[Ip-health] New York Times: Lawmakers Look for Ways to Provide Relief for Rising Cost of Generic Drugs

Thiru Balasubramaniam thiru at keionline.org
Tue Nov 25 09:24:14 PST 2014


*Lawmakers Look for Ways to Provide Relief for Rising Cost of Generic Drugs*

24, 2014

With the prices for some common generic medicines soaring over the past 18
months, state and federal lawmakers are trying to find relief for patients
struggling to pay.

On Thursday, a Senate panel convened to investigate price increases for
generic drugs. Separately, Senators Amy Klobuchar and John McCain will
revive stalled legislation to allow some prescription imports from Canada.
And Maine is testing out a hotly contested new law that allows its
residents to buy drugs from overseas, flouting United States policy.

One half of generic medicines went up in price between last summer and this
summer; about 10 percent more than doubled in cost in that time, with some
common medicines rising by over 500 percent, new data released in
connection with a Congressional hearing found. These include thyroid
replacement hormone, the antibiotic
the heart pill digoxin
the asthma

“Generics have played an important role in making medicine affordable for
millions of people,” said Senator Bernie Sanders, independent of Vermont
and chairman of the Senate Subcommittee on Primary Health and Aging, who
held this week’s hearing with Representative Elijah E. Cummings, Democrat
of Maryland. “I worry that we’re seeing the end of that now,” Mr. Sanders
said in a telephone interview. “This should be highlighted and remedied.”

Because the United States does not regulate drug pricing or negotiate
prices nationally like other countries, generic medicines have long been a
safety valve for American patients, allowing them to obtain needed
medicines at lower costs. Brand name medicines are granted patent
protection for a number of years after they enter the market. Historically,
after the patent expires, generic copies have entered the fray, bringing
prices down, often sharply.

But that pattern is changing, researchers and policy makers say.

The cost of many generic medications has increased so much over the past
year that prices for many common generic drugs in the United States have
surpassed those of their brand-name equivalents in other developed
countries, a new analysis
the website Pharmacychecker, which guides patients in the mail order
purchase of medications, has found.

For example, a 90-day supply of the generic heart medicine digoxin sells
for $187 in New York; the branded version, Lanoxin, sells for $24.30 in
Canada. A month’s supply of a generic steroid
treat inflammatory bowel disease
for $1,625 in the United States, while the branded version sells for
$155.70 in Canada. A three-month supply of the generic cholesterol
drug pravastatin costs $230 in this country, but $31.50 for the branded
drug Pravachol in Canada.

Senator Klobuchar, a Minnesota Democrat, said the time was right for
legislation as drug costs have risen, while salaries have not. “The economy
has stabilized but it’s really hard for the middle class to get by, and
this is a glaring example of where we are so out of line with other
countries,” she said in a phone interview. “One solution is to let some
competition in from over the border.”

There are many reasons that generic prices may fluctuate. The price of a
key ingredient may increase markedly, or competition may decrease as
manufacturers leave a market, leading to price rises.

Stephen W. Schondelmeyer, a pharmaceutical economist at the University of
Minnesota, spoke of the current “Wild, Wild West of drug pricing,” adding,
“I believe in markets, but this market is broken; it’s failing.”

He noted that for generics, “the trend is going up rather than down, as
we’d expect, and not just 2 or 5 percent but by hundreds or even thousands
of percent.” Brand-name medicines have increased in price as well, by an
average of 12.9 percent in 2013, he said.

Ralph G. Neas, president of the Generic Pharmaceutical Association
<http://www.gphaonline.org/>, said that the congressional committee had
overstated the rise in generic drug prices in its calculations. He said
that over all, generic drugs had saved Americans $1.46 trillion in the past
decade, and $239 billion in 2013, compared with the price of brand drugs.

The idea of allowing Americans to import drugs from Canada or other
developed countries is strongly opposed by the powerful United States
pharmaceutical industry. Importation even for personal use is generally
illegal under Food and Drug Administration
Such medicines may be impounded at the border, although the law is rarely

With the federal government slow to come to the table on the issue, some
states have been taking matters into their own hands. Last fall, a new law
in Maine began allowing residents to mail order prescription medicines from
licensed pharmacies in Canada, Britain, Australia and New Zealand.

Mainers had long been traveling over the border to get cheaper medicines,
said Troy D. Jackson, a state senator who sponsored the bill. “They were
organizing bus trips because the price difference was so extreme.” The city
of Portland and some state employees were able to use their insurance to
order Canadian medicine.

“We’d used it for eight years without a problem,” Mr. Jackson said. “It was
convenient, and there wasn’t one safety issue.” But the practice was deemed
illegal in 2012, prompting the new law, which essentially licenses select
pharmacies in other English-speaking countries to operate in Maine.

A little over a year later, companies have been set up in Canada and
Britain specifically to sell prescription
to Mainers.

While other states have considered such legislation, they are watching how
legal challenges play out in court. State pharmacists have challenged the
law, saying it exposes them to unfair competition. (The Pharmaceutical
Research and Manufacturers of America <http://www.phrma.org/> has been
vocal in opposing the law on the grounds that it contradicts F.D.A. policy
and exposes patients to dangerous drugs.)

At the hearing this week, Senator Sanders and Representative Cummings
announced that they would immediately propose legislation mandating that
generic drug makers extend rebates to Medicare
 and Medicaid
their prices rise faster than the rate of inflation — a policy already in
place for branded drugs. Other ideas included allowing the F.D.A. to
fast-track applications to maintain more competition in the generic market.

At the hearing, the two had hoped generic drug makers would aid their
investigation by explaining the reason behind the price rises. But all
three executives invited to testify declined. That included Arthur P.
Bedrosian, the chief executive of Lannett, which has raised the price of
generic digoxin by nearly 1,000 percent, a sudden price rise
recently by The New York Times.

Since then, the company has been subpoenaed by the Connecticut attorney
general and by the Department of Justice seeking information about its
interactions with competitors in setting prices. The company contends it
acted legally, though Mr. Bedrosian has boasted at shareholder meeting that
his company has record profits thanks to its opportunistic pricing.

He told the congressional committee that he could not come to the hearing
because he would be at an investors meeting in Europ

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