Why do You Think They Call It Dope?
Brand-name drugs can cost more than twice as much as their generic counterparts, yet consumers will still pay a premium for advertised brands
The same goes for “doctor-recommended Bayer aspirin.” The commercials I’ve seen imply that only Bayer’s aspirin can stop a heart attack, which is just baloney. All aspirins are created equal.
How do pharmaceutical companies keep this con going? Primarily with good old-fashioned marketing, preying on two popular notions: “This is your health we’re talking about here—don’t you want the very best?” And, “You know, you do get what you pay for.” Sometimes the latter is a helpful notion: a $399 million space shuttle from Sam’s Club couldn’t possibly be as good as NASA’s $2.1 billion version. But in choosing a brand-name drug over a generic drug certified by the Food and Drug Administration (FDA), you get nothing more for the extra money. Read the labels and see for yourself. This is not rocket science—you can do it.
Still convinced that generics deserve their inferiority complex? The FDA isn’t, and here’s the process by which it reaches that conclusion.
Once a drug company patents a new drug, no other company can manufacture or sell it for 20 years. This gives the company plenty of time to recoup its considerable investment, and then to cram the coffers. Make your own judgment about the morality of drug-company profits, but if the development of new drugs were left only to do-gooders, we might still be working with just penicillin and gauze. Remember that drug companies are like movie studios: big duds cost them millions, offset by big winners that haul in the gross national product of Indonesia on opening weekend.
As the 20-year patent expires on a particular drug, the FDA begins evaluating generic equivalents. A generic drug is tested and approved in the same way that a branded drug is. It has to deliver the same amount of active ingredient into the patient’s bloodstream in the same amount of time as the drug being copied. The generic drug cannot look like the original drug, because the company that made the original spent millions of dollars on focus groups to conclude that its pill should look like the blue diamond from a Lucky Charms box. So the generic has to go with a different color scheme or shape.
Many consumers who eschew generic versions secretly believe these drugs are manufactured in abandoned mattress factories by companies trying to expand out of the cat-litter business. They’d be surprised to know that brand-name firms manufacture half of all generics, some producing a generic version of their own branded drug. Regardless of who is manufacturing your Prozac (fluoxetine in generic), all facilities must meet the same FDA manufacturing standards. The only step in the FDA approval process that a generic drug can skip is the clinical trials—that is, actually testing the drug on new patients. If the active ingredient is the same, the fact that the generic looks like a green shamrock rather than a yellow moon shouldn’t make any difference.
So the FDA certification process that brings a branded drug and its generic equivalent to the pharmacy counter is virtually the same. But after that, deciding what patient gets what drug and for how much can get quite complicated.
Under current Minnesota law, if a brand-name drug has a generic, cheaper equivalent, the pharmacist must fill the prescription with the generic. The substitution can be overridden if the patient insists on a branded drug or the physician writes “No substitutions: I have stock in this company.” If Medicaid is footing the bill, the physician must petition Medicaid for authorization prior to using a branded drug. Doctors despise bureaucracy, and so when this little hurdle was added in 2004, it pushed the Medicaid generic-utilization rate up from 55 percent to 58 percent, generating an estimated
$10 million annual savings.
Some insurance companies reduce co-pays on generic drugs, so that everyone benefits. Patients with fixed co-pays often think that if the cost is the same, they might as well take “the good stuff” rather than the generic, forgetting that higher health costs always find their way back to the consumer as higher premiums. Insisting on generics requires a certain level of Altruism™, which seems to be perpetually in short supply.
A couple of high-profile medications recently went OTC: Claritin for allergies and Prilosec for stomach upset and ulcers. That should be good news for consumers, but the subsequent scramble to protect or carve out market share has left all of us, physicians included, in a complicated form of financial origami.
If I took my prescription for omeprazole to Target, the pharmacist would charge my insurer $117.99 for 42 tablets of generic omeprazole, which would be cheaper than the $186.99 my insurer would pay to fill the prescription with the brand-name equivalent, Prilosec. But if I walked back to the over-the-counter medication section and picked up 42-tablet Prilosec OTC, it would cost just $25.29. Three markedly different prices for the same drug. This seems crazy and it is. How can a generic via a prescription be quadruple the cost of the same generic available over the counter? Why wouldn’t every insurer just have you pick up the Prilosec OTC?
I talked with representatives of Blue Cross and Blue Shield of Minnesota and Medica, and the CliffsNotes answer to nearly every question is “market forces.” When Prilosec was the first of its class of drug to reach the market, it was priced according to what its manufacturer thought the market could bear (i.e., a lot). When competitors (Nexium, Prevacid, Aciphex, etc.) arrived, the price fell—some. As for generic omeprazole costing four times what Prilosec OTC costs, the first generic drug to reach the market is rewarded by the FDA with a six-month monopoly, and so the manufacturer charges what it likes. That six-month period has passed; there are now five companies manufacturing generic omeprazole, and so the OTC price is dictated by “market forces.”
Since co-pays have a way of making all but the most socially conscious patients indifferent to actual costs, insurers like Blue Cross and Blue Shield have been moving toward eliminating the co-pay for any generic prescription. With generic omeprazole now available, the question is: why would an insurer pay for any branded ulcer pill when Prevacid, for example, costs $206.49? In the future, it probably won’t. But for now, patient loyalty and physician habit (more than eight years of higher education and we doctors can’t memorize the dosage of a different ulcer pill?!) make it hard to switch. Besides, it’s bad PR for health-care insurers to look money-driven, even as skyrocketing costs threaten to asphyxiate our economy.
A word on “going Canadian,” and here I am not referring to the practice of wearing no underwear. If you think all Canadian generics are cheap, you might also believe that anything you find at an outlet mall is a terrific value. In 2004, the FDA looked at seven of the top-selling generic drugs in the United States. Predictably, they found six of the seven U.S. generics to be cheaper than brand-name versions available in O, Canada! But surprisingly, they also found five of the seven U.S. generics to be cheaper than the Canadian generics. These findings have been replicated with a broader range of medications, so whatever pills you need, it pays to shop.
And to buy generic.
Craig Bowron is a Twin Cities internist who’s scheduled to become available in generic form in July 2007.