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The home for VPR's coverage of health and health industry issues affecting the state of Vermont.

Generic Meds No Longer A Bargain, Say Pharmacists

Nina Keck
Jason Hochberg behind the counter at Rutland Pharmacy. The family-owned business operates pharmacies in Rutland, Springfield and Ludlow.

Generic drugs are often thought of as bargains.  But in the last year, the prices of many generic medicines have skyrocketed and pharmacists across Vermont say they and their customers are taking a hit.

Jason Hochberg is one of the owners of Rutland Pharmacy, a family-owned business with four locations. 

He says generic prices have been all over the place lately. He picks up a bottle of Digoxin for instance, a popular heart medicine. “Yeah,” says Hochberg, “without warning it went from under $100 for a bottle to over a couple hundred dollars a bottle. Creams are another one - nystatin creams and triamcinolone creams which are your generic steroid or anti fungal creams - they’ve also skyrocketed in price.”  He says, “they used to be like $1.69 for a small tube and now it’s 12 bucks. That may not seem like a lot on the grand scale, but that’s 1000%.”

Ken Wilkins of Mount Tabor stops in Hochberg’s pharmacy to pick up his medicine. “As a newly diagnosed diabetic, I have to take more drugs,” says Wilkins. “And it seems like they’re changing them all the time.  And it is an issue for someone who’s retired and on a fixed income.”

For patients on Medicare or with low deductible insurance, the price hikes may be less noticeable. But Jim Godfrey, President of the Vermont Pharmacists Association, says the situation has hit those without insurance hard. “When you’ve been paying $30 cash a month for meds and then all of a sudden it goes up ten fold, you’ve got a $300 a month medication all of a sudden - this can be a significant issue.”

He and other pharmacists say it’s frustrating because the price hikes seem so random.

But Robert Jaffe says there's nothing random about it.  Jaffe is a spokesman for Lannett Company, which makes and sells close to 80 different generic drugs.  In an email to VPR, Jaffe wrote that drug prices are affected by numerous market forces including the increase in cost for hard to find raw materials, new steps in the Food and Drug Administration product development process, as well as what he described as a dramatic increase in fees for submitting a generic drug application.

Rutland Pharmacy’s Jason Hochberg understands the economics, but he and other pharmacists complain that insurance reimbursements aren’t keeping up with the price increases.

Credit Nina Keck

“John Smith comes in and he has standard insurance and gets a script for doxycycline,” says Hochberg. “I submit to the insurance company how much the drug costs me.  They come back and tell me they’re only going to pay me $20 when the drug itself costs $100.  I’m not even breaking even, I can’t afford to let that go.”

Jim Godfrey, of the Vermont Pharmacists Association, blames the Pharmacy Benefit Managers, or P.B.M.s.  These are companies like Express Scripts and CVS Caremark that are hired by large insurance companies and retailers to manage prescription drug benefits.

“The PBM contracts are essentially take it or leave it contracts,” says Godfrey. “And we told the Green Mountain Care Board that nobody really knows how the P.B.M.s arrive at their pricing because of the lack of transparency.”

A study by Creighton University School of Pharmacy found that nationwide, P.B.M.s often engage in what’s known as spread pricing; where they’ll charge an insurance company more for a drug than they pay the pharmacy and pocket the difference. The report found that this money comes on top of fees already charged by the P.B.M.s under their general contracts.

Brian Henry is a spokesperson for Express Scripts, a Pharmacy Benefit Manager that handles 1.4 billion prescriptions a year including most of those in Vermont.  Henry says Express Scripts offers clients a choice between spread pricing or a general fee for service, but not both. 

“I can tell you overall, we have a very strong track record of making sure that the pharmacies that are in our network are paid a competitive rate and ensures that for the medication that they dispense on behalf of our members that they are well addressed and well taken care of in a timely fashion,” says Henry.

Every pharmacist interviewed for this story disputed that and said it wasn’t unusual to have to wait six months to a year for some reimbursement rates to go up.

Pharmacists say it’s unclear how or if the situation will change under the Affordable Care Act.