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Payers: Forget specialty drug costs—generic prices are crushing our budgets, too

Each Thursday, on, I post our pharmacy’s net invoice cost for popular generic and brand medications. Visit and monitor the price changes yourself so that you don’t have to rely solely on third parties. In God We Trust, but for all others we verify.

Dive Brief:

  • According to insurers, prices for some commonly used generics have increased between 15 and 75 times their original prices.
  • Insurers and others are concerned about rising generic drug prices, because of the reliance of these drugs in the U.S. (According to a recent report from the Generic Pharmaceutical Association, 88% of all prescriptions dispensed in the U.S. are generics.)
  • Spending on prescription drugs is the fastest growing healthcare cost. In Massachusetts, spending on prescription drugs increased 13% in 2014, while overall healthcare spending increased by 4.8%.

Dive Insight:

Courtesy of American Action Forum

It’s true that some of the roughly 12,000 available generic drugs have increased in price within the last two years, including drugs such as amitriptyline, an antidepressant, which increased in price from four cents per pill in 2013 to $1.03 per pill in 2015, as well as captopril, a medication for hypertension, which increased from 11 cents for a 12.5-mg pill in 2013 to 91 cents for the same pill in 2015. And there are many other examples.

What’s driving the increases? According to experts, several factors, including increasing costs of chemical and other raw materials used to produce the drugs; lack of price regulation in the U.S.; and declining competition due to increased consolidation in the generics industry.

These factors need to be addressed—especially the issue related to lack of competition. But there is also another perspective: According to the 2014 Express Scripts Trend Report, since 2008 the cost of brand drugs has almost doubled, while generic drug prices have almost been cut in half. In a separate analysis, AARP reported that generic drug prices fell by 4% in 2013. According to that analysis, generic drug prices have declined steadily in the last 10 years.

One reason that payers are still feeling the pinch and complaining about price increases is that, while some of the hikes may be declining (or are modest in nature), use of these medications stretches so far across the market that winds up being a huge cost burden anyways.

By Nicole Gray

Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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