Don Stratton: Prescription Drugs: The Great American Scam

As we age and the need for prescription drugs increases, it becomes very easy to suspect that there is something seriously wrong with prescription drug prices. It doesn’t take much research to validate this suspicion.

Compare this to buying a car. The average price of a new car today is nearly $40,000, with many dealerships charging a premium over the list price. How would you react if someone offered you a coupon that got you the same $40,000 car for just $2,764?

Most people would think this must be some kind of scam. But if the car could actually be bought at that price, then we’d start to think that if they can actually sell it that cheap and still be in business, maybe someone in the automotive supply chain is ripping us off on the list price.

While filling a prescription recently, I had the exact same feeling. My pharmacy price for the prescription was $397, but a coupon from GoodRx brought the price down to $27.64, a 93% discount, just like the car example above.

Another prescription, for an inhaler produced by Astra Zeneca, cost from $280 to more than $400 at local pharmacies. Even with online coupons, the lowest price available locally was over $200, for an inhaler that produced only 60 puffs.

Comparing prices online, a Seattle company that ships drugs primarily from India priced three inhalers for just $33.33 each. I’m sure your first thought of buying from India is that the product would be a cheap counterfeit, manufactured under uncontrolled conditions. But surprisingly, when they arrived, it was Astra Zeneca, the exact same product that costs 10 times more in local pharmacies.

Shortly after, I was given another new prescription, with the same result. The local price averaged over $400 for 60 pills, or over $7 per pill, with no discount coupon available. Checking online found the same prescription from Canada for $131, or about $2.19 per pill, and from the Seattle supplier for $1.61 each.

With prescription drugs available at such discounts in the US with coupons and in other countries just as a matter of business, it’s obvious that games are being played with pricing. The question is, who is responsible?

I doubt the retail pharmacies are to blame. Although their prices vary by up to 30%, none of them are likely to increase the prices significantly. Their need to stay competitive, coupled with the fact that so many prescription prices are dictated by insurance companies, pretty much negates that possibility. So that leaves the manufacturers, distributors and insurance companies.

There’s probably no way, short of a full federal investigation, to know what price manufacturers or distributors are getting for their drugs, no matter where they’re sold. They often justify high prices by claiming that the price should be sufficient to offset their development costs. This is understandable, but it raises the question of whether US consumers bear the bulk of these costs, with other countries being sold the same drugs at prices closer to their true cost of production.

This leaves insurance companies to bear much of the blame. These companies employ pharmacy benefit managers to negotiate drug prices with manufacturers. According to Janice Contreras, director of health policy at the National Consumers League, “These PBMs take a cut of the rebates and share the rest with the insurers. But they rarely, if ever, share savings with patients at the pharmacy counter.

The problem is compounded by the fact that Medicare is prohibited by law from negotiating drug prices with manufacturers. It seems that the government has contributed to the problem, and it is probably up to the government to solve it. Don’t hold your breath.

Hope help has arrived. Billionaire Mark Cuban has a new online “Cost Plus Drugs” that bypasses insurance companies altogether and sets the price of drugs with a fixed 15% markup on the cost. That $7 per pill prescription I mentioned above is available from there for $1.68 per pill, and there are comparable savings on many others.

Don Stratton

Don Stratton is a retired detective from the Lima Police Department. His column does not necessarily reflect the opinion of The Lima News editorial board or AIM Media, owner of The Lima News.

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