Why do drugstores AND medical insurers push generics??

[bluebirdy]

Another question ...

I've read that pharmacies make a much higher profit off of generic Rx's than brand name Rx's ... but I don't know the reason behind this. Do you all know?

It took me several months to get my pharmacy to supply Vicoden so that I could try it instead of Hydrocodone - to see if I could tell a difference. They simply don't even stock brand name drugs like this - telling me that no one requests them. I don't know if that's true, or if no one requests them because the drugstores don't stock them! I DO know I paid a higher co-pay and made that choice.

I've now received a letter from my medical insurer "fussing" at me for choosing the brand over the generic!! :p:mad: Makes me just wanna keep choosing the brand :D

So, even in spite of the higher co-pay I paid, it must have cost my medical insurer more for the brand - and they didn't like that at all :p Are brand name drugs just "dead" once the generics come out?

I don't trust generics no matter how many times we are reassured by our government, FDA and all others that they are just the same.

bb

[Gimpy]

Get this Blue!

I got a letter from Aetna today, stating that if my dr. would agree to write my anti-depressant as a generic, they would waive all my costs for 6 months and then just charge me the regular generic co-pay of $15 after that!

I about fell over when I read that letter. Of course, I'll try it. My name brand co-pay is $60 so I'll do what ever to lower the cost.

G

[Mark N]

Pharmacies make more money off the generics because of the higher profit margin. The profit pharmacies receive is the selling price minus the cost of purchasing the med. IE Med A sells for $55 and cost the pharmacy $48 they get $7 profit. Med B generic of A sells for $25 and cost the pharmacy $5 profit of $20. Generics are so much cheaper because they don't have to account for the millions spent on research to come up with the medicine. Therefore their profit is the selling price minus the cost of materials and packaging. The brand name is the selling price minus research cost/unit along with cost of materials and packaging.

Insurance companies earn more with generics because their cost go down and pharmacies make more because their profit margin is higher.

[Pharmacist.steve]

Using "profit margins" is mis-leading.... Recent surveys claim that the overhead cost of filling a Rx is ~ $10.00 - regardless of the cost of the medication.. If a generic costs $5.00 and the pharmacy adds $12.00 bringing the price to 17.00 for a 70% Gross profit but still $2.00 over the cost of providing the service.. IF a brand name costs $100 and you add the $12.00 giving a gross profit of 11% gross profit .. but still ~ $2.00 over the cost of providing the service.

This is how insurance companies pay for Rxs.. while the "gross profit" may be higher for generics .. the bottom line is pretty much the same. I now work in mental health and see Rxs for $500 - $1000 for a month's supply and we get paid (sometimes) as much as $20-$30 profit. For those of you following the math .. that is 2%-3% gross profit...

The bottom line for the insurance company is that there is -on average - ~ $75 difference between generics & brand name...

If a pharmacy has above average DAW's ( Dispense as Written) ... it will guarantee a third party audit.. which will disrupt the business for 1-3 days .. require extra staff on hand to "hand hold" the auditor's hand - because of HIPAA... they can't have access to any records other than those of their insured...

Many insurance companies will chg the patient their normal co-pay plus the difference between the cost of brand and the generic.

[Mark N]

Steve, from an economic point of view profit margin is not misleading. You are separating out the overhead cost and in economics that is including into the overall cost of providing the meds.

In your example the generic only gives $2 profit as the selling price minus the entire cost of providing the meds is $2 on sales of $17 profit of11.8%. For the name brand example the profit is $2 on sales of $112 profit of 1.8%.

[mrsdoubtfyre]

majority of RXs are paid for by 3rd parties (insurance)

The pharmacy receives the AWP (average ********* price) for that medication, insurances have caps on AWP called MAC (maximum allowable cost) so anything billed higher than that is not paid for.
Plus a fee (each insurance is different), but it is around $3.50-$5.00 and then whatever the copay amount from the patient, if there is any.

For govt medicaid patients the copay is $0.00 or $1.00 in my state.

This does not lend itself to much of a profit.

Cash paying customers, tend to pay more, since they are not being controlled by the 3rd party payor. So if a generic costs say 5.00 and the patient pays $20.00 that pharmacy makes a bit more. Cash customers are not a very high percentage of a typical pharmacy business today. Exceptions are neighborhoods that have high volume fertility RXs for women trying to get pregnant. These drugs are typically not covered by insurance. A pharmacy with many fertility patients would see a higher cash ratio.

