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Pharmacists say they’re mostly left in dark on generic drug price hikes

By TED CARTER

Longtime Mississippi pharmacists Kim Rodgers and Bill Mosby say sudden price run-ups in for certain generic drugs often leave them scratching their heads.

“I’m sure there is a basis for it,” said Rodgers, only half serious, as he recalled the trip into orbit by the price of oral antibiotic Doxycycline Hyclate in 2011.

The Journal of Investigative Dermatology says it, too, looked for a basis. What it found wasn’t anything that fits the “framework of a competitive market,” the Journal of Investigative Dermatology says.

That leaves “non-competitive market forces” as the instigators, adds the Journal. It put the price jump for Doxycycline, an acne medication, at 1,854 percent from 2011 to 2013.

Mississippi and other states also took a look. They discovered the drug makers had agreed to allocate the market for Doxycycline Hyclate, the states say in a lawsuit filed in 2016.

Generic drug companies, on the other hand, blame industry consolidation, FDA-mandated plant closures and elimination of unprofitable generic drug product lines.

For Rodgers Family Pharmacy in Petal, the increase spiked the price of a 500-count bottle of Doxycycline to $1,700 from $79 within a two-weeks’ time.

The supplier gave no explanation, Rodgers said. “We just had to pay.”

Prices eventually dipped some but not close to the earlier $79 price, he said.

“I mean, come on,” said Rodgers, who opened Rodgers Family Pharmacy in 1990 and today serves on the board of directors of the Mississippi Independent Pharmacists Association.

“These drug prices are ridiculous,” he said. “No one really understands how a company comes up with a price of drugs.”

The spikes are contrary to the idea behind a generic market. That market is designed to create lower consumer prices by letting competing companies make and sell generic versions of previously branded drugs.

Congress cleared the way for the generic drug market with the 1984 passage of the Hatch-Waxman Act. In recent years, however, Mississippi and other states noticed the price dynamic changed for many generic drugs as costs rose – and in some instances skyrocketed – without explanation.

With consumers across the country enduring costs that doubled, tripled, or even increased 1,000 percent or more, Mississippi and 46 other states joined a suit with claims of price fixing by a growing number of generic drug manufacturers.

Are Shortages Real?

Bill Mosby, whose family opened Mosby’s Drugs in Canton in 1844, says the steepness of price hikes is hard to grasp, even when a tangible reason like a generic drug maker leaving the market exists.

“Unconscionable,” Mosby said of the unexplained pricing.

Experts say a single generic drug maker exiting the market for a particular drug should not drive up the price of the drug. But it does nonetheless, Mosby said.

He said he suspects a tendency by the generic drug industry to declare shortages when none exist.

“I can’t believe that some of the drugs go up the way they do because a manufacturer goes out,” he said, and questions why the government steps in to stop price gouging after a hurricane but not when a generic drug’s price skyrockets.

Mosby, a former president of the Mississippi Pharmacists Association, recalls the industry had no shortage of Doxycycline when the price of the antibiotic climbed to alarming levels. Generic-drug makers, he says, were following the lead of the oil industry. “The oil companies taught them about scarcity,” Mosby said.

Diminished Price Flexibility

As retailers, pharmacists like Rodgers and Mosby hear the customer gripes. Knowing why a drug has jumped in price helps in explaining the increase to customers. But, otherwise, it means little because the price to pharmacies is what the wholesale distributor says it is.

“We can’t determine the price on about eight out of 10 drugs we sell,” Mosby said, referring to both branded and generic drugs.

“You can lose hundreds of dollars on individual prescriptions. You can’t stay in business doing that,” he added.

Meanwhile, Mosby and Rodgers can expect to hear more price gripes from customers as health insurance deductibles on prescription meds rise. The new, higher deductibles expose customers to the full price of the drugs. Something they once received with a $25 co-pay can now cost them hundreds of dollars.

Higher Prices, Even in Slumps

Generic prescriptions make up more than 85 percent of all retail pharmacy prescriptions, the Association of Accessible Medications said in an August MarketWatch report.

Generic medications come on the market at about 60 percent of the branded price, and eventually decrease to about 20 percent of the branded price as competitors enter the market, the MarketWatch report said.

Prices on some drugs have gone even lower as the FDA steps up its pace of approvals.

But pricing can still go the other way. According to the Government Accountability Office, more than 300 generic drugs in recent years had at least one price increase of 100 percent or more.

Puzzle of the EpiPen

It’s been nearly three years since the nationally publicized EpiPen pricing episode. Bill Mosby is still puzzled by the pricing of the epinephrine used in injections to treat life-threatening allergic reactions known as anaphylactic shock. The EpiPen was not a generic in 2016 but maker Mylan, the second largest manufacturer of generics, received loads of grief over it.

The company also found itself among targets of a multi-state lawsuit alleging price-fixing across the generic industry. Mississippi is part of the suit.

Mylan denied any wrongdoing in an early December Washington Post report.

EpiPen’s price run-up from under $100 to over $600 was but another instance of independent retailers like the family-owned Mosby’s Drug Store having zero leverage with suppliers, Mosby said.

In Petal, Kim Rodgers is wondering what’s going on lately with generic cream medications. “Some of them have quadrupled in prices from $10 on up to $60, $70, $80 up to $100,” Rodgers said.

Asked whom he blames, Rodgers cited Pharmacy Benefit Managers, or PBMs. These third-party organizations administer prescription drug programs for all varieties of health insurance plans, including Medicare Part D. They bring a lot of clout as deciders on a plan’s drug formulary.

“PBMs are the biggest problem we have right now,” he said.

Rodgers cites an example of two drugs with the same long-lasting insulin production. “Each year one is going to be a preferred product on the PBM’s formulary. One is not.”

A rep for the manufacturer that didn’t make the preferred list said a 35 percent fee paid to the PBM by the competitor made the difference, Rodgers recalled.

The price of the insulin product totaled $450. “They are rebating up to $150” of it to the PBM as the cost to be on the formulary, Rodgers claimed.

“You’ve got to pay to be in the game.”

Yes, it’s part of the price of doing business, Mosby conceded, but questions why the consumers are the ones left paying the exorbitant prices.

“It’s frustrating,” he said.

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