Monday, August 30, 2010

Our Not-So-Cheap Generic Drugs

I received the following e-mail from a patient (paraphrased):
"Dear Dr. Fisher,

Thank you for trying to switch me from lisinopril to generic losartan (Cozaar) to help me with the irritating cough that has been nagging me since I was placed on lisinopril. I did not pick up my prescription, though. At nearly $200 for a three-month supply, I've decided to live with the cough, since the same amount of lisinopril costs me about $12.

-Ms. Patient
Interesting how the generic drug market for some drugs only marginally discounts prices.

Since the companies that make generics did not have to absorb research and development costs, how do they justify the exorbitant prices?

Simple: the middle men still have to get theirs.



Keith said...

I believe this is the result of FDA rules that only allow one generic competitor in the first year after a patent expires. I don't understand the logic behind this, but the result is that the one generic competitor prices its drug just a hair below the branded name price and reaps the windfall for the first year before true competition sets in.

jimbino said...

I find it quite strange that a physician would complain about generic drug middlemen.

I assume there's a more or less free market in generics, which means that wholesale pricing information is available, and that this price information will attract other middlemen to compete, lowering the differential between wholesale and retail prices for generics.

Physicians, on the other hand, enjoy an oligopoly and do not publish their price information, making their practice even less consumer-friendly than that of the generic drug market.

If it gets bad enough, Dr Wes, you can quit your busy practice, become a middleman and start undercutting the retail prices, make a fortune and have time for sex again.