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Generic drug costs rise – Congress asks why

This week a key Senate subcommittee is rightly tackling several vexing questions: Why are scores of generic prescription drugs surging in price by 1,000 percent or more virtually overnight? What impact does this have on patients, their pharmacists and the government? What, if anything, can be done about it? 

Our organization, the National Community Pharmacists Association (NCPA), represents independent community pharmacists and about a year ago they noticed a rash of dramatic cost increases for generic drugs. NCPA surveyed more than 1,000 community pharmacists and documented that this problem is widespread

{mosads}You may think cost increases and health care are synonymous. But this situation is unique for a couple of reasons. 

First, generic drugs have for years been associated with reducing costs. That’s why community pharmacists continue to promote their use today, where appropriate, and regularly counsel patients about generic alternatives to save money. 

Second, some of the drugs involved have existed for decades and are hardly new breakthroughs. The case of the common and long-utilized heart medication Digoxin was profiled in detail in The New York Times. Doxycycline, a mainstay as an antibiotic used for treating infections and other conditions, is another interesting case. A new story in the New England Journal of Medicine looks at albendazole, for which the cost of a daily treatment reportedly went from $5.92 to $119.58. 

Sen. Bernie Sanders (I-Vt.) and Rep. Elijah Cummings (D-Md.) launched an investigation on Oct. 2nd. Sanders is chairman of the Committee on Health, Education, Labor & Pensions (or HELP) Subcommittee on Primary Health and Aging and scheduled a hearing for this Thursday, Nov. 20th. Recently it was reported that the U.S. Department of Justice is also investigating this matter. 

Patients without insurance or with a high-deductible insurance plan may have greater difficulty paying for these medications. Some patients are foregoing their medication altogether due to the cost. 

For Medicare beneficiaries, this trend is pushing them into their drug plan’s coverage gap (or “donut hole”) much sooner. That exposes them to prolonged periods of paying for their medication until catastrophic coverage kicks in. 

All patients, and plan sponsors, will eventually be impacted. Ultimately, this inflation is factored into future plan premiums paid by everyone. 

For community pharmacists, this state of affairs is compounded by the fact that reimbursement from pharmacy benefit managers (PBMs) does not keep pace. I recently visited a community pharmacy in Maryland. The pharmacist told me that their cost of acquiring a steroid cream shot up from $100 to $250. They are losing $150 every time they fill that prescription. While the pharmacy must pay its wholesaler the going rate ($250) the PBM insurance middlemen reimburse the pharmacy at the outdated $100 price and may wait one month or more to update payment rates – and rarely, if ever, do so retroactively. 

Regarding the pharmacy reimbursement aspect, bipartisan legislation (H.R. 4437) has been introduced by Reps. Doug Collins (R-Ga.) and Dave Loebsack (D-Iowa). Medicare officials have also acted to require Medicare drug plans to update pharmacy generic reimbursement rates every seven days, starting in the 2016 plan year. Community pharmacists appreciate these efforts. 

We commend Congress for examining this issue. Hopefully solutions can be implemented to mitigate the impact of such price spikes on consumers and to fairly reimburse community pharmacies for the generic drugs and medication counseling that they dispense. 

Hoey is CEO of the National Community Pharmacists Association (NCPA), which includes the owners of nearly 23,000 independent community pharmacies. To learn more, go to, visit, or follow NCPA on Twitter @Commpharmacy.

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