredients, including basic drugs such as ibuprofen.

    Already, Trump has imposed tariffs on many of the ingredients used in the making of prescription drugs. For example, there is now a 20 percent tariff on these ingredients made in China. Presumably, those tariffs are causing drug prices to rise.

    It is very possible that tariffs on drugs will only drive up prices further and lead to drug shortages, particularly shortages of generic drug, the large majority of the prescription drugs Americans take. For example, amoxicillin is produced almost entirely in China, India and Europe, though a Tennessee factory once produced virtually all of this drug for Americans.

    The pharmaceutical industry is asking Trump to phase in any prescription drug tariffs he plans to impose and to exempt drugs that could become hard to get if a tariff is imposed, as well as essential drugs, like antibiotics.

    Generic drug manufacturers in the US already make only slim profits on their drugs. As it is, shortages of some of these drugs are not unusual. Tariffs could lead companies to stop selling them altogether. Similarly, tariffs could lead to a shortage of important medical devices like syringes and blood pressure cuffs.

    Tariffs also could mean higher health insurance premiums and higher out-of-pocket health care costs. Most certainly, health care cost increases will be a barrier to care for patients. They will not fill prescriptions or not comply with medicine regimens in order to save money or because they cannot afford their prescription drugs.

  • Insurers overcharge Medicare enrollees for generic drugs

    Insurers overcharge Medicare enrollees for generic drugs

    The biggest health insurers and Pharmacy Benefit Managers (PBMS) offering Part D prescription drug coverage are overcharging Medicare for generic drugs, according to a new JAMA study by researchers at UC San Diego, West Health and the University of Washington. More than 40 million people with Medicare have Part D drug coverage for their outpatient drug needs. As a result of these overcharges, their out-of-pocket coinsurance costs are likely signficantly higher than they should be.

    The researchers find that part of the reason that older adults and people with disabilities face high out-of-pocket drug costs with Medicare Part D is that Rite Aid, Cigna, Centene, CVS Health Humana, and UnitedHealth, which offer Part D coverage, and the Pharmacy Benefit Managers they own or contract with are inflating the costs of some drugs significantly. Pharmacy Benefit Managers or PBMs buy drugs from manufacturers and design the Part D drug formulary–list of covered drugs–that an insurer offers.

    What’s happening? The insurers and/or the PBMs maximize profits by paying pharmacies (often the pharmacies they own and operate) many times the pharmacies’ acquisition cost of a drug. The insurers or the PBMs eventually clawback that overpayment. But, because they pay a high price to the pharmacies, the Part D insurers can charge a much higher copay to their enrollees–based on the inflated price of the generic drugs–driving up enrollees’ costs.

    The researchers found that sometimes, insurers or PBMs pay pharmacies markups of 6,000 percent or 7,000 percent. For example, insurers paid pharmacies $126 for a cancer tablet that costs $4.20 a tablet.

    In 2022, a USC Schaeffer paper also reported generic drug price padding by the PBMs. The authors call for drug pricing transparency. But, that proposal still gives a role to the PBMs and does not fix the system. It would continue to allow PBMs and insurers to keep low-cost generics off their formularies in order to benefit from big rebates they receive from brand-name drug manufacturers for putting their drugs on formulary. And, it would not stop the padding of generic drug prices.

    The simplest way to address inflated drug prices in the US is to open our borders to drugs from verified pharmacies around the world and require insurers to cover them.

    Here’s more from Just Care:

  • Congress should overhaul drug patent laws to ensure Americans access to medications

    Congress should overhaul drug patent laws to ensure Americans access to medications

    Anyone who thinks that the pharmaceutical industry should continue to be able to gouge Americans with their near-monopoly pricing power should recognize that this power is preventing people from filling prescriptions and keeping important drugs from both coming into the market and from being manufactured. Mounting evidence suggests the need for the government to intervene to ensure that people get the medications they need.

    A story in The New York Times about a lawsuit against Gilead, a pharmaceutical company, for failure to bring a critical drug to market quickly, speaks volumes about how drug company profits come before patient health. The delay in bringing a new HIV drug to market allowed Gilead to maximize revenue on another drug with possibly more dire side effects.

    The people at Gilead believed the new drug would have less harsh side effects on people’s kidneys and bones. But, the drug likely would bring down revenue on Gilead’s patent-protected drug. So Gilead’s executives  decided to delay bringing the new drug to market until the patent-protected drug lost its protection. Based on a review of Gilead’s internal documents, the New York Times reports that Gilead was “gaming the U.S. patent system to protect lucrative monopolies on best-selling drugs.”

