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A warning about the price of generic drugs

Marketplace Contributor Mar 8, 2013
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A warning about the price of generic drugs

Marketplace Contributor Mar 8, 2013
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When I’m not hanging out on Marketplace Money, I’m over at the L.A. Times writing a column on consumer affairs. My most recent piece looked at the pricing of generic drugs. If you’re like me, you probably figure that a generic is a generic is a generic. And the same generic from two different manufacturers will be priced pretty much the same because, well, they’re the same drug. Apparently not.

In my column, I tell the story of a Southern California woman who went to a CVS story to fill a prescription for a generic antibiotic. She paid $4 and 30 cents. When she went in a couple of months later for a refill, though, CVS said she’d have to pay $165 for the same generic drug. But was it the same? Turns out not. The first time around, the drug was from one manufacturer. The second time around, it was from another. And the second manufacturer was charging a price 30 times higher than the first.

This is how I learned about what the drug industry calls the average wholesale price, or AWP. Jeffrey McCombs, a professor of pharmaceutical economics and policy at the University of Southern California, explained it to me like this:

“The AWP price is a made-up price. It’s probably not real at all. I’m not sure that when it comes to the actual price that’s paid by distributors or pharmacy chains, etc. are that different,” says McCombs. “It’s just like your hospital bill. There’s no resemblance to reality whatsoever.”

What’s the takeaway here? It’s this: Don’t assume that just because you’re buying a generic drug you’re paying the lowest possible price. And if you don’t like what you’re being charged, don’t be shy about taking your business elsewhere. A different drugstore might deal with a different manufacturer, and that can make a big difference for your pocketbook.

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