A generic drug that makes me smile
I called my pharmacist today to get a prescription refilled, and he said: “Mr. Jagow, did you know there’s a new generic version of your drug available?” No, I did not. This is a maintenance drug I have to refill every month. It ain’t cheap. $75 a bottle, after insurance. So, I felt like I had just won the lottery when he told me how much the generic was.
$20. “$20 cheaper?” I asked. “No, just $20!” He was even more excited than I was.
Of course, I know there’s a raging debate about generics. Are they safe? Do they drain money from research of future drugs?
Purely from a consumer’s perspective, it’s hard not to like them. I buy store-brand versions of non-prescription medicines and feel safe about that, so why wouldn’t I feel safe about FDA-approved generics? Here’s what the FDA website says:
A generic drug is the same as a brand-name drug in dosage, safety, strength, quality, the way it works, the way it is taken and the way it should be used. FDA requires generic drugs have the same high quality, strength, purity and stability as brand-name drugs.
But I know there are people who doubt this and who think generics are bad for the industry. A CNN Money column last week, “The Truth about Generic Drugs” prompted a slew of comments from all angles:
Dan from Hiram, Maine said, “After drug companies obscenely cranked up drug prices over the past 5 years, a generic drug at 30-50% price reduction is still vastly overpriced.”
Jeff from Mystic, Connecticut wrote: “Just remember that generic drug makers spend more on lawyers than anything else. They are parasites.”
Frank from Oregon wrote: “The web is full of stories about people suffering major health problems after switching to generics…They contain the same active chemical. That does not mean the work the same way.”
CNN responded with a second column, “The Debate about Generic Drugs,” which reiterates the safety of generic drugs. They talk to Jacqueline Kosecoff, CEO of Prescription Solutions, a benefits provider:
She talks about a “triple win” for consumers, for payers, and for Prescriptions Solutions. If her unit delivers more value, it’s likely to get more volume and make more money. And it’s all about value these days. The study also showed stretched consumers have been cutting back on prescriptions: 27% of survey respondents said that they delayed filling, didn’t fill or didn’t take a drug in order to save money.
I can’t see how we can drive down health care costs without generics being a significant part of the equation. I can also see why people might be concerned about the research of future drugs.
But on this collusion issue that Dan from Maine hints at above, the FTC wants Congress to ban deals between drug companies in which the makers of branded drugs pay potential generic drug makers to not make the generic version. From Modern Healthcare:
Under the 1984 Hatch-Waxman Act, companies that want to bring a generic drug to market can challenge patents in court. Generics on average sell for 85% less than their branded counterparts, according to FTC research. The dramatic price margin makes it profitable for the patent holder to settle the lawsuit by paying the potential competitor more than the challenger could earn by selling the generic drug.
I think this whole thing is a pretty hot topic. I’d love to hear your thoughts.
- Jun 30, 2009 12:22 PM — Scott Jagow
- 3 comments
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Comments (3)
June 30, 2009 1:16 PM PT
RE: buying generics taking money away from potential future developments of new drugs by big drug companies - We need to re-think the sources of funding for new drug development, because with the current model, drug companies are much more prone to developing drugs for hair loss, incontinence, erectile disfunction, depression, etc. and not for the really big, serious illnesses that a lot fewer people actually get. Depression is a serious illness that affects a lot of people, but it still doesn’t make sense for research to focus on it to the exclusion of other major life-threatening but less-common diseases.
If buying generics really is hurting the big drug companies’ ability to develop new drugs, then I say: the problem isn’t with buying generics; the problem is with how new drugs are funded. I don’t have an answer, but I’m darn sure that this is a problem.
I’ve never heard of generic drug companies called parasites, or that they spend most of their money on lawyers. I’d really like to hear more about that, as in whether or not it’s true! I take 2 drugs daily, and use generic versions of both; I’ve never had any problems, and certainly prefer it to shelling out over twice as much for the name brands.
The possibility that big drug companies could be paying generic manufacturers to NOT make a generic just sounds like another HUGE waste of healthcare money. That money could be going for something SO much more beneficial to mankind, I don’t even know how to express my outrage. Seriously?? More info about this too, please!
June 30, 2009 6:16 PM PT
Nothing comes without costs, but the current system is pretty good when it works the way it is supposed to.
Researching a drug is expensive, there is no doubt about that. Most of the expense comes not from the research into the working drug, but the fact that you need to go through the process many many times before they find a drug that works and doesn’t have unacceptable side effects. Obviously drug companies won’t continue to do that research unless they are going to make money doing that, which is where patents come in.
Patents are supposed to allow a monopoly for just 17 years, but all sorts of games can be played on both sides, which is where the problems come in.
In most cases, the generics are just the result of the end of the free monopoly traded for innovation. That’s fair, and those generics are good for patients both by reducing costs of existing drugs, and spurring drug companies to research new, even better drugs.
However, when companies use sneaky tactics to either shorten or lengthen the 17 year monopoly, we get distorted results that skew markets and lead to much lower than optimal results.
So in short, ‘generic’ vs ‘branded’ is not the problem, our complex and easily gameable patent system is.
June 30, 2009 9:34 PM PT
Lord help us if we didn’t have a system to allow generic drugs to come to market—as complicated as it is. I only take generic drugs when I have an option and I make sure that my family does as well. My big worry is the next generation of drugs—the large molecule biotech (biologic) drugs. They are more difficult to make and involve lots of manufacturing steps, each of which is patented by the innovator. Once the patent on the drug itself expires (not the manufacturing process steps) a competitor can attempt to use their own manufacturing processes to get to the same end point. Then they have to clinically test the “copy” as if it was a new drug. This is costly and a huge barrier to entry for the “follow-on biologic” drugs. Congress is working on giving the FDA the authority to use good science to determine how to shorten that approval process. Otherwise, we are going to wait years and pay top dollar for these new “generic” miracle drugs. The average price for a month’s worth of today’s branded biologics is around $1,500 and there really are no competitors today to bring the prices down. While it is complicated to make these drugs, the manufacturing techniques are getting to be more routine with each passing year. About 60% of the drugs in development today are biotech drugs so you can see how the small molecule drugs averaging between $120-150 per branded drug per month will quickly seem cheap even though their generic drug equivalents (when they exist)are 50-70% less. Again, Lord help us if we can’t find a solution to this advancing biotech drug conundrum. We will have the best drugs on earth that no one but the wealthiest can afford.