    Stories also abound about drugs that are not available because pharmaceutical companies are not able to make big profits selling them. These drugs are not outliers. They can treat cancer and heart disease and basic infections. And, there are drug shortages of more than 300 of them.

    Geoffrey Joyce, Director of Health Policy at the USC Schaeffer Center, explains in The Express that drug shortages have been around for some time. But, we are seeing shortages of more drugs of late and we are seeing drug shortages for longer time periods. Amoxicillin to treat ear infections, for example, is hard to get, as is lidocaine and albuterol, which many Americans depend on for treating their asthma. Ironically, the problem is that these drugs come with a low price tag, so pharmaceutical companies don’t see the financial value of producing them.

    Because of US patent laws, pharmaceutical companies can pretty much call the shots on what they charge for brand-name drugs for a long period of time. That means big bucks for them. They can charge many times more for these drugs in the US than in any other wealthy country because every other wealthy country negotiates drug prices. And, drug companies generally can charge high prices for at least 20 years or until their patent expires, which could be even longer. Once a drug is off patent, they face generic competition and prices tend to fall, along with profits.

    Even when drug companies outsource generic drugs for manufacture, they do so to cut costs and, in the process, sometimes undermine quality and supplies. Interestingly, though the FDA struggles to inspect foreign drug manufacturing facilities, it allows the sale of these drugs in the US but still does not allow drug importation.

    And, when several companies manufacture a generic, quality and supplies can suffer. The supplier of key ingredients might be the same for all of them. If the supplier stops producing, no generics are produced. Or, the supplier might be responsible for a harmful ingredient in all the generics. Who knows the consequences in any given situation, but people can die.

    Joyce proposes that the US produce more generic drugs, as California has proposed to do.

    Here’s more from Just Care:

  • Large corporate entities drive major generic drug shortages

    Large corporate entities drive major generic drug shortages

    Yes, we are facing drug shortages in the United States, the wealthiest country in the world. The result is that many Americans with cancer and other deadly diseases are not able to receive treatment, reports Christina Jewett for The New York Times. Three large corporate entities likely are responsible for the drug shortages but are not accountable.

    There are literally hundreds of prescription and over-the-counter drugs that Americans cannot get, including drugs that treat strep throat, lung cancer, breast cancer and ovarian cancer. The drugs are generic, meaning that they generally do not command the prices that pharmaceutical companies charge for brand-name drugs. It seems likely that somehow the goal of maximizing profits is behind the generic drug shortage.

    One possible immediate solution to the generic drug shortage would be for the US to open its borders to the importation of these drugs from verified pharmacies abroad. While today these imports are not legal, no one has ever been prosecuted for purchasing them for personal use. But, that solution does not appear on the table.

    Instead, Congress is considering handing pharmaceutical companies more money through lower taxes as a carrot to manufacture the drugs we need. I would imagine that would only induce them to keep making limited supplies of generics so the tax benefits continue. Congress might be better off having government take control of the prescription drug supply-chain to ensure that supplies are adequate.

    The Food and Drug Administration (FDA) wants the White House to focus on the economic challenges facing generic drug manufacturers. Today, almost all generic drug purchases come from just three entities. Those entities, such as Red Oak Sourcing and Clarus ONE, include big retailers such CVS Health and Walmart. You can bet they are doing what they can to maximize their profits.

    One academic expert, Dr. Kevin Schulman, who teaches at Stanford Medicine, argues that these entities use their leverage to demand super low prices from the generic drug manufacturers. When the manufacturers don’t deliver, it’s not their problem. They are not accountable. Rather, they profit off of the brand-name drugs they sell, and it’s the patients who suffer because their generic drugs are not available.

    One big manufacturer of generics, Akorn, closed down. It had made 100 generic drugs, including albuterol and a drug that treated lead poisoning.
    There is at least one promising domestic solution, Civica Rx, a non-profit that manufactures prescription drugs, which you can read about on Just Care here. Civica was started to ensure a robust supply of critical generic drugs.

    Here’s more from Just Care:

  • DiRx cuts out Rx middlemen to lower costs

    DiRx cuts out Rx middlemen to lower costs

    Why should insurers be involved in people’s purchase of prescription drugs?  Allison Bell writes for Think Advisor about Satish Srinivasan,  whose company eliminates insurers and PBMs from the prescription drug purchasing process for generic drugs. It should bring down your cost for generic drugs, but it’s not clear by how much.

