The Times' Drug Problem

The New York Times led its business section today with the headline:   “Drug Prices Up Sharply.” The subject of the piece was a study by AARP showing that prices of prescription drugs rose 3.9 percent in the first three months of this year, four times the rate of inflation.   Outrageous!

But wait:   it isn’t until you read a little closer that you realize that the price increase just refers to brand-name pharmaceutical prices.   And what the article never mentions at all is that the AARP released a second study yesterday, showing that generic drug costs in the

United States were unchanged in the first quarter and fell 0.1 percent over the past year.   Here is the key paragraph from the AARP report, which—unbelievably—never made it into the Times piece: 

"The rate of increase in average annual change in manufacturer’s list price for generic prescription drugs most widely used by older Americans was about one quarter the rate of general inflation for 2005.”

Now why would the Times ignore lower generic drug prices and highlight higher brand name drug prices? I have no idea.   But it drives me crazy, because this kind of reporting reinforces the notion (perpetuated, among others, by big Pharma,) that there is some magical distinction between brand name and generic drugs.   There isn’t.   Drugs are drugs.   And these days, in most of the major therapeutic categories, there is a perfectly acceptable and much cheaper generic substitute available.   And the real news from yesterday is not bad news, but good news. 

Let’s take a few examples.   Lipitor, the Times tells us, rose between 4.7 and 6.5 percent in the first quarter.   That’s a hefty increase.   But let’s put this in perspective.   Lipitor is of the “statin” class of cholesterol lowering drugs, and there is a perfectly good generic statin available—Lovastatin—at a fraction of the cost.   (On Drugstore.  com:   100 tablets of 10mg Lovastatin cost $62; 90 tablets of the 10mg Lipitor cost $220.) Now is Lovastatin the precise equivalent of Lipitor? Not quite.   Is it possible for everyone to substitute one for the other? Not quite.   But most people on Lipitor could take Lovastatin and never notice the difference.   And what’s more the companies making drugs like Lovastatin aren’t raising their prices right now.   They are, in response to increased competition, effectively lowering prices.   

Here’s a better example.   You can spend $434 for 100 tablets of the 10 mg Prozac, or you can get generic Prozac—Fluoxetine, an absolutely identical molecule—for $55 for 100 of the 10 mg tablets.   Why do we care how much Prozac costs, or whether it has gone up by five or ten or even fifty percent in the past quarter? No doctor in his right mind should be prescribing it, no insurer ought to be reimbursing for it, and no patient ought to be taking it when the same drug is available for a quarter of the cost. 

Now, of course, it isn’t the case that there is a good generic alternative available in every category.   If you want a really good asthma drug, you have to pay the going rate from Merck or Genentech.   But these are increasingly isolated cases—and will become even more so over the next few years, as an unprecedented number of major brand name drugs come off patent.   And there are enough generic alternatives now available that the impact of higher brand name prices—for consumers who make rational drug choices—is much less than it seems.   In fact, what percentage of prescriptions filled last year in the United States were generic? 56 percent.   In terms of prescriptions filled, four of the top five American pharmaceutical houses are now generic manufacturers.   And that industry is doing exactly what Congress intended when the drug patent laws were re-written:   competing against each other and holding prices down.   

The Times’ lead read:   “Prices of the most widely used prescription drugs rose sharply in this year’s first quarter.”  Wrong, wrong, wrong.   It should have read:   “Prices of the most widely used prescription drugs fell last year.”

Correction, anyone?

Comments

[Timmothy]

This seems to be something that fell out of the same mold that a majority of our news does - at least the news that takes of most of the space of the front of the America's attention. It is depressing that not only is an article such as that was published in widely read magazine, but that many people, such as myself, are completely void of any shock. It's just another article in a truth-ignoring society of media.

It seems like they right the headline first, a headline that will generate interest, then fill in the body to suite it.

[Craig]

Here's something weird: on my Bloglines RSS feed, every place you wrote "America" has been carefully replaced with "U.S." What's more, there's a carriage return both before and after.

I wonder why...

[Account Deleted]

I don't know if I agree with your Lipitor example, even though you qualify it. I take a very small dose of Lipitor each day (5 mg, which is tiny but dropped by cholesterol by about 30+%), and my insurance plan sent me a note asking me to talk to my doctor about the generic Lovastatin.

I have a unique doctor who runs a 'concierge' or 'retainer' practice, and doesn't accept money from drug companies. He said that despite the lower cost of Lovastatin and the deal my insurance company offered me (three free months!), that the drug performed differently and he didn't recommend it. Further, it took an adjustment, with blood tests along the way, to create the right dosage. So this would increase the costs on the rest of the medical system and I would be paying for part of that.

