The first sign of trouble came when Dr. Barry Lindenberg, a cardiologist, received a three-page insurance form in January, demanding he get preapproval to prescribe one of the oldest known heart medicines.
His patient had been on the drug, digoxin, for many years. A mainstay of treating older patients with rapid rhythm disturbances, it was first described in the medical literature in 1785. Millions of Americans still use it every day, and many had long paid just pennies a pill.
“I wrote on the form: ‘ARE YOU KIDDING ME?’ ” said Dr. Lindenberg, who practices in Schenectady, N.Y.
What the cardiologist did not know then was that the price of generic digoxin was rapidly rising. The three companies selling the drug in the United States had increased the price they charge pharmacies, at least nearly doubling it since late last year, according to EvaluatePharma, a London-based consulting firm.
For patients, that meant the prices at pharmacies often tripled from last October to this June, according to Doug Hirsch, chief executive of GoodRx.com, a website that tracks drug pricing to help consumers find good deals. And while the average price tag at the pharmacy for a month of digoxin this year is still relatively cheap, about $50, he said, some patients are now encountering costs of more than $1,000. That can translate into co-pays of hundreds of dollars.
No wonder, Dr. Lindenberg said, that he began hearing from patients requesting a drug change because they could not afford digoxin. He noted that one patient did not fill her prescription because it would have cost her $1.60 per pill, and that she ended up in intensive care.
Large price increases in the United States for vital medicines for the young, such as vaccines, have been mirrored by similar rises in some of the most basic treatments for older patients, like digoxin. Though there are many newer types of drugs to treat heart disease, for some patients there are no effective substitutes; digoxin is on the World Health Organization’s list of essential medicines.
In recent years, generics have curbed the rise of drug prices, saving the American health care system billions of dollars. After the patents for Lipitor, the cholesterol drug, and Ambien, the sleeping pill, expired in the last few years, for example, generics entered the market and prices plummeted.
But increasingly, experts say, the costs of some generic drugs are going the other way. The prices paid by pharmacies for some generic versions of Fiorinal with codeine (for migraines) and Synthroid (a thyroid medicine) as well as the generic steroid prednisolone have all more than doubled since last year, EvaluatePharma found. In January, the National Community Pharmacists Association called for a congressional hearing on generic drug prices, complaining that those for many essential medicines grew as much as “600, 1,000 percent or more” in recent years. The price jumps especially affected smaller pharmacies, which do not have the clout of big chains to bargain for discounts.
Digoxin provides a telling case study. There was no drug shortage, according to the Food and Drug Administration, that might explain the increase. There was no new patent or new formulation. Digoxin is not hard to make. What had changed most were the financial rewards of selling an ancient, lifesaving drug and company strategies intended to reap the benefits.
Though generic medicines are far cheaper to bring to market than brand-name drugs because they involve little research and development, they also are priced lower because generics typically face intense competition. But Dr. Aaron Kesselheim, a professor of health economics at the Harvard School of Public Health, noted, “Studies show it is not until you have four or five generics in the market that the prices really are down.”
By late 2013, a number of generic manufacturers had largely stopped producing and distributing digoxin, then a cheap medicine whose use had declined, leaving only two companies dominant in the market. Both businesses — the Lannett Company and Global Pharmaceuticals, a division of Impax Laboratories — are small companies whose bottom line can rise and fall on the sales of a single drug.
Then this January, the Swiss manufacturer Covis began selling an “authorized generic.” Such medicines are made according to the specific formula of the company that makes the branded drug and holds the original patent (GlaxoSmithKline in the case of digoxin), and tend to be more expensive than a typical generic.
In late 2013, one of the companies began a price increase, and the others soon followed, records show. “It’s quite difficult to pinpoint who was the catalyst, but we are seeing a big step up,” said Anthony Raeside, an analyst at EvaluatePharma.
In January, the price pharmacies paid for the dose of digoxin Dr. Lindenberg had prescribed his patient was about $1.10 per pill for the authorized generic and about 40 cents a pill for the two other products, about double that just six months before.
Only one of the companies, Lannett, responded to calls and emails for comment and would not discuss the specific case of digoxin, saying only in an emailed statement, “On occasion and for a variety of reasons generic drug makers can and do raise prices.” Those factors, it said, included problems acquiring raw material, increased costs of complying with Food and Drug Administration requirements and manufacturers exiting the market.
Lannett, the major supplier in the United States, has benefited. The company’s reported sales for cardiovascular products — its major drug in that category is digoxin — rose to $16.9 million from $4.5 million in just a few months, according to company conference calls with investors. In a February call, Arthur Bedrosian, the chief executive, said Lannett’s net sales had increased 84 percent year on year, and were the best in the company’s history.
The Federal Trade Commission has been examining anticompetitive practices in the generic drug industry, but there is often little the agency can do if businesses take advantage of a monopoly or near monopoly, “if it happens naturally” through companies leaving the market, said Jaime King, a professor at the University of California Hastings College of the Law. Mitch Katz, a spokesman for the agency, would not say if it was looking into digoxin.
Insurers can sometimes react to high drug prices by bargaining with manufacturers for better rates. But, Dr. Kesselheim said, those negotiations tend to focus on very expensive new products, like infused drugs to treat arthritis and some cancer treatments, where a good discount could save tens of millions a year.
With cheaper drugs, insurers use simpler tools to discourage use and prod doctors to think about other options: They require physicians to fill out forms — like the one that landed on Dr. Lindenberg’s desk — and move the drug to a category that requires larger patient co-pays.
If markets function, the current high price of digoxin might induce some more drug companies to begin selling it, which should in turn bring prices back down. But a few years of higher bills could be a strain for older patients, most of them on Medicare, who must contribute to prescription drug costs.
Antoinette Newell, 85, said she was shocked when her co-pay for digoxin suddenly jumped this year to $30 a month from $1.15 for a three-month supply. She takes several other medicines as well.
A widow from Schenectady, she lives on $1,600 a month. “I was so upset, I at first told the pharmacist I didn’t want it,” she said about her digoxin refill. “But I know I need it. It’s the only pill that works for me.”