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Fall-Winter 2015, Volume 9 Issue 2


At Pharmedix®™ we have been warning of run away generic drug prices for over 5 years. It doesn’t take a rocket scientist or a Stanford MBA to figure out that as big corporate Pharma consolidates by buying up the competition (including generic companies), that drug prices will rise. Fewer companies making the same drug means less competition and HIGHER prices. But now, because of what happened with Daraprim and Turing Pharmaceutical, the government wants to investigate. Sorry folks but the horse is out of the barn. Except for the recent congressional investigation of Valent Pharmaceuticals (See Medixfacts Spring-Summer 2013 and 2014), why hasn’t the government gone after much bigger companies who have passed on significant price increases almost unnoticed? Did I hear someone say Epi-Pen?

Big Pharma consolidation not only affects drug prices but also tax revenues. Many American corporations, including pharmaceutical companies, are buying smaller European companies and then moving their headquarters to Europe or other counties. This is for the purpose of tax inversion, i.e., they will pay significantly lower corporate taxes because they are now a foreign company. For example, Watson Pharma bought Actavis and is now called Actavis with it’s corporate headquarter in Europe and then, in turn, merged with Europe-based Allegan. Similarly, Qualitest, a division of Endo, just purchased Par Pharmaceutical and will now be officially headquartered in the UK. Endo also has recently purchased over the last couple of years other companies to go under this umbrella, including Dava Pharmaceuticals, Boca Pharmaceuticals and JHP Pharmaceuticals. It’s hard to keep up with the mergers which are seemly occurring weekly.

And on the distribution side, except for the big box retailers Costco and Wal-Mart, we now have just TWO big pharmacy chains (CVS and Walgreens). Just in the last year, CVS purchased ALL of Target’s pharmacies and Walgreens Boots Alliance just purchased Rite-Aid (the third largest pharmacy chain) for 17.2 billion dollars. In addition, each company owns a significant share of 2 of the 3 major wholesalers, Ameri-Source Bergen and Cardinal Health (McKesson which had partnered with Rite-Aid is odd man out). CVS also owns one of the largest benefits payment companies, Caremark. The majority of drug distribution is now controlled from purchasing from select manufacturers, to distribution, to dispensing and reimbursement by just two companies. And don’t forget the walk-in clinics these chains are putting in as well. Pretty soon small pharmacies like the ones on college campuses or student health clinics with dispensaries will be pushed to extinction because they either won’t be able to purchase drug products at a fair price or they won’t be able to purchase product at all. Case in point, despite the fact that our federal government has established an official pharmaceutical supply chain) of which we are a licensed member), manufacturers are continuing to deny access to their products by registered, licensed and inspected members of the supply chain because of exclusivity deals made between the manufacturers and the large wholesalers and pharmacy chain. As this real life monopoly grows, where is the federal trade commission? These events will have the negative effect of restricted access to drug products for everyone outside the mega system. Speak up now before it is too late.

Here is a list of common generics that have or will take a significant price increase by the end of 2015 or during early 2016 or will experience significant shortages during this time period. Stepped up FDA inspections of number of pharmaceutical companies in India, including but not limited to Aurobindo, Dr. Reddy, Sun Pharma, and Wockhardt, have resulted in a number of FDA 483 warning letters. This could result in spot shortages and price increases of number of drugs, including azithromycin, amlodipine, metformin, pantoprazole and venlafaxine ER-Capsules. Pharmedix® will continue to provide the best cost-effective alternatives when these situations arise.