Generic Price Increases Results in More Plan Design Tiers

PBIRx®

Intelligent Solutions in Pharmacy Benefits

612 Wheelers Farms Road, Milford, CT 06461

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Whether you are a manufacturer of generic drugs, a pharmacy that supplies generic drugs, or a consumer that relies on certain generic drugs, you are probably aware that the cost of generic drugs is increasing at a steady rate. According to the New York Times, over the past year alone, several generic drugs have more than doubled in price, and seemingly, the rate at which they are increasing does not seem to be slowing down. But what does this mean for those that interact with these drugs on a daily basis? While for some drug channels increasing costs have brought nothing but benefits; for others, the negative effects of generic drug inflation are much more prominent. 

For generic and brand manufacturers as well as wholesalers, increased drug costs are not much of a concern. Why? For generic manufacturers, increased costs mean you are now selling the same drugs but at higher prices, therefore increasing profits. For brand-name manufacturers, shortages in generic drugs are leading consumers to their product, since lately many have shown to be less expensive than some of the more popular generic drugs. Lastly, many wholesalers are also benefiting from increased costs since increases in gross profit dollars and lifted revenue growth have come as a result of the change in price.

Unfortunately, some pharmacies, third-party payers and consumers are not as lucky when it comes to generic drug inflation. Although some pharmacies will benefit from price increases over time, those that signed at-risk payer contracts are likely to see a decrease in profits as costs continue to rise. Similarly, third party payers are also experiencing the negative effects of generic drug inflation as it increases the cost of their pharmacy benefits. That means that third party payers must now allot more of their budget to cover generic drugs for each of their clients. Finally, since some plans offer multi tiers for generics, higher cost generic drugs now fall under a higher co payment tier and thus, out of pocket costs are increasing for the consumer, which could make it financially prohibitive for them to fill the prescriptions that they need.

As the cost of generic drugs continues to rise, it becomes even more important for entities that provide pharmacy benefits to its employees or members to connect with an expert like PBIRx. PBIRx can analyze the generic drug mix for an entity and provide both optimum plan design recommendations and negotiate discounts resulting in a win-win situation. PBIRx works closely with all of their clients to create optimal health care outcomes for their members while minimizing overall health care costs. For more information on how PBIRx can help, visit us on our website or contact us at (888) 797-2479 today!