August 14, 2018

Drugmakers increase prices 100x simply by combining generic drugs

In the opaque world of pharmaceutical prescriptions, many drugmakers find ways to increase prices simply by combining generic drugs together.

A new exposé from Axios brought to light many drug manufacturers’ practice of combining multiple generic over-the-counter medications and selling them as ‘convenience drugs’ for up to 100x more than their generic counterparts.

Although these combo meds provide no additional medicinal benefits to patients than their separate OTC counterparts, they bring in billions for the companies that manufacture them by exploiting the power of prescription.

Markups that would make Martin Shkreli proud

‘Pharma bro’ Martin Shkreli made headlines for increasing the cost of lifesaving Daraprim 5,000% overnight. But, while Shkreli later landed in jail (securities fraud), this pharma price-gouging is totally legal. 

In fact, price hikes are common practice at pharma companies. Horizon Pharma sells a drug called Vimovo (which is just Nexium and Aleve combined into 1 pill for convenience) for $2,482 per bottle. 

Nexium and Aleve, however, are just as effective when taken separately — and cost less than $20 when purchased over-the-counter.

How is this possible?

Companies like Horizon combine common meds into unnecessarily expensive convenience drugs to increase margins. By striking deals with pharmacy benefit managers, they get their drug on insurance lists. 

Then they hire huge sales and marketing teams to convince doctors (who don’t know the drug’s price) that convenience drugs encourage patients to use drugs ‘as directed.’

Then, the nail in the coffin: Pharma companies like Horizon subsidize copays, making the drug seem cheaper and more accessible to doctors and patients — and then bill health insurers for thousands.

Medical misinformation makes money

The reason drugmakers go to such creative lengths to sell meds is simple — it makes money. 

In less than 5 years, Horizon made $540m by selling Vimovo, and $670m over the same time period selling another convenience drug called Duexis (the company stands by the benefits of both drugs, despite criticism). 

Other drugmakers such as Pfizer and GlaxoSmithKline have also sold billions of dollars worth of convenience drugs over the past decade.

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