[bluebirdy]

Who would go to the grocery to buy a can of say, green beans, that just said ... "Green Beans"? No manufacturer's name, no country of origin, no state of origin, no address, no guarantee, NOTHING about the origin of those Green Beans. Yeah, sure, a nutrition label and all. But if I got sick off of those Green Beans ... I have NO WAY to trace them to anyone, anywhere. Who is accountable for my generic Green Beans??

That's how I feel about my generic Rx's. They are just pills in a bottle. I have NO idea who the manufacturer is :confused: I have NO idea where they were made (US? foreign? China? :eek:) :confused: I have NO idea what ingredients go into them in addition to the "active" medication :confused: (I've read about problems with these additional ingredients that few are aware of.) Can the pharmacy trace them? I don't know ... hopefully. But maybe not. :confused:

In life we learn that when no one is accountable, things tend to NOT be held to a high standard. Or worse.

The FDA is the only entity to protect us. And wtih all the recent poisons and taint-alerts from China, lead, dog foods, toothpaste, flu vaccine shortages ... blah blah blah ... the FDA has shown we cannot place our trust in them.

So here we all are, putting all of these generic pills down our throats every day ... when many are made in China ... and who knows WHAT is in them?? And whether they even contain the active ingredients they are supposed to?? :confused: At least with a brand name Rx there is a COMPANY putting their name on the bottle.

bb

[mrsdoubtfyre]

go thru the FDA approval process just like any other drug.

The manufacturer is required on labels in my state. The insert that comes with them, in the original bottle has a list of all the ingredients, just like the name does. So if you get lisinopril, then IVAX would appear after it, on the label.

Here is the Orange Book link from FDA. You can search any product there and learn about it.
http://www.fda.gov/cder/ob/default.htm

In many cases there are Brand name recalls in excess of generic products.
The Schering corp has had just about every drug of theirs recalled, in the last 10 years, including Claritin D, ALL asthma inhalers (no active ingredients), and all timed release products like Theo-Dur.

The major chain drugstores typically use AB generic rated products. These are quality drugs. Independents are free to order from whoever they choose, so if you are concerned about where a generic comes from, you can always ask for a drug insert from the bottle (not a printed one from the computer data base) to have and read. All drugs are mandated in this country to provide the insert with each unit.

Some manufacturing generic companies are LARGER than some older brand names. Watson, IVAX, TEVA, for example. And many brand name companies own generic subsidiaries... Pfizer (Greenstone), Novartis (Sandoz) and many Brand name companies supply the raw ingredient to generics, like SOMA.
And some drugs today dispensed as generics are really brand names that have become very inexpensive, and are dispensed as generics.. example Sumycin (tetracycline).

[houghchrst]

I thought that with the generics that the same manufacturers that do the brand name only the inert stuff in the meds differ and are a bit cheaper. Kind of like that can of green beans, say they might be made by Del Monte but they sell for cheaper because they are using their less than top quality beans, cut costs on labeling and such so they can put it out at a cheaper price.

Okay posted at same time as Mrs. D

[bluebirdy]

Mrs. D & all - I'm going to ask for a drug insert on my next generic Rx refill, and I'll report back to you all what I find out! And if I'm treated like NOBODY has ever asked for THAT before. thanks for the info ... bb

[mrsdoubtfyre]

Mrs. D & all - I'm going to ask for a drug insert on my next generic Rx refill, and I'll report back to you all what I find out! And if I'm treated like NOBODY has ever asked for THAT before. thanks for the info ... bb

You go girl!

[bluebirdy]

... so if you are concerned about where a generic comes from, you can always ask for a drug insert from the bottle (not a printed one from the computer data base) to have and read. All drugs are mandated in this country to provide the insert with each unit.


I picked up my new Rx yesterday - and it was a generic. I was at the window at my pharmacy that starts with "C". Here's how it went:

The girl at the window was holding the bag with the Rx ... so I asked her for the "drug insert for the generic drug" - "that tells who the manufacturer is". She looked puzzled, then flipped to the standard drugstore customer drug printout attached to the bag and said something like "this is all we have?"

