In a past post, we discussed two companies with hopes of disrupting the prescription drug market. Amazon Pharmacy and Mark Cuban’s Cost Plus have entered the pharmacy arena but have not disrupted the status quo. Why? Because cheaply priced generic drugs offered through many programs and apps are cheaply priced on Amazon and Cost Plus, and expensive brand-name medications available just about everywhere are expensive on Amazon and Cost Plus.
Expensive drugs are expensive for a variety of reasons, including legal shenanigans. As an example, Humira was supposed to go off patent seven years ago. Humira helps those with rheumatoid arthritis. Abbott Medical made Humira. They then spun off a company named AbbVie. Through competitor lawsuits and intellectual property claims AbbVie kept Humira off the generic list until this year. That’s seven more years of brand-name profits. Humira was cheap in 2016, only $50,000 a year. It’s now $80,000!
Recently the federal government capped out of pocket costs for Medicare recipients using insulin to $35 a month. This caused insulin manufacturers to lower prices in the non-Medicare market to hold market share. Eli Lily cut insulin list prices by 70% and Sanofi cut their list price by 78%. What does this tell us? It tells us insulin manufacturers were over-charging by 70%-80% for years because the market allowed it. Regulations have their price.