    Srinivasan is the CEO of DiRx. His company operates an online pharmacy principally for individuals who pay for their medications with their own money, rather than through insurance. For the most part, Srinivasan’s customers either don’t have insurance or have high-deductible plans and want to pay as little as possible for their drugs. They might have a health savings account to get their drugs tax-free. In some cases, people use DiRx and then submit their bills to their health insurers for reimbursement.

    Srinivasan started his business to reduce prescription drug costs for Americans. He saw firsthand how health insurers drive up the cost of prescription drugs. Insurers add their administrative costs to the prescription drug’s cost. Moreover, their cost is based on a “reference price,” not the drug’s actual cost to them. So, insurers want to keep the reference price as high as possible. Then they can keep as much of the spread between the reference price and the drug’s actual cost for themselves.

    Srinavasan also blames Pharmacy Benefit Managers (PBMs) for the high cost of drugs in the US. PBMs negotiate drug prices with pharmaceutical companies and then decide which drugs will be covered and at what cost to patients–the formulary. They can, and will often, include prescription drugs on their formularies that cost more than other similar drugs when they make more money by doing so. And, PBMs will sometimes exclude low-cost drugs from formularies when they profit more by doing so, as CVS has been charged with doing.

    Srinavasan’s company cuts out the PBMs and the insurers to drive down drug prices. How much savings you get is unclear. DiRx works directly with the generic drug manufacturers.

    Mark Cuban’s Cost Plus formulary manufactures hundreds of prescription drugs and sells them at cost plus 15 percent and a $3 processing fee. His company has begun contracting with insurance companies to cover drugs you buy through his formulary.

    Here’s more from Just Care:

  • Does Medicare Part D save you money on generic drugs?

    Does Medicare Part D save you money on generic drugs?

    A new Avalere analysis reveals that more than half of people with Medicare Part D paid the full cost of their generic drugs at least one time in 2020, in some cases as much as they would pay for brand-name drugs. Sarai Radriguez reports for Health Payer Intelligence on the increasing number of people with Medicare Part D who pay the full cost of their generic drugs.

    In the three years between 2017 and 2020, the percent of people with Medicare getting no help from their Part D prescription drug coverage to pay for their generic drugs in at least one instance rose from 45 percent to 63 percent. Their copays were in the same tier as brand-name drugs.

    Drugs for which people paid the full cost included drugs to treat thyroid issues as well as musculoskeletal, cardiotonic, thyroid issues and anxiety. Curiously, a higher percentage of people in low-income subsidy benchmark plans (Extra Help plans) (68 percent) paid the full price of their generics than people in non-benchmark plans (62 percent).

    Medicare Part D plans cannot charge their enrollees more for copays than their negotiated price for a drug. But, they can put generic drugs on high copay tiers, while getting higher discounts for brand-name drugs. So, that’s what they are doing increasingly to maximize their profits. As a result, some brand-name drugs cost enrollees less out of pocket than their generic substitutes during the catastrophic coverage phase of the Part D benefit, even though they cost Medicare more.

    If the skinny version of Build Back Better passes–the reconciliation bill–it would allow federal drug price negotiation for some brand-name drugs without generic substitutes. But, it does nothing to ensure that Part D prescription drug insurers are offering their enrollees coverage at the lowest price possible, for example, at the prices you can get through Mark Cuban’s Cost Plus Pharmacy.

    Here’s more from Just Care:

  • Whistleblower says CVS won’t cover some low-cost generics

    Whistleblower says CVS won’t cover some low-cost generics

    Ed Silverman reports for Stat News on a whistleblower lawsuit against CVS. The lawsuit alleges that CVS won’t cover some low-cost generics, driving up costs for people in the CVS SilverScript Medicare Part D prescription drug plan, while boosting CVS profits. It sounds like CVS is engaged in a big bait and switch with its Medicare enrollees.

    We don’t have the numbers, but many people throughout the US in the CVS SilverScript Medicare Part D plan complain about being forced to buy a higher-cost brand-name drug rather than the generic drug equivalent if they want CVS to cover their medication. CVS kept at least twelve popular low-cost generics off its formulary. The generic drugs treat a multitude of conditions, including high eye blood pressure, dementia, ulcerative colitis and hepatitis C.

    For example, a Part D SilverScript drug plan did not cover a generic form of Advair, an asthma medicine, on its formulary. Instead, CVS required people to buy the brand-name medicine at a much higher cost.

