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08/10/2017

Topsy-Turvy Brand Name Drug Pricing?

On August 7, 2017, The
New York Times
with ProPublica
(an independent, non-profit investigative new agency) reported
that some drug companies have struck deals with insurers to require that
prescriptions be dispensed for the more expensive brand name drug rather than
the less expensive generic alternative! Has the world turned upside down? What
has happened? Perhaps one could respond: Follow the money.

Pharmaceutical companies have apparently cut a deal with
health insurance companies and pharmacy benefits managers for some drug
products so that middle men pay prices that are very competitive, at least as
competitive as the generic equivalents. In one arrangement for a particular
drug – Shire’s Adderall XR, used to treat attention deficit hyperactivity
disorder (ADHD) – UnitedHealthcare insured patients were provided a discount
coupon which lowered the cost of the brand name considerably, but a patient’s
family still payed about $50 more a month than for the generic. Consumers
clearly are bearing the increased costs.

A spokesman for United Healthcare defended the program: “By
providing access to these drugs at lower cost, we are able to improve
affordability for our customers and members.” Of course, the statement is true,
but it is a poor justification because in this instance have no choice in the
matter. Even if patients’ physicians write for the generic equivalent, the
doctors are told that they “had to specify that patients required brand-name
versions of the drug.” This may or may not be true depending on the health
insurers’ and pharmacy benefits managers’ formulary requirements; but it may be
a moot point if the band name drug is the only one available, or unless the
patient wants to pay full price for a drug product that is not listed in the
formulary.

Regardless, it appears as if the drug companies and the
health insurers and pharmacy benefits managers have conspired or colluded in
some way to maintain unique market shares when generics are a reasonable option
at consumers’ expense. It seems anti-competitive. It undercuts the foundation
for providing for generics in the first place. It doesn’t make sense because
it’s so counter-intuitive.

The Alden March Bioethics Institute offers a Master of Science in Bioethics, a Doctorate of Professional Studies in Bioethics, and a Graduate Certificate in Clinical Ethics. For more information on AMBI’s online graduate programs, please visit our website.  

 

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