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Posted on August 10, 2017 at 9:22 AM

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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