    CVS is charged with keeping its Medicare Part D enrollees from getting generic drugs in order to profit more from covering brand-name drugs beginning in 2015. You would expect CVS to do everything in its power to maximize profits. So, why doesn’t the Centers for Medicare and Medicaid Services (CMS) require all Medicare Part D plans to cover all generic alternatives to any brand-name drug they cover? Moreover, why doesn’t CMS require Part D plans to cover drugs their enrollees secure through Mark Cuban’s Cost Plus Pharmacy and other outlets, when they offer the lowest price for generic drugs?

    CVS can profit more from covering brand-name drugs because their manufacturers send CVS rebates for including their brand-name drugs on its formulary. CVS could redistribute these rebates to its enrollees through lower premiums and copays. But, it can also keep the rebate money for itself. I’ll leave it to you to guess what it does.

    Because CVS owns retail pharmacies, a Part D prescription drug insurance plan, and a Pharmacy Benefit Manager, CVS has myriad ways to boost profits. For this reason, back in 2012, it agreed to maintain a firewall between its different businesses to keep it from engaging in activities that could undermine competition. The lawsuit claims it broke that commitment.

    The lawsuit further claims that CVS developed formularies with fewer generic drugs for patients in Medicare’s Extra Help program, for whom the federal government pays most or all of the copays. These people would be less likely to notice that they were forced to get a brand-name drug, since getting a brand-name drug would have little effect on their copays.

    At the same time that CVS did not offer generic substitutes on its formulary, it also allegedly kept these drugs from being stocked in its pharmacies. What better way to ensure people bought brand-name drugs and not their generic drug equivalents?

    SilverScript is also charged with not making enrollees aware of higher costs associated with brand-name drugs or with using their Part D drug coverage rather than paying cash for drugs.

    Here’s more from Just Care:

  • Medicare Part D insurers unwilling to bring down generic drug costs

    Medicare Part D insurers unwilling to bring down generic drug costs

    A new study published in the Annals of Internal Medicine shows that the Medicare Part D insurers would have saved Medicare several billion dollars on generic drugs in 2020 if they paid Mark Cuban’s Cost Plus pharmacy prices. But, had they done so, these insurers would have lost billions in profits. Why is the administration continuing to promote a failed corporate health insurance model, over public health insurance, to the detriment of taxpayers and people with Medicare?

    The whole idea behind having private health insurers “compete” to offer drug coverage is that competition will bring drug prices down. But, the Part D health insurers are not in business to bring down drug prices. They are unwilling to do what Mark Cuban is doing to bring costs down or even to offer their enrollees coverage of their generic drugs through Cuban’s Cost Plus Pharmacy.

    Ed Silverman reports for Stat News that the study finds $3.6 billion in savings to Medicare in one year alone. Of course, that would mean savings to people with Medicare who use these drugs, as well, in the form of lower copays. When the study was done, Cuban’s company produced 100 generic drugs. Now, it produces 700 drugs, suggesting savings would be far greater now.

    The study’s authors say that “The lower prices from [Cuban’s] direct-to-consumer model highlight inefficiencies in the existing generic pharmaceutical distribution and reimbursement system.” What’s more shocking is that it highlights that the Part D private health insurance model for providing drug coverage to people with Medicare will never put taxpayer interests or the interests of people with Medicare first. (Recently, Kaiser Health News exposed that people can’t even count on a given published price of a drug on the Medicare Part D web site. Drug prices can change at any time at the insurers’ whim.)

    The authors say that 64 cents of every dollar spent on generic drugs goes to the producers and distributors, including pharmacy dispensing and shipping. How much of the price goes to the health insurers?

    Meanwhile, many older adults and people with disabilities are cutting their pills in half, delaying filling their prescriptions or dropping their medications altogether because they can’t afford the cost. For thousands each year, an additional $10.40 in copays means stopping filling prescriptions and premature death, according to a recent NBER study.

    For this study, the researchers looked at 77 generic drugs and found that if the insurers had paid Mark Cuban’s Cost Plus prices, they would have cut 37 percent of Medicare’s $9.6 billion in generic drug costs. An additional 12 generic drugs cost the same with Cuban’s pharmacy as Medicare paid.

    Some of the price differences between what the insurers are paying and what Cuban charges are inexplicably huge. Esomeprazole, which is used to treat acid reflux (a generic for Nexium,) cost Medicare about $1.77 a pill. Cuban charges about one tenth the price–$0.19 a pill.

