Prescription drug pricing is totally broken, even for generics—here’s what happened — Quartz

Much less attention has been paid to the price of prescription drugs that tens of millions Americans take every day–that is, the 85% of prescriptions that treat common chronic conditions such as high blood pressure, high cholesterol, chronic pain, diabetes, and depression–and are usually generic medications, not brand-name drugs. Generics are the versions of drugs that get released after a manufacturer’s patent expires, allowing other makers to sell the same compound for less money–well, that’s how it’s supposed to work, at least. More than 3 billion prescriptions are written for generics every year. And the story of generic drug pricing is even weirder than brands.

 

All this means that the average American has been quickly exposed to what’s called “usual and customary” (U&C) prices, which are the staggeringly high list prices for prescriptions that were never really intended for consumers to actually pay. Think of these prices like the sticker price on a car–most buyers know that the MSRP is a fool’s price, and the real, lower price is hashed out directly with the dealer. Same with the U&C price on drugs, except there’s no back office for consumers to negotiate with.

Take atorvastatin, which came on the market as Lipitor but has been available as a generic since 2011; the cash price for the most common dosage is $120 or more per prescription. Gabapentin, an oft-prescribed pain reliever, has a cash price of $75. Nexium, which went generic in 2015, has a cash price at $250 per fill. The story is even worse with diabetes drugs, including insulin, which are often not covered on insurance formularies altogether, (same with medications for erectile dysfunction and many dermatological conditions).

These prices aren’t just what people without insurance–which still numbers 30 million Americans and could rise substantially if current laws change–will pay. Add up the people in high deductible plans, on Obamacare, and more than 50% of Americans are at risk of paying the full cash price for generic medications.

Fortunately, there are now ways for consumers to comparison shop and access tools to make prescriptions more affordable, even when insurance can’t help. Some pharmacies have created programs to discount limited lists of prescriptions. Manufacturers are beginning to provide discounts and assistance programs to help reduce costs for cash-paying patients. And, over the past decade, pharmacy benefit managers–the companies that actually negotiate prices between manufacturers, insurers, and pharmacies–have launched discount cards that offer lower prices. Together, all of these discounts can provide significant savings; up to 75% off more expensive generics. The company I co-founded, GoodRx, has brought the same technology used to compare prices for plane tickets and TV’s to healthcare. We built a comprehensive database of all available discounts that shows consumers to the best available discount based on pharmacy and location, free of charge. It’s just one solution among many that are needed.

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Prescription drug pricing is totally broken, even for generics—here’s what happened — Quartz.