There are few days that go by when there’s not a story about someone having to make the difficult choice between buying food or medicine or cutting back on their medicines, including life-saving medicines, to save money. With the price of so many prescription drugs beyond the income of so many people, it is an American dilemma played out in Denver and everywhere else in the country every single day.
A Gallup poll recently showed that as many as 18 million Americans are today in the position of making this life-threatening decision. Some drugs are so expensive that insurers often balk at covering the costs or pay only a fraction of the cost. As an example, Zolgensma, a recently approved medication, comes with a one-time cost of $2.1 million. Zolgensma is used for treating spinal muscular atrophy.
Drug companies defend their prices for Zolgensma and other drugs by explaining the costs of the research and development in creating new medicines. A 2019 study conducted by the Tufts Center for the Study of Drug Development and published in the Journal of Health Economics estimated that it cost an average of $2.6 billion to put a new drug on the market. Post-approval research adds an additional $300-plus million bringing the total cost of a single new drug to more than $3 billion.
But while drugs like Zolgensma may be prescribed for only the tiniest sliver of patients, there are plenty of other drugs keeping people alive or, at least, giving them a better quality of life that are simply too expensive for fixed-income budgets. That’s where generic drugs and NBA team owner-entrepreneur Mark Cuban enter the ‘staying alive’ equation.
Earlier this year Cuban kicked off his own on-line pharmacy selling deeply discounted generic drugs. The television star-pro sports mogul promises to show price comparisons—prescription versus generic—so that customers know exactly what their costs will be. In the end, they’ll pay the generic price, plus a $3 handling fee and $5 shipping costs. The transaction will be point-to-point and insurance companies will not play a part. Costplusdrugs.com launched last January.
Cuban is not the first to enter this cut-rate drug sales market, said Metropolitan State University’s Christopher Looby. Walmart and Amazon have been in the business for a number of years. Each is simply taking advantage of a modern day reality: generic drugs are essentially the same as prescription drugs with only minor differences. The biggest difference is that the patent on the prescription drug has expired. The next biggest difference—and perhaps the most important one—is cost.
Cuban and his partners, said Looby, “found a place where they could create space for themselves…it’s a business opportunity.” “They’re using the same approach that other companies are using.” But in the end, consumers are the winners, at least when shopping for certain drugs.
Drugs for arthritis and allergies, health issues affecting millions of Americans, are perfect examples in the war between name brands and generic, consumers and big pharma. As examples, Celebrex, an arthritis drug, is nearly $400 each month. Its generic counterpart, Celecoxib, is between $10 and $20 dollars monthly. The allergy medicine, Claritin, is a $30 monthly expense. Naproxen, its generic equivalent, is listed between $4 and $12 for a thirty-day supply. For some drugs there are even more dramatic price differences. Imitrex, a migraine drug, sells for up to $650 for a month’s supply—nine tablets. Naratriptan, its generic counterpart, sells the same nine pills for between $17 to $60.
While Cuban’s generic drug sales company may benefit millions of consumers, those living with diabetes, as one example, will still have to shell out cash money for insulin, a drug for which there is no generic equivalent. Currently the House and Senate have dueling legislation that would set the cost of insulin at $35 a month.
However, diabetics in Colorado now enjoy the benefits of new legislation that has capped insulin prices at $100 a month. The bill will affect as many as 300,000 Coloradans. Colorado is one of two states in the country that have enacted legislation to fight back against pharmaceutical companies who have sometimes hiked prices to astronomical levels.
Insulin is often the easiest target when big pharma foes shine a spotlight on the grip it has on consumers. A 2019 study by the Health Care Cost Institute found a doubling in price for insulin in just a single year, rising from $2,864 to more than $5,700. Interesting, a single dose of insulin is said to cost only five dollars. The World Health Organization (WHO) has included insulin on its Model List of Essential Medicines, a list that includes drugs that should always be available in adequate amounts.
Cuban’s on-line drug company originally began with a hundred drugs, including those for blood pressure or statins, drugs for controlling cholesterol, but now is up to as many as 700.
The key to Cuban’s model, said Looby, is eliminating the middleman and providing a transparency that pharmaceuticals do not. Consumer drug prices, he said, do not reflect actual costs for drugs. They don’t, for example, show undisclosed rebates and discounts that are channeled to a variety of middle-of-the-stream brokers. Cuban is merely a new player hoping to ignite competition. “There are so many layers of mystery where you can’t explain readily,” said the MSU-Denver professor. It’s the difference, he said, between “quality and cost.”