    Here’s more from Just Care:

  • California plans to produce generic drugs for its residents

    California plans to produce generic drugs for its residents

    Like most drug prices, insulin prices are out of control. Unlike most other drugs, insulin has been around for decades and tens of millions of Americans with diabetes depend upon it for their health and well-being. Congress can’t seem to get its act together to regulate drug prices so, Angela Hart writes for Kaiser Health News, California has decided to produce its own brand of generic insulin to help its 4 million residents with diabetes, along with other generic drugs.

    Today, three big pharmaceutical companies manufacture brand-name insulin and sell it at a list price of as much as $400 per vial. At that price, it’s difficult for a lot of Americans to buy it and make ends meet. Even with insurance, costs add up. And, the dirty little secret is that it costs these pharmaceutical companies less than $30 a vial to produce.

    Left unchecked, diabetes kills. It can take people’s vision and limbs. Their organs shut down. Still, about one in four people who need insulin can’t afford it because Congress continues to give pharmaceutical companies monopoly pricing power over their drugs.

    CalRx intends to produce insulin, along with other generic drugs people need but can’t get. It will distribute the drugs through pharmacies and mail order. The question is whether California can realize the 70 percent savings on insulin it anticipates. It also apparently needs to find a pharmacy benefit manager to distribute its drugs.

    Governor Newsom plans to launch CalRx with a $100 million investment. California will need to find a drug manufacturing partner. Civica Rx, a relatively new nonprofit drug manufacturing company, could get the contract. It is planning to make three different types of biosimilar insulin, insulin that mimics the insulin currently available through Eli Lilly, Sanofi and Nordisk.

    Civica Rx could be the perfect partner for California, as it plans to sell its insulin for just slightly more than it costs, around $30 a vial and $55 for five pen cartridges. Civica Rx will apparently need pharmacy benefit manager partners to get their drugs on insurers’ formularies.

    Mark Cuban has also created a drug company that sells drugs at their wholesale price plus 15 percent. For whatever reason, California appears less interested in a partnership with Cuban’s company.

    Let’s hope California can succeed, given Congress’ inability to act on behalf of people with Medicare, let alone on behalf of people in corporate health plans and the uninsured. Insulin prices are soaring, up as much as 70 percent in the five years between 2014 and 2019 alone.

    It’s not clear that there will ever come a time when Congress takes control of drug pricing away from manufacturers and pharmacy benefit managers. At the very least, to make drugs affordable quickly and save millions of lives, Congress should be opening US borders so that people can easily and legally import prescription drugs from verified pharmacies around the world.

    Here’s more from Just Care:

  • Mark Cuban launches low-cost drug pharmacy

    Mark Cuban launches low-cost drug pharmacy

    The big news this week on the drug pricing front is that Mark Cuban has launched a low-cost generic drug pharmacy. Helaine Olen reports for The Washington Post that Cuban will charge just the cost of manufacturing a generic drug plus 15 percent and a $3 processing fee. Believe it or not, Cuban’s CostPlus Drugs online pharmacy could save some people hundreds, if not thousands, of dollars.

    I wish I could explain how Mark Cuban is selling generic drugs at significantly lower prices than you will ever find at your local pharmacy. But, the great news is that he somehow is. And, he has created a Pharmacy Benefit Manager so that, over time, drugs his company sells should be covered by your insurance. Right now though, your insurance won’t cover drugs you buy from his company.

    Cuban’s prices are so low for some generic drugs, that his online pharmacy can mean the difference between life and death for some people. Even if you have insurance, you might be able to save a fortune relative to what your copay would be with your insurance and get the drugs you need. People who do not have insurance of course also can benefit from Cuban’s drug company. For example, CostPlus Drugs charges $17.10 a month for imatinib, the generic of the cancer drug Gleevec, even though its typical price could easily be more than $2,500 a month.

    Cuban is planning ahead to control drug prices. He is building a prescription drug manufacturing site that will help ensure his generic drugs are as low-cost as possible.

    Today, the federal government reports that more than five million people with Medicare are struggling to afford their drugs, including 1.8 million people with disabilities. CostPlus Drugs cannot begin to help all of them since Part D won’t cover the generic drugs he sells and CostPlus cannot help people needing brand-name drugs. And, that means that many of them will die needlessly.

    In short, Cuban’s effort is a nice opening. But, Congress must step in and regulate all drug prices. Joe Manchin is blocking passage of the Build Back Better Act, which would regulate prices in Medicare for top-selling drugs. Since he does not appear to object to that portion of the bill, we need him to agree to vote for and allow the Democrats to pass at least that portion.

    Here’s more from Just Care: