As a Georgia Power retiree, Clay Mills has good health insurance and prescription drug coverage, with copayments of $10 for 90-day supplies of various medications he needs to treat epilepsy, high blood pressure and cholesterol.
But the 63-year-old Columbus resident got a taste of sticker shock the day he forgot his insurance card when trying to fill several prescriptions at a local CVS pharmacy.
"They were going to charge me full price, and that's about $700 or $800. I pay $80 (with coverage) when I could be paying 10 times as much," said Mills, who quickly retrieved his card for his customary discount.
Such a consumer scenario serves as a dramatic backdrop for a prescription drug industry -- generic drugs in particular -- that has been on a pricing roller-coaster in recent months, putting intense pressure on independent pharmacies in the Columbus area.
Wholesale costs for not all, but some very common drugs, have shot sharply higher -- seemingly overnight and without any reason -- pinching the budgets of local pharmacists who would rather be tending to customers' health needs than crunching dollars and cents hawkishly like a typical businessman or woman.
"Take a drug that's been around forever, like the antibiotic doxycycline. A year ago, we were buying bottles of 1,000 for probably less than $20 or $30, and now it's $1,299," said pharmacist David Lovett, owner of North Columbus Pharmacy on Veterans Parkway. "That's something we dispense every day and one of the major problems we run into is when this kind of stuff happens, we're feeling it right now. Most of these prescriptions go through one of these third-party insurance companies. We try to fill it and our computer gives us this flag that says, 'Warning: Sold below cost.'"
That's when the pharmacist, based on the current pricing and ethical policies, is forced to fill the prescription with a $10 copay at a considerable loss. If the price doesn't eventually stabilize, the sky-high drug may not be reordered, which can prompt consumers to seek service elsewhere.
"Most of the customers have insurance and they're right now still under the same contract and they still pay the same copay," said Terry Hurley, pharmacist at Dinglewood Pharmacy on Wynnton Road. "But the drug that costs $8.61 when they paid their $5 copay, I'm having to replace it and it's costing $127 to replace it."
He said any profit the pharmacy makes is now having to be put back into inventory, with some cash even coming out of independent pharmacists' pockets.
Pharmacist: Rising prices could impact consumers
Hurley fears as insurance companies renegotiate with prescription drug wholesalers on prices in the coming year, the natural presumption is that costs will continue to climb, both for retail pharmacies and for consumers, even those with copays.
"Anybody that's got any business sense knows you can't have that large of an increase in the cost of merchandise and not go up," he said.
Hurley has seen price spikes in a number of drugs on his order form, including blood thinner Plavix (up 200 percent), channel blocker Verapamil (902 percent) and muscle relaxant Methocarbamol (9,162 percent).
Maggie Okeke, pharmacist and owner of Midtown Pharmacy on Buena Vista Road, has seen the price swings as well, with some drugs she used to pay $19 for now coming into her business at a cost of about $900. Like other pharmacists, she can only guess why its occurring.
"It's mostly because the generic drugs, which used to be cheaper, are going up because of lack of raw material," she has heard. "Some of the (overseas) plants were shut down by the government because they didn't meet the FDA requirements."
Association: Some increases 'just surprising'
Kevin Schweers, senior vice president of public affairs at the National Community Pharmacists Association, said he wished there was a good, obvious reason for the generic drug price roller-coaster. He, too, said shuttered manufacturing facilities, possibly for safety reasons, is a factor. That diminishes supply, thus increasing demand and costs. U.S. consumers use drugs made in many places, including in India and China.
"In other instances, some of these medications have been around for a really long time, which is why the spikes have been so concerning and alarming and just surprising," he said. "Drugmakers may make decisions that they're not earning adequate revenue off certain medications and decide to stop producing them. That's another way sometimes demand can increase for a smaller supply."
Generic drugs are a growing segment of the prescription market, comprising about 80 percent of sales in the U.S. today. At the same time, more and more brand-name drugs are losing their patent protection (20 years after being invented), thus allowing generic drug manufacturers to move in competitively and grab sizeable market share.
In theory, that should help push wholesale and retail prices lower. The mysterious swings are one reason Schweers said his organization is pressing federal lawmakers for hearings and investigations into the matter.
"We're looking for legislative action in individual states, including Georgia, as well as federally, for some kind of potential fairness legislation so that the pharmacies -- when this does happen -- they're at least reimbursed at a rate that reflects these costs and not the older rate that might be two or three months outdated," he said of the third-party prescription drug plans that are slow to update prices for pharmacists, including Lovett, Hurley and Okeke.
Lobby group: Generic drugs a money-saver
The Generic Pharmaceutical Association, a Washington-based lobby group, insists generic drugs have proven to be major money-savers for patients through the years. It said generics have yielded overall savings of more than $1 trillion over the last decade.
Ralph G. Neas, president and chief executive officer of the Generic Pharmaceutical Association, in a statement, said the pipeline for generic drugs runs through the manufacturer to the wholesale and retail customers.
"The ultimate retail price of a generic medicine is not determined by the manufacturer," he said. "By the time a generic therapy reaches a patient, the price reflects its position in a highly competitive and fluid marketplace. This price could fluctuate as products go through third-party channels such as insurers, pharmacies, (prescription benefit managers) or other payors."
The generic landscape, he said, is influenced by costs related to regulatory reviews, scientific and clinical processes, legal steps, and fluctuations in the prices of raw materials, as well as the departure from various drug markets by name-brand or generic manufacturers.
Pharmacist: Some gouging is occurring
Lovett at North Columbus Pharmacy said the gyrating pricing has left him feeling that some gouging has to be taking place, though he doesn't truly have a solid explanation for drug prices soaring several hundred percent in a short amount of time.
For local pharmacies like the one he bought in 1997, dollar-cost averaging losses and making up financial ground through sales of groceries and other items like those sold at the big pharmacy chains, supermarkets and discount stores isn't possible, he said.
"For us, we're looking at real and huge dollars and cents loss, and it's growing," Lovett said. "I've got a box for every time I print (a prescription label) that says 'Warning: Sold below cost,' and I probably have 300 labels in there in just the last year."
Long term, the pharmacist said he's not sure what to expect. In the past, drug prices that shot higher would eventually settle lower again. Whether that happens again is anyone's guess, he said.
But it certainly will continue to put painful financial pressure on the independent pharmacies, some of which have sold out to larger companies or gone under entirely in recent years.
"There's been a good handful of my colleague friends that have told me that some of the factors that have gone into play with them selling out or closing up are these very things," he said. "That's because you spend your day -- instead of getting to do more patient counseling and true health-care intervention -- you're playing the role of some businessman tracking his profits and losses."