Magnitude of the Fraud
By William Faloon
The magnitude of the price gouging on generic drugs is beyond verbal description. Here are mathematical examples taken right from the New England Journal of Medicine article:
Drug Price Increase per Pill Percent Price Increase
Doxycycline (antibiotic) 6.3 cents to $3.36 5,300%
Captopril (anti-hypertensive) 1.4 cents to 39.9 cents 2,850%
Clomipramine (anti-depressant) 22 cents to $8.32 3,780%
These outlandish price increases are not unique. They reflect a growing swath of generic drugs that cost virtually nothing to manufacture, but are spiking to stratospheric price levels. Nearly 10% of generic drug prices have more than doubled in the past year.
The New England Journal of Medicine gave an example of a generic drug (albendazole) that cost less than one dollar per daily dose overseas, but had risen to $119 per typical daily dose in the United States ($3,570 per month). This is a 2010% increase from what this generic drug cost in the U.S. in 2010.
Medicaid spending on this one drug alone spiked from $100,000 in 2008 to $7.5 million in 2013---a 75-fold increase!
We’re all being defrauded
Whether or not you need a generic drug whose price has exponentially increased, you are paying through higher health insurance premiums, higher deductibles, higher-co-pays and limitations on what doctor you are allowed to use and what services that doctor can perform.
As you can see on an amateur video of my November 13, 2014 talk, a generic drug I need is costing $1,100 per month. My health insurance covers $850 and I have to pick up the balance of $250 per month.
This drug (tretinoin) was approved in 1995 and long ago lost patent protection, yet it is costing me $13,200 per year. I say me because I pay this extortionist price via my insurance premiums along with the many “exclusions” that cause me to pay out-of-pocket for what health insurance used to cover.
As you’ll see in the video link, I reveal what the active ingredient in this $1,100 per month generic drug actually costs. If you don’t want to watch the video, I’ll tell you right now. The active ingredient for this generic drug is 80 cents, yet it costs me $1,100 every month.
As we reported in the September 2014 edition of Life Extension magazine, collusion amongst drug makers, I believe, is causing generics to be priced beyond rational affordability.
The cover headline of the September issue was titled “How to turn 8 Pennies into $600”. This was based on an article where I reveal an anti-viral cream (acyclovir) that long ago lost patent protection was being sold to pharmacies for 7,500% over the active ingredient cost.
These kinds of price markups are unsustainable. They are part of the reason why healthcare has become unaffordable despite unprecedented political meddling in the marketplace.
An increasing number of experts are coming to this realization, including editors of the New England Journal of Medicine.
We are all being defrauded by this unconscionable price gouging.
I own a Pharmacy
I own a retail pharmacy (Life Extension Pharmacy) and witness the manipulation going on behind the scenes that result in consumer prices for generics spiraling upwards. I never know when we order a generic whether a company has decided to “stop making” the drug. When this happens, the price almost always increases as the competition disappears.
One reason I set up the Life Extension Pharmacy in 2008 was to slash the prices of generic drugs to our members. Back then, pharmacies were selling generic drugs at prices higher than what average people could afford out-of-pocket.
My goal of slashing consumer prescription drug costs was short lived, as generic makers raised prices so high that the out-of-pocket costs remained unaffordable, even though the cost to make most generics is virtually nothing.
Will You Join me in Local Protests?
We are working with other consumer groups to amend the Food, Drug and Cosmetic Act to allow more competition in the generic marketplace. If enacted, generic prices will plummet to levels so low you won’t even worry about what percentage your insurance company will pay.
When generic drugs drop this much, it will push down many name brand prices because there are often generic substitutes that work almost as well as newer branded drugs.
Against us are pharmaceutical lobbyists who will do virtually anything to protect their lucrative monopoly enforced by the FDA.
On our side are over 300 million American consumers, most who cannot afford to fall ill even if they have health insurance. That’s because the deductibles, co-pays, and exclusions results in enormous out-of-pocket expenses that are today’s leading cause of personal bankruptcies.
I invite you to view my recent impromptu talk. It’s less than ten minutes long including the CBS News report. It was enough to motivate people attending an Alzheimer’s disease treatment seminar to pledge to join me in protests at local Congressional offices.
Below are a few back issues of Life Extension magazine that discuss the catastrophic impact caused by the corrupt regulation of prescription drugs: