Like their namesake, 'bubble gum' drugs are a sticky mess with a bad aftertaste | NCPA Executive Update | March 23, 2018

by NCPA | Mar 23, 2018

Dear Colleague,

Doug Hoey

As we assembled for the start of a meeting this week, one of the meeting participants commented that his teenage son was into buying and selling baseball cards. That rang a bell with me because 30 plus years ago, buying and selling baseball cards was my 1980s version of Bitcoin mining.

I spent all my money from working at my family's pharmacy on baseball cards. I didn't just buy cards by the pack; I bought them by the case! And with all those cards came lots and lots of the flat, rectangular sticks of bubble gum in each pack. Some of you might remember the gum's taste. It's hard to erase that memory from your taste buds, no matter how hard you try.

Chewing gum isn't included in packs of baseball cards anymore but, of course, you can still buy packs of bubble gum and many of you may sell it in your pharmacy. If you do sell it in your store, you may have already noticed: More and more prescription drugs are being reimbursed at bubble gum price levels.

There have always been a few extremely inexpensive drugs — like HCTZ, for example — but now more of them are showing up in the list of drugs in the top 100 by prescription volume. These bedrock drugs, such as metformin, lisinopril, atorvastatin, simvastatin, losartan, and more, treat some of the most common health conditions in our country, and they are reimbursed for less than a pack of bubble gum.

Generic deflation is part of the reason for bubble gum drugs. The prices for many generics continue to fall — until they don't. Let me explain. It wasn't long ago that generic prices were skyrocketing overnight and bubble gum-priced drugs were suddenly sold at caviar prices. Community pharmacy reimbursement increases did not rise with the drug acquisition price increases, resulting in strong NCPA advocacy for changes to MAC price updates.

The frequency of generic drug price spikes has slowed down considerably because of greater scrutiny of price increases, regulation and litigation to check how quickly generic drug prices can go up. Ironically, generic prices for some drugs may have gotten too low.

It's counterintuitive that at a time when the high cost of prescription drugs is a dominant theme some drugs may actually be too inexpensive. With a reward of only a few pennies per tablet/capsule, the risk for a generic drug manufacturer may begin to outweigh the motivation to keep making certain generic drugs. It wouldn't surprise me if some manufacturers stopped making drugs when prices are so low they can't make any money. When that happens, the laws of supply and demand take over. Fewer competitors will result in higher prices — and drug shortages.

We hear from members all the time who tell us about reimbursement for some of these bubble gum drugs where the patient copay is under a dollar, sometimes even less than 50 cents. The pharmacy's reimbursement isn't even enough to cover the cost of the vial and label — assuming the reimbursement is positive.

The volume of ultra-inexpensive medications is increasingly an issue. When total prescription reimbursement is less than a buck, there's no room to increase dollar margin. Eventually, availability of the product and patient access will be affected. It's time to start looking at a reimbursement structure that, at a bare minimum, covers the pharmacy's costs of dispensing to ensure that price fluctuations do not negatively affect patients. In the long run, such a system would provide stability in medication supply and consumer pricing.

Just like the bubble gum that was included in a pack of baseball cards, bubble gum drugs may look good on the surface to some, but they will leave a bad aftertaste for consumers, pharmacies, and generic manufacturers.

Best,
Doug Hoey

P.S. Your representatives in Congress don't understand how you get paid. Register today for NCPA's 50th Congressional Pharmacy Summit, April 11-12, to explain to your lawmakers how pharmacy DIR fees affect your business.