Marketplace Scratch Pad

A generic drug that makes me smile

Scott Jagow Jun 30, 2009

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.

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