I said "No ... I've been told that I can request a drug insert that tells all about the manufacturer of the generic drug ..."

She then said Oh - the manufacturer is printed on the bottle - as she pulled the bottle from the bag. Then immediately told me that the manufacturer's name was covered by one of those (zillion!) labels that they stick on the bottles - as she started peeling the label off. Then she frowned and said Oh - you're not going to be able to read this.

I WAS able to read it after she removed the label ... but it's the teeniest-tiniest font on the bottle - and I never knew it was there! So I have learned something brand new. And it's probably covered up by labels on most/all of my Rx's.

This particular new Rx says:

MFR: PAR PHARM

which means nothing to me, and that's all I got, but it's a start!

So thanks Mrs. D.

bb

[Pharmacist.steve]

Par Pharmaceuticals CLAIMS to be a generic MANUFACTURER.. when in fact some of their products are produced by other companies and they are just a DISTRIBUTOR.. you can look at their website where the Package inserts are available... at the end of the inserts you find out who really MANUFACTURED the product

http://www.parpharm.com/pdf/product/Allopurinol602.pdf

[BrokenBladder]

Pharmacist Steve could you help us out in this thread?

http://brain.hastypastry.net/forums/showthread.php?t=26896

[bluebirdy]

I checked out the Par site - so thanks! Two other generics I happened to have handy were by Caraco (their website has a U.S. address) and my Hydrocodone says something odd like M'ckfodt Spec. I can't even Google it properly. Is that Merck? Something else? How can we tell how many of these drugs are made overseas? Aren't MOST made overseas now?

thanks ... this is a whole new learning experience on generics ;) bb

[Pharmacist.steve]

Teva is becoming a major manufacturer and I think that it is based in Isarel
The other is probably referencing http://www.mallinckrodt.com/
There has been such consolidation in the Pharma's over the last decade+ we have few left that are US owned/based.. even those .. a lot of product is manufactured in Puerto Rico.. has been since the late 70's - early 80's
In all honesty... I have a lot of other things that I have to worry about than where a product is manufactured.. as long as it is rate "AB" in the FDA ORANGE BOOK.. I can dispense it knowing that - according to the FDA - it is equivalent to the brand.

[bluebirdy]

I didn't know about he "orange book" or the FDA ratings ... so it's been all a big unknown to me, a patient and customer. Hubby told me about Teva in Israel.

But with so much being manufactured in China ... WHERE drugs (and vitamins) come from IS very important to me these days. I've been preparing my dogs homemade food ever since the pet food poisoning happened.

thanks again! bb

[mrsdoubtfyre]

I put that link to the Orange Book...in post #8 here, in this thread.

I guess I'll put it in the stickys now, for future reference.

[Gymnast_Navy_Wife]

Great Post !
I never knew you could ask for the package insert on generic drugs or about the FDA book. I never have issues with either generic versions I get of Neurontin (but, I've never had the brand name of it anyway); but I see a huge difference in the generic Ditropan 5 mg pills (thankfully my hospital pharmacy still carries the name brand version of the 10 mg pills, so I can adust my dosage).

I don't see any drug stores pushing the generics, but I rarely use civillian pharmacies, so the pharmacy itself has no control over things....

[Lil E]

A company holds the patent on a drug usually for 20 years. After that the formula becomes available to other companies to make under their labels. Usually the ingredients are pretty much the same, they're cheaper because you're not paying for the brand name. By law they can't use the brand name so they use the chemical name. The term generic simply referes to the use of the chemical name (cyclobenzaprine) instead of the brand (Flexeril). I think people are getting a little paranoid.

I used to go to a place in So. Cal called the Hamburger Stand. They used black and white paper products marked Hamburger, Fries, Soda, just like some other generic foods used to do. Just because it wasn't marked with a brand name doesn't mean they didn't taste good. Cheaper too.

[Pharmacist.steve]

they're cheaper because you're not paying for the brand name

There is NO:

Research & Development
Advertising
Samples
Patient assistance programs (free/indigent drug programs)

While the patent is for 20 yrs.. that patent starts when the drug is discovered.. there is typically 12-14 yr period between discover & reaching the market place.. when all the clinic trails must take place and FDA approval is sought.

Recently there has been a couple of drugs in the stage II - stage III clinical trials when everything "fell apart" and 400 -500 million in R&D expenses for EACH DRUG .. went down the drain...

