Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

How are drug companies making millions from generic drugs?

Peter Ubel, MD
Meds
April 17, 2015
105 Shares
Share
Tweet
Share

It is well accepted among health economics wonks that the lion’s share of pharmaceutical company profits come when these companies hold exclusive rights to their products. Once their blockbuster pills go “generic,” competitors enter the marketplace and profits plummet. Consider captopril, a groundbreaking heart failure medication introduced in the early 80s by Bristol-Myers Squibb under the trade name Capoten. After making a fortune for the company, captopril went generic in 1996. By 2013, you could purchase a captopril pill for the lofty price of … hold your breath … 1.4 cents.

Not many fortunes to be made at that price.

Of late, however, the well-accepted cheapness of generic drugs has come under question, in the face of surprising price hikes for long time medications. As reported in the New England Journal of Medicine by Jonathan Alpern and colleagues, captopril has experienced a 2,800% price hike. OK, that still leaves the pill pretty affordable, at 40 cents a pop, but that’s still a pretty hefty price hike for a generic pill that competes against other generic medications.

Or consider albendazole — not the patriarch of a dysfunctional 80s sitcom family, but instead an antibiotic used to treat parasitic infections. The patent on albendazole expired eons ago, but unlike the popular captopril, which quickly went into generic form, no generic manufacturer applied to sell this relatively rarely prescribed drug. Not many Americans experience parasitic infections, so they did not see enough market to warrant investing in the product. So the original manufacturer continued to sell a trade version of the drug, priced at about $6 per pill in the United States and $1 a pill overseas.

Then GlaxoSmithKline , the manufacturer, decided to sell the marketing rights of albendazole to a company called Amedra Pharmaceuticals, which thrives on identifying old drugs ripe for new prices. Since purchasing the marketing rights, the price of albendazole has risen from $6 a dose to, gulp, almost $120.

How could they do this? For starters, they faced no competition to sell albendazole because, as noted above, no generic company had chosen to manufacture it. In addition, the company making mebendazole, a similar medication, had decided to halt production of that product. Add to that the increasing number of recent immigrants who require anti-parasitic treatment in the U.S., and you finally have a lucrative market. Look, for example, at how much Medicaid programs spent on albendazole over the last six years:

Millions-to-Be-Made-on-Generic-Drugs-Figure
Medicaid spending and prescriptions for albendazole and mebendazole, 2008 to 2013.

Normally, monopolies are illegal. But there is nothing illegal about a company making a product that no one else wants to make. Any pharmaceutical company jealous of Amedra’s bottom line can choose to develop a generic version of the drug, and compete for market share by charging less for their product. Of course, they will have to develop the ability to manufacture the drug, conduct tests to determine whether their generic version works as well as the trade drug, and then wait for the FDA to review its application. Meanwhile, Americans will pay a hefty price for a patentless drug.

Aren’t medical markets fascinating!

Peter Ubel is a physician and behavioral scientist who blogs at his self-titled site, Peter Ubel and can be reached on Twitter @PeterUbel.  He is the author of Critical Decisions: How You and Your Doctor Can Make the Right Medical Choices Together. This article originally appeared in Forbes.

Prev

The metaphors of illness 

April 17, 2015 Kevin 0
…
Next

Physicians are the Rosetta Stone for patients

April 17, 2015 Kevin 2
…

Tagged as: Medications, Primary Care

Post navigation

< Previous Post
The metaphors of illness 
Next Post >
Physicians are the Rosetta Stone for patients

More by Peter Ubel, MD

  • Clinicians shouldn’t be punished for taking care of needy populations

    Peter Ubel, MD
  • Patients alone cannot combat high health care prices

    Peter Ubel, MD
  • Is the FDA too slow to handle the pandemic?

    Peter Ubel, MD

More in Meds

  • The deadly consequences of a shortage: The Pluvicto crisis leaves metastatic prostate cancer patients in limbo

    Matt Drewes
  • The real story of Xylazine contamination in street fentanyl and how we can manage it

    Julie Craig, MD
  • The cannabis education gap: Why patients are left in the dark

    Timothy Byars
  • Are doctors ready to discuss psychedelic therapies with patients?

    Thaís Salles Araujo, MD
  • The rise and dark side of fungi: Exploring health benefits and pathogenic threats

    Sandra Vamos, EdD and Deanna Lernihan, MPH
  • Advocacy and collaboration lead to major patient safety benefits on sterile pharmaceutical compounding: a review of USP’s revisions to Chapter <797>

    Elizabeth Rebello, MD
  • Most Popular

  • Past Week

    • Unmasking wage disparity in health care: the truth behind the Elmhurst Hospital physician strike

      Kevin Pho, MD | KevinMD
    • A patient’s perspective on the diminishing relationship between doctors and patients

      Michele Luckenbaugh | Conditions
    • Why affirmative action is crucial for health equity and social justice in medicine

      Katrina Gipson, MD, MPH | Policy
    • How electronic health records preserve patients’ legacies in the words of oncologists

      Marc Braunstein, MD, PhD | Physician
    • Emulating Michael Jordan’s winning mindset: a path to success for health care professionals and entrepreneurs

      Harvey Castro, MD, MBA | Physician
    • Why is being a patient a difficult pill to swallow?

