Generic Drugs

The Wall Street Journal featured a fascinating article by Sarah Rubenstein yesterday on generic drug costs (freely accessible reprint from the Pueblo Chieftain). At last week’s FEHBP carrier conference, prescription benefit management company representatives explained how generic drug costs will not dip much below the brand name price during the 180 day period during which the generic manufacturer who won the race to challenge the patent has exclusive sales rights. Ms. Rubenstein’s article points out that pharmacies may be trying to maintain the relatively high generic price after the expiration of the exclusivity period (although I expect this is a high retail price not the price paid by the PBMs.) There is a lot more flexibility on pricing generics as compared to brand name drugs because generic drugs are not subject to the Medicaid best pricing requirement. In fact, I understand that generic drugs are more expensive in Canada than they are here. Medicaid’s best price rules are changing, however, and I am not certain how those changes will impact generic pricing for health plans and consumers.