Generic brands and markets
This quote at Dailykos caught my attention on trends for the generic drugs markets:
For years, doxycycline has been a valuable drug for physicians who treat the indigent — unemployed or underemployed folks without insurance. A staple of $4 drug lists, it can be used to treat everything from bronchitis to “walking” pneumonia to urinary tract infections to skin infections to acne to venereal disease—and it covers some rarer infections like Lyme’s and is sometimes used for malaria prevention, too.
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http://articles.latimes.com/…A CVS pharmacist in Los Angeles, who asked that his name by withheld because of fear of retaliation by the company, shared with me the average wholesale price of different makers’ doxycycline, as made available to pharmacists by the McKesson Connect online ordering system.
The system shows that the average wholesale price of 100 doxycycline pills made by Watson with a strength of 100 milligrams is $328.20. The same number of doxycycline pills at the same strength made by Mylan cost $1,314.83.
Remember this sort of thing is in addition to general shortages and disruption in the US concerning important drugs. See these two Angry Bear posts from 2008 helping to look for trends in the generic drug markets Trends for generic drugs to watch and GAO report on generics and devices, Shortages of prescribed drugs 2011, Competition in the drug markets 2012, and Drug shortages and markets.
A few years back a doctor gave me a sample pack of 5mg sleeping pills — can’t remember which. When I went to renew AARP’s plan wouldn’t pay for it: $210 a month. Researched it; turned out DOUBLE the dose, 10mg, would go for only $10 a month.
Seems, the drug company did some research — found half the dose worked better for some people (good guess) — filed the smaller formulation as a “new drug” and of course charged whatever they wanted to.
Elizabeth Warren for president (even if only for candidate — scare the deck changers a little to the left.
Doxy isn’t a good example of the general case. One of the largest US manufacturers withdrew after their production facility took a hit by Hurricane Sandy because they weren’t making enough on it to justify continuing production.
The sharp difference between manufacturers is because all wholesalers make agreements with manufacturers to get one as a major supplier and one (or more) as secondary suppliers. Since the volume is low with the secondary manufacturer prices are much steeper. Doxy is far more extreme then most because of the continuing supply shortages (other recent examples of wild price fluctuations would be anything that was being produced by the Ranbaxy plant that the FDA put import restrictions on last year, Depakote ER being the worst example of this,wholesalers that had contracts with other suppliers kept getting them at contract prices for a while, companies that had been carrying Ranbaxy saw extremely large price increases by other manufacturers when they tried to secure new supplies) but for a drug like levothyroxine the price will be about 50% more for the secondary manufacturer opposed to the primary.
Drugs companies also seem to coordinate somewhat on price increases, often one company will raise a price on a drug by a factor of 10 when margins get too low, within 6 months the whole industry will have followed suit (and patient resistance to switching manufacturers tends to prevent pharmacies from switching to the vastly less expensive manufacturers giving no incentives for other manufacturers to resist the temptation to raise prices) Taking wholesale costs for one pharmacy using one wholesaler doesn’t tell you anything about the market (I worked for a generic wholesaler for awhile).
This isn’t to say this market isn’t badly jacked up. This is inevitable because marginal costs are almost 0 while start up costs are quite high due to the need for safety testing with the FDA (entirely necessary I might add, the crap these folks try to get away with is incredible). The structure of this market makes me wonder if it is possible to make it work efficiently at the manufacturer level (the wholesale level is very competitive with returns largely squeezed out due to competition).