Millicent Graves of Williamsburg, Virginia, recently was shocked to discover a huge price variance in different forms of the very same generic drug, one that she needs to treat psoriasis. When she filled her prescription in December of 2014 for Clobetasol solution, she paid $35 — the full retail cost. But when filling the first prescription for Clobetasol foam in 2015, Graves learned the retail cost was $475.88. And five weeks later when she refilled her prescription for the foam, the cost had jumped dramatically— to $627.00, making the total difference in price between the solution and foam 1,691%. “When I looked at the receipt I almost passed out,” she says. “Everything is the same as the first bottle! It’s price gouging,” she says.
Clobetasol propionate is one of four medications that accounted for the most significant generic price increases in 2014, according to information on the website of pharmacy benefit manager Express Scripts. The drug has little competition. Only a limited number of companies manufacture the drug, making it possible to raise prices whenever the opportunity presents itself.
The U.S. Medicare market is particularly lucrative to drug makers, because there’s little in this country to deter manufacturers from increasing prices. By law Medicare is restricted from negotiating prices for Part D prescriptions, or the Extra Help program.
Stratospheric jumps in many other generic drugs are wreaking havoc — not only with Medicare spending, but with Medicaid and the VA system budgets as well. The unprecedented climb in prices prompted a Senate hearing last year. More than 1,200 generic medications increased an average of 448 percent between July 2013 and July 2014, according to Senator Bernie Sanders (I-VT), ranking member of the Senate Subcommittee on Primary Health and Aging.
TSCL’s 2015 Senior Survey suggests that the increases are taking large numbers of Medicare beneficiaries by surprise. Sixty-one percent of survey participants said they had higher than expected co-pays and co-insurance costs in 2014.
Graves can’t understand why the pricing is going unchecked by the federal government. “This needs to be investigated,” she says. “People who don’t have good Part D coverage or the money to pay for their drugs would be forced to go without,” she protests. “It’s GREED, GREED, GREED!” Following prodding from Congress, the Office of the Inspector General of the U.S. Department of Health & Human Services is conducting a new review of generic price increases between 2005 and 2014.
TSCL believes that the extreme cost increases are putting Medicare beneficiaries and funding for Part D at risk. “Medicare must be given the authority to negotiate pharmaceutical prices with manufacturers for covered Part D drugs,” says TSCL Executive Director Shannon Benton. How are rising healthcare costs affecting you? Send TSCL an email at www.SeniorsLeague.org .
Sources: “Taro Pharmaceuticals, Once Nearly Broke, Now Has $6 Billion Market Cap,” Yoram Gabison, Reuters, August 15, 2014. “Feds To Probe Impact Of Generic Price Increases On Medicaid,” Ed Silverman, The Wall Street Journal, April 14, 2015. “The Reality Behind Generic Drug Inflation,” Express Scripts, December 30, 2014.