      Harvey Max Chochinov, MD, PhD | Physician
  • Past 6 Months

    • The growing threat to transgender health care: implications for patients, providers, and trainees

      Carson Hartlage | Policy
    • Breaking point: the 5 reasons American doctors are dreaming of walking away from medicine

      Amol Shrikhande, MD | Physician
    • “Is your surgeon really skilled? The hidden threat to public safety in medicine.

      Gene Uzawa Dorio, MD | Physician
    • It’s time to replace the 0 to 10 pain intensity scale with a better measure

      Mark Sullivan, MD and Jane Ballantyne, MD | Conditions
    • Revolutionize your practice: the value-based care model that reduces physician burnout

      Chandravadan Patel, MD | Physician
    • Breaking the cycle of racism in health care: a call for anti-racist action

      Tomi Mitchell, MD | Policy
  • Recent Posts

    • Unlocking the secrets of cancer conferences: an end-of-life counselor’s journey among pharmaceutical giants

      Althea Halchuck, EJD | Conditions
    • Why HIPAA is failing and what you need to know to protect your data [PODCAST]

      The Podcast by KevinMD | Podcast
    • Revolutionizing emergency medicine: Overcoming long-term challenges with innovative solutions for physicians and patients

      Anonymous | Physician
    • An obstetrician-gynecologist reveals the truth about reproductive planning and how to navigate society’s expectations

      Yuliya Malayev, DO, MPH | Conditions
    • Why affirmative action is crucial for health equity and social justice in medicine

      Katrina Gipson, MD, MPH | Policy
    • Overcoming stigma and finding hope in infertility, pregnancy loss, and childlessness [PODCAST]

      The Podcast by KevinMD | Podcast

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 6 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

CME Spotlights

From MedPage Today

Latest News

  • Sotagliflozin Gets FDA's Blessing for Heart Failure
  • Cardiorespiratory Monitoring Can Be Telling of Outcomes in Extremely Preterm Infants
  • Neurologic Events After COVID-19 Vaccines Assessed
  • Medical Board Reprimands Indiana Doctor in Child Abortion Case
  • Improved Care for Patients With Schizophrenia Is Needed, Experts Say

Meeting Coverage

  • No Access to Routine Healthcare Biggest Barrier to HPV Vaccination
  • Trial Results Spark Talk of Curing More Metastatic Cervical Cancers
  • Cross-Border Collaboration Improves Survival in Pediatric Leukemia Patients
  • Monoclonal Antibody Reduced Need For Transfusions in Low-Risk MDS
  • Less-Invasive Surgery for Pancreatic Cancer Proves Safe, Effective
  • Most Popular

  • Past Week

    • Unmasking wage disparity in health care: the truth behind the Elmhurst Hospital physician strike

      Kevin Pho, MD | KevinMD
    • A patient’s perspective on the diminishing relationship between doctors and patients

      Michele Luckenbaugh | Conditions
    • Why affirmative action is crucial for health equity and social justice in medicine

      Katrina Gipson, MD, MPH | Policy
    • How electronic health records preserve patients’ legacies in the words of oncologists

      Marc Braunstein, MD, PhD | Physician
    • Emulating Michael Jordan’s winning mindset: a path to success for health care professionals and entrepreneurs

      Harvey Castro, MD, MBA | Physician
    • Why is being a patient a difficult pill to swallow?

      Harvey Max Chochinov, MD, PhD | Physician
  • Past 6 Months

    • The growing threat to transgender health care: implications for patients, providers, and trainees

      Carson Hartlage | Policy
    • Breaking point: the 5 reasons American doctors are dreaming of walking away from medicine

      Amol Shrikhande, MD | Physician
    • “Is your surgeon really skilled? The hidden threat to public safety in medicine.

      Gene Uzawa Dorio, MD | Physician
    • It’s time to replace the 0 to 10 pain intensity scale with a better measure

      Mark Sullivan, MD and Jane Ballantyne, MD | Conditions
    • Revolutionize your practice: the value-based care model that reduces physician burnout

      Chandravadan Patel, MD | Physician
    • Breaking the cycle of racism in health care: a call for anti-racist action

      Tomi Mitchell, MD | Policy
  • Recent Posts

    • Unlocking the secrets of cancer conferences: an end-of-life counselor’s journey among pharmaceutical giants

      Althea Halchuck, EJD | Conditions
    • Why HIPAA is failing and what you need to know to protect your data [PODCAST]

      The Podcast by KevinMD | Podcast
    • Revolutionizing emergency medicine: Overcoming long-term challenges with innovative solutions for physicians and patients

      Anonymous | Physician
    • An obstetrician-gynecologist reveals the truth about reproductive planning and how to navigate society’s expectations

      Yuliya Malayev, DO, MPH | Conditions
    • Why affirmative action is crucial for health equity and social justice in medicine

      Katrina Gipson, MD, MPH | Policy
    • Overcoming stigma and finding hope in infertility, pregnancy loss, and childlessness [PODCAST]

      The Podcast by KevinMD | Podcast

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

How are drug companies making millions from generic drugs?
6 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...