Pharmacist Testifies: Generic Drug Price Spikes Wreaking Havoc on Patients, Pharmacists and Health Care Payers

A pharmacist testified before a Senate subcommittee today that unprecedented price hikes for formerly inexpensive generic prescription drugs are "wreaking havoc" on the health care system while jeopardizing the viability of community pharmacies.

Alexandria, Va. (Nov. 20, 2014)

— A pharmacist testified before a Senate subcommittee today that unprecedented price hikes for formerly inexpensive generic prescription drugs are “wreaking havoc” on the health care system while jeopardizing the viability of community pharmacies.

Rob Frankil

of Sellersville Pharmacy in Sellersville, Pa.

appeared on behalf of t

he National Community Pharmacists Association (NCPA) at a hearing of the Senate Subcommittee on Primary Health and Aging. He described to senators the sudden nature of the price spikes and their impact on patients, payers and community pharmacists.

Historically, generic drugs have provided significant cost savings to payers and consumers alike by providing safe and effective alternatives to typically more costly brand name drugs,” Frankil testified. “Therefore it was extremely concerning when, about a year ago, pharmacies began noticing a rash of dramatic price increases for many common, previously low-cost generic drugs.”

Patient shock

The cost increases, he warned, have a “profound effect on patients.” Patients who are uninsured or on Medicare drug plans or high-deductible plans are most directly affected.

The cost of Digoxin at Frankil’s pharmacy jumped from about $15 to $120 for a 90-day supply — an 800 percent increase. That astounded one of his patients in the Medicare coverage gap (or “donut hole”) who thought Frankil was overpricing the medication. Phone calls to a few competing pharmacies confirmed the new reality.

Ultimately, everyone pays for these cost increases, now or later,” said Frankil. “Insurance plans aren’t likely to simply just absorb these higher costs, so even those with generous insurance plans will pay the price in higher future premiums.”

Pharmacies short-changed

While the cost pharmacies must pay their wholesalers for drugs goes up, Frankil explained, the reimbursement rates for those drugs does not keep up. Insurance middlemen known as pharmacy benefit managers (PBMs) bear that responsibility.

“In this era of instant communication, it is indefensible for PBMs to wait weeks or even months before updating their pharmacy payment benchmarks in the wake of these price spikes — without reimbursing pharmacies retroactively,” Frankil said. He questioned whether the PBMs were profiteering from the situation by “spread pricing” – paying pharmacies low, while charging insurance plans high.

Policy changes

The Centers for Medicare & Medicaid Services (CMS) finalized a regulation earlier this year at the urging of NCPA to mitigate the problem. It would require PBMs, starting in 2016, to update generic pricing benchmarks used in Medicare drug plans every seven days. Bipartisan house legislation, H.R. 4437, has also been introduced and 16 states have enacted comparable laws.

“The current situation in which unprecedented spikes in previously inexpensive generic medications are becoming commonplace is one that cannot be allowed to continue,” Frankil concluded. “These prices are wreaking havoc on patients, pharmacists and health care payers alike. In addition, the associated payment lags on these medications are jeopardizing the ability of small business pharmacies to remain viable and continue to provide critical medications and related care to patients.”

After hearing the concerns of its community pharmacist members regarding this issue, NCPA wrote to Capitol Hill earlier this year to suggest a congressional hearing along the lines of the one held today.

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The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of nearly 23,000 independent community pharmacies. Together they represent an $88.8 billion health care marketplace, dispense nearly 40% of all retail prescriptions, and employ more than 300,000 individuals, including over 62,000 pharmacists. To learn more go to

www.ncpanet.org or read NCPA’s blog, The Dose, at

http://ncpanet.wordpress.com/