Expiring prescription drug patents

The price of prescription drugs can be ruinous. I remember trenchrat saying that his money melted away like ice cream on a Florida sidewalk after he got cancer.

7 blockbuster drugs that could get cheaper soon

Expiring patents will usher in generic competition, lowering prices for American consumers

By Bruce Gil, qz.com, Updated Monday 6:57AM

Nothing cuts a drug’s price like competition. A U.S. Food and Drug Administration (FDA) report found that a drug’s wholesale price drops an average of 39% after one single generic drug competitor enters the market. With four generic competitors, a drug’s price plummets 79%. These cuts result in billions of dollars in savings for American consumers… [end quote]

Of course, savings for consumers represent losses for the companies that market the drugs. These include some of the largest of Big Pharma, including Merck, J&J, Pfizer, Bristol Meyers Squibb and Eli Lilly.

Until recently, U.S. law prohibited Medicare from negotiating prices with pharma companies. The Inflation Reduction Act now allows Medicare to negotiate the prices of a few of the hundreds (thousands?) of prescription drugs. CMS will publish any agreed-upon negotiated prices for the selected drugs by September 1, 2024; those prices will come into effect starting January 1, 2026.

Also, Medicare Part D out-of-pocket costs will be capped at $2,000, starting in 2025. This is a tremendous benefit for Medicare recipients who use expensive prescription drugs. Also, vaccines will be free for people on Medicare. (Including the shingles vaccine. I paid $400 for 2 shots before the law was passed.)

The new law only impacts Medicare Part D beneficiaries and not the general public. But price cuts due to generic competition will be on top of the Medicare negotiated price cuts.

Wendy

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Private insurers match Medicare. The “best” coverage is the same thing dollar for dollar pretty much. There is no way to tell a private insurer to pay more.

Except for what is going on with competition clauses in the major cities between two private insurers and hospitals/doctors to stifle competition from the other insurers. Doctors and hospitals are being paid up to 20% more at the leading city hospitals. That won’t be the case as the other private insurers fail.

Sticks in my mind that generics aren’t all that cheap, in the US, either. The side channels I watch on TV are flooded with adverts for mail order viagra. The ads show CVS and Walgreens charging hundreds of dollars for a dozen generic viagra pills.

And a hat tip for mentioning Rat.

Steve

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Does anyone know how this actually works for Medicare? Private health insurance companies use a pharmacy benefits manager (PBM) that negotiates the price of the drug for the insurance company. The saves every insurance company from having to negotiate the price for every drug. The PBM negotiates discounts from the manufacturer which is usually in the form of rebates paid back to the PBM and PBM may share some of it with the insurance company. The list of drugs the PBM has negotiated prices for is called a formulary.

Back in the day, there were lots of PBMs but now there basically only three. That gives the PBM huge leverage to negotiate rebates because if your drug isn’t on the formulary you lose about 33% of the market. Again, the rebates are shared with the insurance company, and sometimes the insurance buyer, typically the employer. The entity that doesn’t get to share the rebate is the patient.

If all that sounds bonkers, it is even more bonkers than that.

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“Soon” is a relative term.
The drugs referred to in the OP:
Trulicity (2027)
Ibrance (2027)
Eylea (2027)
Stelara (2025)
Opdivo (2028)
Eliquis (2026)
Keytruda (2028)

DB2

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They are cheap if you’re paying cash. You get often screwed on price by health insurers, but the price gouging is the cost of having the prescription purchase counted towards your insurance plan deductible.

Just another feature of our health care system that capitalizes on consumer ignorance.

intercst

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The three big PBMs are all owned by health insurance companies.

Aetna = CVSCaremark
Cigna= Express Scripts
United Healthcare = OptumRx

Any price gouging the PBM does, is profit to the insurer. But the additional expense to the patient is considered to be a medical cost.

Captive PBM drug price gouging allows the insurer to exceed the 20% cap on overhead and profit for Obamacare, and 15% for Medicare Advantage.

The Medicare Price Negotiation regime was designed by Biden’s Chief of Staff Jeff Zients, a wealthy Private Equity operator in the health care space, and career drug lobbyist Steve Ricchetti. I’m very confident that they are protecting their bottom lines and any negotiations will have little effect on drug prices.

intercst

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They’re charging low prices for the first dose, then jack prices for subsequent mail order doses. I’m pretty sure you’d do better by going to your own doctor for the Viagra prescription, and then buying the generic with a GoodRx coupon.

While I was buying a year’s supply of the “expensive” immunosuppresant drug I take for $354 with a GoodRx coupon, some hapless patient was paying over $10,000/yr for the name brand drug.

You shouldn’t need an engineering degree and MBA to make sure you’re not getting screwed by the health care system.

intercst

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Fortunately, I have both an engineering degree and an MBA :slight_smile:

That said, when it came time to choose a Medicare Part D carrier, I also drilled down to the pharmacy level and found that, though my wife’s expensive anti-cholesterol drug (Repatha) was cheapest at one of their “preferred” pharmacies, there was a group of small “non-preferred” pharmacies which were significantly cheaper on most other meds. We are talking about hundreds of dollars per year in price difference which is not apparent unless you call up the insurance company and ask the cost of every drug at every pharmacy.

