NCPA - National Center for Policy Analysis

WHY GENERIC DOESN'T ALWAYS MEAN CHEAP

March 13, 2007

The great promise of cheap generic drugs is taking a bumpy road to arrival.  Case in point: Zocor, one of the most commonly prescribed pills in the United States, which lost patent protection last June.  Multitudes of patients have switched to generic versions of the cholesterol-lowering drug, lured by lower insurance co-payments or the promise of a significant price drop for those who pay out-of-pocket, says the Wall Street Journal.

As predicted, the price that many insurers pay for generic Zocor has dropped dramatically.  But the price that pharmacies charge patients who pay cash remains high in many locations, with wide variations by vendor:

  • At online pharmacy walgreens.com, for instance, the price for 30 tablets of a 20-milligram dose of Merck & Co.'s Zocor is $149.99, compared with $89.99 for simvastatin, the generic version.
  • And last week, the same dose of simvastatin cost $108.99 at CVS's Web site, compared with $154.99 for Zocor.
  • After a call from a reporter, CVS said it would drop its simvastatin price to $79.99, as part of an "ongoing price analysis."

At a time when policy makers are searching for ways to cut health-care costs, generic drugs are often viewed as one of the most straightforward solutions.  But as the situation with generic Zocor illustrates, prices can vary wildly, and may not be nearly as cheap as expected.

How far -- and how fast -- generic prices fall depends on a number of factors, explains the Journal.  Among them: how many generics makers sell the drug; how much competitive pressure pharmacies feel; whether there is another alternative, such as a different generic in the same class of drugs; and whether a particular generics maker gets an initial exclusivity period.

Source: Sarah Rubenstein, "Why Generic Doesn't Always Mean Cheap; Zocor Case Shows Drugstores May Offer Only Small Savings Over Brand-Name Drug Prices," Wall Street Journal, March 13, 2007.

For text:

http://online.wsj.com/article/SB117374717814634856.html

 

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