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Some Newer Generics No Bargain, At First

04/24/13

  12:26:02 pm, by MedBen5   , 301 words,  
Categories: Prescription, Health Plan Management

Some Newer Generics No Bargain, At First

Leslie Ramirez, an internal medicine physician, observes that the price of some prescription drugs don’t drop much when they become first available in generic form – and considers why this is so:

“Patients are used to paying a high price for branded medications, and pharmacies know this. So when a new generic becomes available, many pharmacies discount the medication, but only by a small fraction as little as 10- 15%, However, the patient buying the prescription sees the new generic medication is somewhat cheaper and appreciates paying a little less for it. Over the course of a year or two, the price at the pharmacy retailer falls little by little. Eventually the generic medication stabilizes at a much lower price – as low as a tenth of the original, non-generic price. Meanwhile, the patient never realizes that they have been paying a very steep mark-up that constitutes as much as 15 times the wholesale price.”

Ramirex, who also runs a regional health care cost comparison website, notes the value of comparison shopping for new generics:

“A few months after going generic in August 2010, the branded version of [generic breast-cancer drug] anastrozole, was selling for more than $400 for a month’s supply. The generic form was sold for $361 at CVS, $360 at Walgreens and about $340 at Walmart and Target. Sounds like a bargain, right?

“Actually it was not. You might be interested to know that Costco has a well-publicized pricing strategy of charging the wholesale price plus a standardized 14% mark-up on everything it sells, including prescriptions. So how much was Costco charging at the time for this life-saving cancer drug? $27 per month. So we can deduce that the wholesale price at that time would have been around $24, which means that the major retail pharmacies were charging quite a hefty mark-up.”

Read more at KevinMD.com.

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