As far as generic drug prices, the cost of drugs in quite a few countries (Argentina and Russia come to mind) is a fraction of the cost of the same drug in the US.

The solution does not involve negotiation. It simply involves insisting that drug companies agree to the same “Commerciality Clauses” required by all GSA contract holders:

  1. The item offered is sold under the same name/part number commercially in significant quantities (to prevent “special” names/part numbers)

  2. The manufacturer agrees to sell at no higher a price than the lowest they sell at world-wide under similar terms and conditions of sale.

No agreement, no contract (and a prohibition of use).

Hardball? La vie, they say.

Jeff

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The $2,000 annual out-of-pocket limit on Medicare Part D drugs starts in January 2025.

I’m very sure that Part D insurers will fund the $2,000 cap by ramping up the PBM price gouging on generic drugs. That makes it all the more important to check what the insurance company is charging you against paying cash with a GoodRx coupon.

I doubt you’ll see much of an increase in Part D premiums. Since Part D is mostly a scam, even a small premium hike will cause lots of folks to decide it’s not worth it, and only the people with large drug costs will remain.

About 90% of the drugs seniors take are generics. The eye popping prices you see on the TV news only affect about 2% to 3% of Medicare beneficaries. In 2021, only 1.5 million out of 64 million beneficiaries had Part D drug costs exceeding $2,000 – and that $2,000 figure includes the PBM price gouging you can avoid by paying cash.

intercst

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I don’t want to be too cynical, but US Pharma has made sure that there isn’t much competition.

If Big Pharma’s losses are going to be so great, why do these same companies agree to sell these drugs for a fraction of the price to other countries.
One Example of the drugs listed in your link:
Eliquis (5mg) Price per unit: Each is about $9.50

In Canada Eliquis sells for $1.60. Squibb has made something like $70bil selling this one medication. It’s illegal for Canadian pharmaceutical companies to compete with American pharmaceutical companies in the United States.
Furthermore, Squibb has only agreed to allow the new Inflation Reduction Act pricing after Eliquis comes off patent.
Bernie Sanders is a voice in the wilderness. Meanwhile, Big Pharma will continue to own American political parties.

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I’m a big Bernie fan, but I have more confidence that racism, ignorance and immumeracy will continue to protect my sizeable portfolio allocation to the drug industry.

intercst

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I’m pretty sure that the captive PBMs owned by Part D insurers aren’t “GSA contract holders”.

intercst

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I guess my question is Medicare doesn’t need a PBM, right? They should be able to do fill the PBM role on their own and pass the rebate along to the patients.

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That would be true if Medicare was running the Part D drug benefit in-house. But by law it was outsourced to the for-profit insurers with about a 13% skim rate (plus whatever they make on the PBM price gouging.)

I can chose traditional Medicare and avoid Medicare Advantage if I don’t want to pay the 15% skim rate to the for-profit insurers. There’s no “public option” for the Part D drug benefit. Everyone pays the 13% skim to the for-profit insurers if they want a drug plan.

intercst

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Early on in the AIDS epidemic I was one of the California “mules” doing the same thing portrayed in the movie Dallas Buyers Club. A few years later, when proven drugs became available, I simply decided to break USA monopolistic pharma laws by buying crucial anti-HIV drugs from overseas manufacturers rather than pay obscene USA prices. I did it in an overtly political way by putting together an updated “buyers club” of many HIV guys lacking platinum health insurance so as to have a political and civil liberties argument available if needed, ignoring as useless except for corporations any “free market” arguments some thought I should have used. My political civil rights angle worked. I had one official inquiry from the post office, and then they left me alone.

Then I moved to Spain, and then to Mexico. Both are places where the governments never got bought out by the pharma mobsters.

d fb

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True, but that doesn’t mean that standard government contract strategies can’t be plagiarized.

Jeff

These are actually two separate issues.

These same companies agree to sell these drugs for a fraction of the price to other countries because those other countries demand negotiated prices which are illegal by U.S. law.

Big Pharma’s losses will be great because the inflated U.S. prices will be reduced, cutting their profits.

Wendy

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Ah okay. I’m still a few years away from Medicare and don’t understand it yet.

I’m having a preventative screening colonoscopy under Medicare in a few weeks and picked up the bowel prep this afternoon. This is supposed to be “without cost sharing”. I got hit with a $2.06 co-pay.

Under Obamacare, the bowel prep was “100% without cost sharing”. Apparently medicare covers the Part A and Part B charges 100%, but your Part D drug plan can charge a co-pay on the bowel prep. And if Private Equity has bought out your hospital or doctor’s office, you could get hit with a 15% “facility-fee” on the whole cost that’s not covered by the “no cost sharing” promise.

intercst

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