Making Sense Out of Drug Prices

When the author tried to find out why the cost of her blood pressure medication had gone up by 150%, she was left fumbling for an answer

OPINION – DECEMBER 18, 2012 -- I take a generic drug, a little yellow pill that’s been produced for decades, to control blood pressure. I started taking it long before the day I turned 65 that happened to coincide with the beginnings of the great recession that effectively reduced the value of our savings and our house.

If that wasn’t enough, my blood pressure was further challenged by certain elected leaders who somewhat hysterically proclaimed that it was time to cut Medicare and Social Security benefits.

Oh my, what are people thinking? But in all the upheaval, I still had my little yellow pill to quell the violence of a blood pressure that was simply responding in kind to the events of the day. Some stability existed after all in $4 a month yellow pills.

Then one day last year I went as usual to pick up my 90 day supply and was told the pharmacy didn’t have it. Say what? How could you not? Moreover, why didn’t you call me, warn me that this perceived lifeline was disappearing?

“Oh, you called my doctor to order something else and not me?” (Hear internal scream here which apparently the pharmacist did because she said, “We don’t have time to call everyone when this happens.”)

Besides being annoyed that a call to me, the customer, would be a distraction, I was more stunned that I didn’t have my little yellow pills. My next step was to call my former pharmacy (I changed because I mistakenly thought my new part D plan required it) who had the little yellow pill and would call my now former pharmacy to transfer the prescription.

I learned later through a little research and articles that began appearing that certain long-used generic drugs were in short supply. It seems that there is little money in it for manufacturers. Surely health insurers who were telling the public to get the lowest cost effective drug, sometimes just the lowest cost, would have some say or clout in working with manufacturers. After all, there are more expensive drugs being developed every day for other conditions.

Almost as if someone heard me ask the question and thought I needed a bit of humbling, I became privy to a problem far worse than mine. I had come to the pharmacy to pick up my prescription and was waiting respectfully behind a women being served. She was frantically waving her arms and pacing. A pharmacist and pharmacy staff were trying to comfort her by assuring her she would receive her medicine just not today.

In her anguish, she turned and headed toward me, and I saw the very worried face of this woman of advanced years with a bent and tilting body that seemed propelled by fear and anger. Her eyes were rimmed in red partly due to her age and partly her emotional stress.

“I have cancer and I have to have my medicine or I will die,” she shouted to me. Oh, man, how much I wanted to help her, hold her and how utterly powerless I felt. I could only agree how terrible this was for her.

Unlike my medicine, hers was expensive and apparently not produced by many drug manufacturers. Her worry was so much greater than mine, but we both were in the untended weeds of insurance and drug manufacturing. It seemed we were the collateral damage of a failed strategic partnership between government and corporate interests.

Fast forward about nine months. I went to my pharmacist for my little yellow pills and was shocked to learn the price had increased 150%. I was able to ask why despite the fact my jaw was somewhere below the counter.

“You will have to call your insurance company,” she kindly said.

So I did, and they said I had to call my pharmacy about the price increase.

So I did. “It’s the insurance company trying to get your deductible.” The clerk reasoned that the insurance company sets the price and gets whatever money I pay. Further the clerk said I would have to call the insurance company.

So I did. I learned, and frankly I feel a bit, okay a lot, stupid that I didn’t connect these dots before. My money goes to the insurance company who then pays the drug manufacturer for the drug at some prearranged cost and pays the pharmacy a prearranged dispensing fee. It dawned on me that the insurance company could set the price at any price and who was around to question it.

I liked the insurance representative on this call because she was the only one who thought I had a reason to question the increase. She made the effort to find out the reason for the increase and actually called me back the next day. She said the drug manufacturer increased the cost.

What possible reason is there for a 150% cost increase to the consumer for a generic drug that probably costs pennies a pill to manufacture?

Bertha D. Cooper is retired from a 40-plus year career as a healthcare administrator focusing on the delivery system as a whole. She still does occasional consulting.

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You are on to a significant element of prescription pricing that few are aware of, but it affects many (all) plan sponsors and members. Try googling “PBM” and “spread pricing”….see what you get. There are two questions to ask your health plan and/or broker 1) Are you receiving any payments from the PBM that you allow to process prescription claims, and 2) Is the cost of the claim that is being charged to me equal to the amount you are paying the pharmacy. These are very serious questions that must be answered. In the context of the member, these practices pose 2 significant problems, 1) In an HSA, the member often is paying an amount that is greater than the actual amount of the claim (amount paid to the pharmacy), and 2) If a plan has a % coinsurance, what is the member paying a % of, the amount charged the health plan or the amount paid to the pharmacy. Many questions, few answers…. There are ways to do things different, you just need to engage folks who know the industry and are willing to address the above issues.