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[e-drug] United States Congress Investigates Drug Price Increase for Generic Drugs (2)

E-DRUG: United States Congress Investigates Drug Price Increase for Generic 
Drugs (2)
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The problem with the requests that are being made to the manufacturers is that 
the Congress is asking for list prices which are hardly ever real prices. They 
may be the prices paid by individuals without health insurance and who do not 
know better but the reality worldwide is that list prices are a starting point 
for price reductions. Prices are reduced by discounts which occur before 
invoicing. These may be up to 97% in the case of originator medicines offered 
to hospitals that will start a patient on a medicine as an inpatient and then 
will continue lifelong. Then there are rebates which occur after invoicing and 
often are based on revenue paid for multiple products from the same company or 
wholesaler. The final method is bundling in which the deal is buy three and get 
one free. Or this can be complicated by offering a deal of buy three and get 
five of another product (not ordered) free. In this circumstance it is very 
difficult for the purchaser to calculate the true price of the three because 
they would need to value the five they did not want and may struggle to sell.

So what are real drug prices? The easiest prices to ascertain are tender prices 
for large scale procurement. For these prices there are no discounts, rebates 
or bundling. Prices may be affected by volume but are often most affected by 
the reliability of the purchaser in paying their bills.  Internationally these 
prices are reported in the MSH International Drug Price Indicator Guide 
(http://erc.msh.org/mainpage.cfm?file=1.0.htm&module=DMP&language=English) but 
there are many similar reports from Europe and in the US Department of Veterans 
Affairs. 

Of interest to the example used is that the MSH International Reference Price 
for doxycycline 100mg is a median price of  $0.0144/tab-cap for the supplier 
price from 13 suppliers and a buyers median price of $0.0184/tab-cap for eight 
buyers. The pack size for the sellers were all 1000 tablet packs while the 
buyer pack sizes varied from 1 to 100. Compare these prices with the quoted US 
original price of $20 per 500 tablets which amounts to $0.04 which is 2.77 
times the international sellers price. This difference may be reasonable 
considering the high cost of generic registration in the US now and other costs.

Why the cost has gone up so rapidly is hard to understand as this is a 
competitive market as there are 12 different companies listed on the FSS 
Schedule  with widely differing prices. Data available from Pharmacy Benefits 
management Services  managed by US Department of Veteran Affairs at 
http://www.pbm.va.gov/PharmaceuticalPrices.asp .

It will be interesting to see what comes out of these enquiries.

Richard Laing
Professor International Health
Boston University School of Public Health,
801 Massachusetts Avenue Boston MA 02118
Tel 617 414 1445 (Office) 617 435 7860 (Mobile)
E mail richardl@bu.edu
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