Consumers stand to reap big savings when a drug patent expires, freeing other companies to sell generic equivalents. At least that’s how it’s supposed to work. In reality, drugmakers can manipulate the market to maintain higher profits for as long as possible. You can still save—as long as you know how to sidestep the traps.
First off, be patient. For example, the patent on the blockbuster antidepressant Cymbalta (duloxetine), which costs about $ 8.66 per 30-milligram capsule, expired in December 2013. But a month later we found the generic selling for $ 6.32—only about 27 percent less. If duloxetine follows the typical pricing trajectory, you won’t see significant savings for at least six months, says Stephen W. Schondelmeyer, Pharm.D., Ph.D., a pharmaceutical economics professor at the University of Minnesota. By the end of the first year, the price might drop by up to half of the original cost; by the second year, it can fall by 70 percent; by the third, it could plummet as much as 95 percent.
Why the delay? Before a company’s patent on a drug expires, generics manufacturers often race to file lawsuits to challenge the patent. The company that wins gets a six-month exclusive to sell the drug, so prices don’t drop until there’s more competition. And, in some cases, the maker of the brand-name drug undercuts competitors by jumping into the generic market early. “They can come out with their own version—an ‘authorized generic’—just before the patent expires to keep prices higher,” Schondelmeyer said. Whoever is first wins big, he notes: Drugstores are likely to stick with one manufacturer for at least six months.
Over the next year or so, a slew of big-name drugs will become available as generics (see chart below). If you take one and don’t see a notable price drop after six months of switching, ask your pharmacist about getting a cheaper version from another supplier.
Here are three other common traps and how to avoid them.
1. Manufacturer co-pay coupons. Makers of brand-name drugs try to keep customers with special deals, but it still makes sense to go generic. Even if a coupon cuts your price at the counter, your employer and insurance company still foot the bill for the full price, and that can cost you in higher premiums later on.
2. New forms of old drugs. Drugmakers sometimes discourage the use of generics by making subtle changes to the branded drug—switching from a tablet to a capsule, for example, or offering a higher or lower dose. By law, pharmacists cannot substitute a generic version if the drug is in a different dosage form or strength. So remind your doctor to write prescriptions that can be filled with a generic drug.
3. Prescription versions of OTC drugs. Doctors might write prescriptions for drugs even after they are available over-the-counter. But “OTC drugs are often cheaper,” Schondelmeyer says. Case in point: A month’s supply of 20 milligrams of the prescription heartburn drug Prilosec (omeprazole) costs $ 236; the generic version, $ 58; OTC omeprazole costs just $ 17. Look for an OTC version of Nexium soon.
Compare over-the-counter drugs for common ailments.
When drug prices will drop
Used to treat
Generic price per month
disorder, severe depression
diabetic nerve pain
|Nasonex (mometasone nasal spray)
||Seasonal allergies, hay fever
*Retail prices for 30-day supply are for the most common dosage; Lunesta is priced for a 15-day prescription. Prices are derived from data provided by Symphony Health Solutions, which is not involved in our analysis or recommendations.
Are brand names better?
No! To gain approval from the Food and Drug Administration, the maker of the generic must demonstrate that the drug has the same active ingredient and that it is identical in strength, dosage form, route of administration, and labeling as the brand-name drug. The company must also demonstrate that people absorb the drug at the same rate. “People may think that brand-name products are better because they’re more expensive, but the body does not know whether the drug came from a brand-name or a generic company,” said Vinod P. Shah, Ph.D., a pharmaceutical scientist who worked for 30 years at the FDA.
This article also appeared in the May 2014 issue of Consumer Reports magazine. This article and related materials are made possible by a grant from the state Attorney General Consumer and Prescriber Education Grant Program, which is funded by the multistate settlement of consumer-fraud claims regarding the marketing of the prescription drug Neurontin (gabapentin).
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