This is an expense the generic companies NEVER HAVE TO DEAL WITH..

[bluebirdy]

I put that link to the Orange Book...in post #8 here, in this thread.

I guess I'll put it in the stickys now, for future reference.

This is really a great link ... I knew nothing about the Orange Book before as I've said. It links to other stuff as well. I very much appreciate your help!

bb

[PAINJOURNEY]

This is a little off the subject, but over the 15 years of taking various prescription drugs, I find a difference in some brand name and generics. The side effects, duration and quality of effectiveness, etc. Most of my docs agree with me and say they have other patients with the same experience. It's strange because I can sometimes tell a difference between two generics from different companies. Believe me, I wish this weren't true, it creates a big hassle for me,but my docs and I have experimented for years with the same results.

I'm not suggesting that this is true for every med or even common


Just my personal reality

painjourney

[Kandra]

agree with me and say they have other patients with the same experience. It's strange because I can sometimes tell a difference between two generics from different companies. Believe me, I wish this weren't true, it creates a big hassle for me,but my docs and I have experimented for years with the same results.

Oh, I totally believe you...I find it to be true for me also..and most CPers find the same thing, I think.

However where I'm from the docs just don't believe it...for some reason they think you just want the brand instead of the generic...emphasis on some reason. Well, yes..it's because for that particular drug the brand was more effective! Or once it was the difference between one generic and another.

[PAINJOURNEY]

KANDRA-

It's always great to hear someone with the same experience!

And yes, when you ask for the brand, people get suspicious because people who take these meds for other reasons usually want the brand names. That sucks for us, cuz we always have to keep proving our credibility, and never want anyone to start to doubt us.

Fortunately my doc has no problem with me asking for the brand names, but my insurance and my pharmacy have a problem with the amount of paperwork and work that goes into geting approval for a brand name.

Thanks again Kandra!

painjourney

[bluebirdy]

Hi Kandra & painjourney!

Our newspaper (major city) publishes a weekly column from something called the People's Pharmacy ... I've learned a tremendous amount from it! You all would enjoy reading about what they've discovered regarding generics. You'll see that topic right at the topic of their website:

http://www.peoplespharmacy.com/index.asp

One of the first Rx's you'll read about is Wellbutrix XL ... I have a friend who absolutely could NOT take the generic!

And painjourney ... what in the world is it that some people want brand names for - that's bad?? I'm clueless on that ...

take care, bb

[Pharmacist.steve]

what in the world is it that some people want brand names for - that's bad?? I'm clueless on that ...

On average there is ~ $70 difference in the cost between brand name & generics. With nearly 4 BILLION Rxs filled annually and ~ 60% being generic. IF EVERYONE took brand names only... at current pricing ... our system would have to spend another 168 BILLION on drugs. While there are some individual who have problems with a particular drug.

I once had a patient who took Quinidine and the only product that did not give him diarrhea was a GENERIC, from a specific manufacturer.

When the extended release generic Dilantin came out ... we were getting toxic levels with patient switching to the generic BECAUSE ... the bench mark Dilantin 's manufacturing procedures were developed in the '30s and it was such a crappy made product that it was poorly adsorbed and the generics developed in the '80s were better adsorbed... resulting in toxic levels when the same mgs were given with generic vs brand Dilantin.

[RJW]

I haven't noticed a difference in the geberic vs brand in my Ambien but did notice it in my Oxycontin. I would really like to try the brand Roxicodone instead of the generic but my insurance pays zero for brand if generic is availible so I have put it off.

[PAINJOURNEY]

Bluebird-

I'm not sure of your question. I was responding to Kandra's post about some docs not liking patients to ask for brand names when it comes to certain meds especially pain meds. My doc even told me that it was one of the 'red flags'. Their thinking is that addicts usually know all about meds and ask for whatever they think is best. That's from their mouth, not mine. There are alot of red flag behaviors that are actually very innocent, but for some reason sometimes they are interpreted as something else. Is that what you were asking?