Prozac and its generic are good examples, but I'd argue that Ativan and its generic lorazepam are better cases. They are identical, and there was an effort to corner the generic market's raw ingredeitns, which dramatically increased the price-- I believe octupled it at one point. That's one of the dangers of the generic side.

[Daniel Farquhar]

Thanks for the positive news.

Perhaps the original article was trying to shock gov't into action and reduce the prices.

(Tongue in cheek - obviously)

[ik]

thank you.

[Fajita]

Thanks for the other side of the story.

You know, I am all for reporting on drug companies, especially when what they do that appears to gouge consumers. But I don't think we need bad reporting to induce more disdain for drug comapnies. No need to skew things.

If the truth, or at least a balance, isn't good enough for the Times, then good grief, what sources am I going to be left with to get the full story - blogs?

Hey, wait a minute...

[Art]

Perhaps the story, while poorly written, is indeed about the unnecessary gouging of consumers by the pharm industry. Wouldn't be the first time that the Times (or other main stream media) latched onto an idea or issue but wholly fumbled it in delivery.

[drmarcr]

Why would any doctor prescribe the brand name over the generic? Perhaps it's the billions of dollars "Big Pharma" spends on marketing (far more than on R & D industry-wide).

Chances are, the doc writing the Prozac Rx rather than the fluoxetine Rx is actually using a pen that says "Prozac." Don't think MD's are any more immune to marketing than the rest of our population. Sad but true.

Marc A. Rifkin, MD

[Greg]

If MD's are no more immune to marketing (on products are the core of their own profession!) than the rest of our population, then what justification do they have for the high salaries they keep arguing for? I'd rather get my perscription from Dr. Gladwell.

[brad kreit]

I think hidden in Gladwell's argument is what we don't want to admit about health care: There's a certain, limited amount of money we can spend on keeping people well. People will get sick. People will die.
Lipitor is a strong example of the potential trade offs with costs. Back when I was up on these things (a couple years ago) Lipitor was better at reducing cardiac events (not just cholesterol, which is really only important insofar as it relates to problems like heart attacks) compared with other statins. The question is: Is it so much better than generic statins that it's worth all of the extra cost?
Health care economists typically value a quality year of life at $50,000, which comes from the approximate cost of kidney dialysis. There's obviously nothing magical about this number, and we can debate how fair it is. But I think it's important to remember that the reason we need to see generics as a viable alternative when appropriate is that prescribing generics would free up money for improving other forms of care, especially in terms of health insurer costs. It's crass to say this, but in the end, it would allow doctors to provide better care to everyone.
That said, I do take issue with Gladwell's assertion that "higher brand name prices—for consumers who make rational drug choices—is much less than it seems." Drug choices are not really consumer choices. We trust that doctors understand drugs. Few people have the time or ability to research their drug options, and talking about drug prescriptions as health care choices perpetuates the myth that patients who trust their doctors to know best are somehow at fault.

[Devang]

The relationship which is making insurance companies pay for the brand name drugs seems well worth exploring.

If my insurance company wants to keep costs down, It shouldn't be paying for the brand name unless I absolutely need it, on the other hand if my insurance is paying for the brand name, I gain nothing by asking for the generic alternative, except maybe a lower co-pay in some cases.

Why don't insurance companies want to keep their costs down by making me take generics... How much of Lipitor and Prozac sales are to Insurance companies? why?

Very good post, Dr. Gladwell

[newyorkette]

I'd like to say something about Valtrex, since their ads seem to be all over the place on TV these days.

(Now, this isn't a reflection up on myself or any personal disclosure, mind you! I just happen to know about it because I do some modelling, and it's come up because models and actors who get cold sores are often obliged by contract to take suppressive medication, so as not to blow a ten grand job by showing up with a cold sore. Valtrex suppresses cold sores as well as the genital manifestations of herpes.)

Valtrex is making big -- no, HUGE bucks, costing more than three times as much as similar molecules that work just as well, and which are available in generic form.

The drug's equivalent of a copyright was due to expire last year, I believe, and they managed to avoid the obligation to go generic by coming up with other uses or other doses for the drug. It seems as soon as a drug is applicable to a new use, the copyright is renewable, and no generic version is allowed to be produced.

I don't know what their pretext was, but the result is that it will continue to be a brand name drug that costs three times more than it would have cost had it gone generic and become simply "valacyclovir."

Combine this with their strategy to make a "household name" of their product, and you have people paying from 1 to 3 dollars a pill for a product that they might not even have truly needed. (There are other ways to avoid cold sores, etc., and other, much cheaper drugs available).

It's a perfect example of the pharmaceutical industry's abuse of the system, as well as the duping of the public by preying on them psychologically through a barrage of publicity (I'm sure we've all seen those ads). All for a drug that isn't life-saving in most applications (except perhaps in the figurative sense). And it's obviously working very well for them, as the ads just keep coming on.

[Michael]

Generics and Brand are not always the same...

