December 3, 2014
Local Pharmacies, Patient Care Threatened by Generic
Drug Price Hikes 

Washington, D.C.—Unprecedented spikes in the price of generic drugs are threatening patient care and the viability of community pharmacies, according to recent testimony before a Senate subcommittee.

Rob Frankil, RPh, testified at a hearing of the Senate Subcommittee on Primary Health and Aging in November that the cost increases are "wreaking havoc" on the healthcare system. He appeared on behalf of the National Community Pharmacists Association.

“Historically, generic drugs have provided significant cost savings to payers and consumers alike by providing safe and effective alternatives to typically more costly brand name drugs,” Frankil told legislators. “Therefore it was extremely concerning when, about a year ago, pharmacies began noticing a rash of dramatic price increases for many common, previously low-cost generic drugs.”

He noted that patients who are uninsured or on Medicare drug plans or high-deductible plans are most directly affected.

As an example, he said the cost of digoxin at his pharmacy in Sellersville, Pennsylvania, rose from about $15 to $120 for a 90-day supply—an 800% increase.

When one of his customers complained that Frankil was overpricing the drug, telephone calls to competing pharmacies confirmed that the price, unfortunately, was in line with others.

“Ultimately, everyone pays for these cost increases, now or later,” he pointed out. "Insurance plans aren’t likely to simply just absorb these higher costs, so even those with generous insurance plans will pay the price in higher future premiums.”

Frankil blamed pharmacy benefit managers (PBMs) for some of the problems.

“In this era of instant communication, it is indefensible for PBMs to wait weeks or even months before updating their pharmacy payment benchmarks in the wake of these price spikes—without reimbursing pharmacies retroactively,” Frankil said. He questioned whether the PBMs were profiteering from the situation by “spread pricing”—paying pharmacies low, while charging insurance plans high.

A new regulation from the Centers for Medicare & Medicaid Services will require PBMs to update generic pricing benchmarks used in Medicare drug plans every 7 days starting in 2016.

“The current situation in which unprecedented spikes in previously inexpensive generic medications are becoming commonplace is one that cannot be allowed to continue," Frankil concluded. “These prices are wreaking havoc on patients, pharmacists and health care payers alike. In addition, the associated payment lags on these medications are jeopardizing the ability of small business pharmacies to remain viable and continue to provide critical medications and related care to patients.”

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