Steve-yes, I know some people who actually prefer generics over brand-just shows that sometimes people ARE sensitive to brand/generic meds and/or the products of various companies that make them. I don't doubt that some generics are good products, and some better than brand names. But I can even tell a difference between generics from different companies. NOT every single med I take, but enough to become a problem. Certain generics just don't work for me, and can give me enough side effects to stop the med completely. I know if I was a total pain in the butt I could get some brand names, but I don't have the energy anymore. Over time ALL my meds became generic but luckily we've figured out certain companies have generics that suit me just fine. Unfortunately, two meds that are essential to me I take as generic, but the brand(which I took for years) works so much better for me. And I would never ask for a brand name just for the heck of it. I am a big believer in keeping costs down also, and I know it is tremendous work for the pharmacies. I have a great friend who is a pharmacist who tells me stories of what she goes through in a day that blow my mind! I feel very fortunate I have insurance at all.

RJW- Do you know the company that your generic ambien is? I can tell a big difference between the generic and brand, but maybe it's the company and not the generic.

Painjourney

[Kandra]

And yes, when you ask for the brand, people get suspicious because people who take these meds for other reasons usually want the brand names. That sucks for us, cuz we always have to keep proving our credibility, and never want anyone to start to doubt us.

I think some people who are using these types of drugs for purposes other than pain only know to ask for the brand name...as someone else has already mentioned. However, my previous PM just had a snit fit when I asked her to write for the brand Oxy (at the time I was on Oxy) rather than the generic as I could certainly tell a difference. She just flat out didn't believe that there could be any differences. When I asked the pharmacist, he looked at me like I had grown a third eye somewhere and said there's no difference...they're A/B rated. Well, that doesn't take into account different fillers etc. being used.

I once had a hospital based pharmacist tell me that on some antibiotics and on pain meds one should really get the brand...he was one of the pharmacists that I used to work with.

PharmacistSteve: I used to take Tegretol and when I was started on it the brand was the only option. A couple years later the generic came out but I was told not to change due to the plasma drug level problem. I stopped the Tegretol a long time ago but am having some problems. I already know no one wants to restart it due to its effect on Coumadin. It's a great med though!

Fortunately my doc has no problem with me asking for the brand names, but my insurance and my pharmacy have a problem with the amount of paperwork and work that goes into geting approval for a brand name.

I don't bother to ask my current PM for brand. For one thing currently I'm taking Opana which doesn't have a generic equivalent..but even when I was on MS, he wrote for the ER instead of MSContin. The doc who writes for my sleep meds doesn't have a problem wrting for brand..I could tell a difference between brand Ambien and generic. However now I take Lunesta which used to work just fine but of course now doesn't. I find that if I take sleep meds for more than 3 nights in a row my system becomes accommodated quickly and they're ineffective.

Thanks, painjourney!

[bluebirdy]

When the extended release generic Dilantin came out ... we were getting toxic levels with patient switching to the generic BECAUSE ... the bench mark Dilantin 's manufacturing procedures were developed in the '30s and it was such a crappy made product that it was poorly adsorbed and the generics developed in the '80s were better adsorbed... resulting in toxic levels when the same mgs were given with generic vs brand Dilantin.

Pharmacist Steve - that's very interesting how it can cut both ways! I consider myself a very fair person, not easily swayed. I've tried the brand Vicoden for 2 months instead of Hydrocodone which I've been taking for years ... just to see if the brand was better. I think not. In fact, if I were doing a blind test I would probably choose the Hydrocodone as more effective. AND ... that Vicoden is so funny-shaped that it's harder to swallow. So I'm switching BACK to the generic on this one ...

Painjourney - yes you answered my question! I think I was OK asking for the brand in my case ... just wanted to be sure I wasn't raising one of those "red flags" unknowingly :rolleyes:

I was clearing out some old (unread) newspapers and came across a Parade magazine from a year ago with a cover story: "Could your medicine be fake?" Talk about on-topic!! Has the story of the mass fake Lipitor case in 2003:

"One such case in 2003 involved as many as 18 million tablets of bogus Lipitor that had been manufactured in Costa Rica. The counterfeiters had purchased their ingredients from the Hong Kong office of a Swiss company and even embossed the fake product with a real-looking Pfizer logo. The "Lipitor" was the marketed through a drug *********r operating in the Midwest and sold through legitimate pharmacies. The pills reached Pfizer's attention only after American customers began to complain about their bitter taste. It's possible that more than 600,000 people could have received bottles containing the fake Lipitor tablets."

