It’s standard advice for consumers: If you are prescribed a medicine, always ask if there is a cheaper generic.
Nathan Taylor, a 3-D animator who lives outside Houston, has tried to do that with all his medications. But when he fills his monthly prescription for Adderall XR to treat his attention-deficit disorder, his insurance company refuses to cover the generic. Instead, he must make a co-payment of $90 a month for the brand-name version. By comparison, he pays $10 or less each month for the five generic medications he also takes.
“It just befuddles me that they would do that,” said Mr. Taylor, 41.
A spokesman for his insurer, Humana, did not respond to multiple emails and phone calls requesting comment.
With each visit to the pharmacy, Mr. Taylor enters the upside-down world of prescription drugs, where conventional wisdom about how to lower drug costs is often wrong…
Out of public view, corporations are cutting deals that give consumers little choice but to buy brand-name drugs — and sometimes pay more at the pharmacy counter than they would for generics.
The practice is not easy to track, and has been going on sporadically for years. But several clues suggest it is becoming more common…
The continued success of the brand-name drug Adderall XR, long after generic competitors arrived on the market, is a case in point.
Dr. Lawrence Diller, a behavioral pediatrician in Walnut Creek, Calif., said he began noticing “very odd things” going on with Adderall XR and other attention-deficit drugs about two years ago. He began receiving faxes from pharmacies telling him that he had to specify that patients required brand-name versions of the drugs.
He had been practicing for 40 years, but until then had never had a pharmacy tell him that he had to prescribe a brand-name drug instead of a generic.
“It’s Alice-in-Wonderland time in the drug world,” he said.
Some insurers require members to have prescriptions filled with brand-name drugs and do not charge them more than for generics. But 29 percent of Americans with health insurance paid for by their employer have a high-deductible insurance plan. They acutely feel the cost difference between branded and generic drugs because they often have to pick up the full sticker price of medications until they have paid out thousands of dollars.
Naomi Freundlich, a Brooklyn writer, had been buying the generic version of Adderall XR for two years to treat her son’s attention-deficit hyperactivity disorder. Her family had a $3,000 annual deductible, and the relatively lower price helped keep medical costs down.
Then, in 2014, her pharmacist told her that her insurance plan would cover only the brand-name drug, which cost her family some $50 more a month than the generic. If she paid for the generic herself, it would not have counted toward her deductible. Ms. Freundlich complained to her insurer, UnitedHealthcare, but could not get a clear answer.
“It’s hard to explain because it doesn’t really make sense,” she said.
UnitedHealthcare has continued to favor Adderall XR and certain other brand-name drugs over generics, according to claims provided by independent pharmacists and reviewed by ProPublica and The Times…
A spokesman for UnitedHealthcare, Matthew N. Wiggin, said the insurer does at times prefer brand-name drugs. “By providing access to these drugs at a lower cost, we are able to improve affordability for our customers and members,” he said in an email.
Asked whether consumers sometimes ended up paying more because of these choices, he said pharmacies and doctors could seek an exemption from the insurer if they wanted the generic instead. Several patients said they had not been told of that option.
Shire, the maker of Adderall XR, and some other brand-name drug manufacturers are no longer content to allow sales of their products to plummet when generic competitors arrive on the market. Instead, they are negotiating deals with insurers and pharmacy benefit managers to give priority to their versions. Consumers are given no details about these deals.
A Shire spokeswoman said the company had been able to hold on to market share for Adderall XR by offering insurers and government programs prices that are competitive with those of generic manufacturers.
Adderall XR, the long-acting version of Shire’s popular treatment Adderall, had for years been the company’s top-selling product, bringing in $1.1 billion in sales in 2008, about one-third of its revenue that year.
But mindful that its blockbuster could soon face generic competition, Shire acted aggressively to protect its franchise...
Then, a few years ago, Shire tried a new tactic: giving ever-larger discounts to pharmacy benefit managers and insurers for preferential treatment over the generics. That did not mean lowering the list price of the drug, but rather negotiating rebates that were paid not to the patients but to insurers and middlemen such as CVS Caremark.
Benefit managers and insurers have been passionate advocates of generic drugs, arguing that the cheaper products save patients and their employers billions of dollars. Indeed, generic drugs have come to dominate the market, and today account for nearly 90 percent of all prescriptions filled in the United States.
Shire has managed to hold on to a much larger share of the market through its deals than most companies do when their drugs come off patent and face generic competition.
Adderall XR, the brand-name version of extended-release mixed amphetamine salts, accounted for 29 percent of the 13.1 million prescriptions for the drug in 2016, according to QuintilesIMS, a health information company that purchases the data from pharmacies and sells it to clients that include drug companies. The average market share of brand-name products dwindles to less than 6 percent two years after the first generic competitor arrives, according to QuintilesIMS.
The list price of Adderall XR has remained $7.12 per pill since mid-2012. But according to data from SSR Health, a research firm that tracks drug prices, the portion that Shire keeps has steadily declined. In the first quarter of 2017, SSR estimated that Shire kept only $1.73, down from $2.93 per pill in the first quarter of 2013. Shire does not break out how much it pays to each middleman in the system, from distributors to pharmacy benefit managers.
But Ryan Baum, an analyst at SSR Health, said it was clear that Shire’s declining share of the list price reflected “just a really aggressive instance of trying to hang on.”
“It’s irrefutable, really,” he added.
In contrast, the generics cost as low as $3.89 per pill, but that does not include unspecified concessions that generic makers offer to pharmacies and distributors, according to Truven Health Analytics, another research firm that tracks the prices wholesalers pay for drugs.
A spokeswoman for Shire, Gwendolyn Fisher, said that while Shire did not make decisions about how much patients paid in out-of-pocket costs, “Shire is helping to deliver cost savings to the system and greater patient access to an important medicine.”
Courtesy of a colleague