While the active ingredients may be identical, often the inactive ingredients are not.

My wife gets a severe allergic reaction to a generic drug and has to get the brand name drug or risk severe illness.

Otherwise, I do agree with you about the "sins of omission."

[C. Callosum]

On Prozac: "No doctor in his right mind should be prescribing it, no insurer ought to be reimbursing for it, and no patient ought to be taking it when the same drug is available for a quarter of the cost."

I wonder whether the placebo effect has something to do with the preference some people have for brand name drugs. In his book _Placebo_, Dylan Evans describes an experiment in which headache patients were given four different types of pills: placebo tablets and non-placebo tablets, given in branded or non-branded packets (the latter were just labelled 'analgesic tablets').

The people who took the branded tablets felt better than the non-branded tablets, though the effect of the active ingredient was stronger than the branding effect. For something like depression, which appears to be placebo-responsive, it would not be too surprising if patients felt better after taking branded Prozac than the generic drug, even if the active ingredients are the same.

[Theodore Sawchuck]

Unfortunately, one of the best ADD meds on the market today (Strattera) is unavailable in a generic, AND my insurance won't cover it, so I'm paying $150 a month out-of-pocket . It's worth it - Strattera's like Adderall without the increased risk of heart attack - but the cost is IMO too high.

[Merrick]

I go to a doctor who helps out the uninsured quite a bit. Everytime I go into his practice it's swarming with big pharma salesman stocking his cabinets with samples. Then they try to sell the doc on all the new drugs they have. The samples are given to the patients without insurance, but the doctor also prescribes those same brand drugs instead of the generics - why? Maybe because he has so much exposure to them.

[AAwoken]

"four of the top five American pharmaceutical houses are now generic manufacturers." Are you telling me that the same Pharma's that make the orginals are making the generics? Or are generic manufacturers bigger than Pfizer et al? Or am I missing something?

[Carlos]

You certainly raise the issue of using generics vs. brand-name (which does make sense most of the time), but I still think that the Times makes a valid point. Just to check the math here: if generics are 0.56 of the dollar, and brand-name is 0.44, generics go down by 0.1 percent over a year (so now 0.55) and generics go up by 16% (4% per quarter, or 0.51) at the end of the year you are paying a net increase of 6% and thus overall prices are still going up.
Also, while I agree that direct to MD marketing affects prescribing patterns, we should also emphasize direct to consumer advertising, which IMO leads to at least as much brand-name prescribing.

[GB]

AAwoken - Most (if not all) of the big Pharmaceutical companies have their own generic companies. It makes sense since when the patents expire for the branded product (and thus anyone can start making the generic version), the same company can make both branded and generic versions of the drug in order to minimize revenue loss to generic competitors.

[Jeremy S]

Does anyone know of other topics of which the mass media constantly fail to report KEY points and findings? Can you say 'Global Warming'?
Mass Media Sensationalism - where do we go to get the right information?

[Ron Lyon]

Zocor and Pravachol, the two main competitors to Lipitor, recently became available as generics. The Lipitor price increase likely represents an attempt to obtain a greater profit margin on a shrinking market share.

[Cameron]

Mr. Gladwell makes a great point about generic drug prices, but I do not understand why he does not explain why my insurance company -- for an example -- will pay for my Nexium when a far cheaper alternative is available. My co-pay for Nexium comes to about $5 less than what I would pay for OTC Prilosec (sp), so I continue to use Nexium. But why does my insurance company do this?

[Pilliperipat]

In suburban areas in which the patient population prides (hubris?) itself on providing some influence on their own healthcare, prescribing generic drugs may be difficult if not impossible. You see, many patients insist on name brand drugs as though there is a qualitative difference as a result of the marketing efforts that have been referred to previously. Herein lies the insidiousness of the marketing/branding effort. The marketing preys upon our society's branded mentality in the vein of fashion, autos, pcs, and other function-first items that have been branded into value beyond any objects actual component part value.
However, on the other hand, how can we argue against paying pharma for the HUGE dollars that go into r&d and testing? Additionally, if some of the money goes toward creating a large knowledge base and informatic systems, it is worthwhile. So where does that leave us as a society?

[T]

Thanks for bringing attention to the fine print.

[db]

I also blogged on this issue.

I do not object to the headline, because brand name drugs are still a major problem for physicians and patients. Patients ask for brandname drugs by name - they watch TV and see ads. Physicians do become "brainwashed" by drug reps. Brand names are easier to spell and remember.

So why do I not object to the article title? Because it does accurately frame the problem - brand name drug price inflation is a major problem. You have spoken to the solution (as have I and others). I hope that the continued aggressive inflation of brand name drugs will stimulate physicians and patients to better understand generic alternatives. We physicians have the responsibility (which we do not always accept) to take money into consideration when we prescribe.