The article goes on to conclude:

"One thing everyone agrees on: The problem is becoming widespread, and the supply chain is still vulnerable. Up to 40 million of the prescription bottles handed out in the U.S. today are filled with substances that aren't what they claim to be, according to the National Association of Boards of Pharmacy."

bb

[PAINJOURNEY]

Kandra-

I can relate to your experience with the doc not wanting to do the brand. Although NOW everyone believes me when I tell them of my sensitivity to meds, in the very beginning they told me the same thing. However, I've spoken to alot of people personally and over the internet who believe people can react to certain products differently. I read that although the generic has to have the same ingredients, there is a 20% leway(sp) as far as how much goes into a product.

I know I'm not explaining this well, but I know some time ago there was a huge thread on this subject explaining this, and it was debated hotly. I have no intention of sparking that up again. Everyone has their own experience and beliefs. I just wanted to share my experience;and in turn I feel better when I hear other people have had similiar experiences. Believe me, I'm not saying that brand names are always better than generics. I think it's more likely I'm sensitive to the products from different companies. In this day and age I can't believe that EVERY drug company makes the best possible meds. Maybe it's filler that I am sensitive to, I don't know. My allergy doc is very interested and is actually going to somehow study this, because he sees this often. He is a great researcher so I'm hoping that he can give me some insight.

Thanks everyone!
Painjourney

[Pharmacist.steve]

"One such case in 2003 involved as many as 18 million tablets of bogus Lipitor that had been manufactured in Costa Rica. The counterfeiters had purchased their ingredients from the Hong Kong office of a Swiss company and even embossed the fake product with a real-looking Pfizer logo. The "Lipitor" was the marketed through a drug *********r operating in the Midwest and sold through legitimate pharmacies. The pills reached Pfizer's attention only after American customers began to complain about their bitter taste. It's possible that more than 600,000 people could have received bottles containing the fake Lipitor tablets."

There have been a lot of changes in our ********* distribution system in the past 5 yrs. Those "fake" tablets got into the supply channel by a dishonest warehouse employee in one of the large *********rs.. There are only 3-4 *********rs that control 90%+ of the ********* distribution.

There use to be a lot of "trading" between primary *********rs and secondary *********rs. We now have "petigrees" on drugs - a paper trail ... basically a "chain of custody".. they are experimenting with RFID's in the bottles - right now just in EXPENSIVE brand name drugs.

The major chains have taken the position that if they can't get a drug from a known/reliable source... they will decline filling the rx and send the patient somewhere else. It use to be that you would do anything to keep from turning a prescription customer away.

[Kandra]

has to have the same ingredients, there is a 20% leway(sp) as far as how much goes into a product.

I thought it was 10%...maybe Steve can answer that??

meds. Maybe it's filler that I am sensitive to, I don't know. My allergy doc is very interested and is actually going to somehow study this, because he sees this often. He is a great researcher so I'm hoping that he can give me some insight.

I'm now seeing an allergist because I've suddenly developed several allergies including drugs. I now can't take Solu Medrol which is kinda bad when you're an asthmatic! (To pharmacistSteve: what would they give me in place of that??) and also have developed so many antibiotic allergies that I'm left with only being able to take one oral antibiotic...doxycycline. My pulmonologist told me 3x two weeks ago: do NOT get sick..well, I have such incredibly bad sinusitis with fevers that he ended up giving me doxycycline. I can tell you I was frightened to take it. I finally took one dose of it and so far so good :)

As to the fillers, I think that's a definite possibilty as to why some generics work well and others dont. Just IMHO :)

[Pharmacist.steve]

Originally Posted by PAINJOURNEY View Post
has to have the same ingredients, there is a 20% leway(sp) as far as how much goes into a product.

the FDA requires ALL MEDICATIONS to be +/-5% of what is stated on the label... generally what you will get is the potency being closer to 105% when first produced and closer to the 95% at the expiration date.

[PAINJOURNEY]

KANDRA-

I hope they can figure things out for you!

Steve- I'm pretty sure I heard different....but like I said, it's more than once been a debated issue. Again, I've read all the debates, studies and numbers until my eyes burned. Don't have any desire to do that again. I'll just make my decisions on my personal experiences (how a med works or doesn't work for me, side effects, etc.) rather than on the paperwork.

Thanks everyone
Painjourney