Are Generic Drugs Priced Fairly?

They're cheaper than brand name drugs, and said to work just the same, but behind the label 'generic' are price markups consumer watchdogs call appalling, reports CBS News Correspondent John Roberts.

An example is Captopril -- a blood pressure medication -- cost $1.60 from the manufacturer, and sold for $22.74. While cheaper than the $66 brand name price, it's still a 1,400 percent markup.

Dr. Sidney Wolfe of the consumer group Public Citizen says generics are cash cows for pharmacies, at the expense of patients.

"Price gouging by either the drug companies or pharmacists is unconscionable and it's incompatible with the idea that the purpose of the health care system is to benefit people who need help," Dr. Wolfe says.

The association representing drug stores defends the markups, saying that while percentages appear high in dollar terms, they barely cover the cost of doing business.

"If the cost to the retail pharmacy is three dollars, we cannot turn it around and sell it for four, five or even eight dollars, because we are not covering the costs of the pharmacist's salary...keeping that community pharmacy open 24 hours a day, 7 days a week," says Laura Cranston of the National Association of Chain Drug Stores.

It's not just pharmacies that are accused of steep markups. The Federal Trade Commission just filed a $120 million lawsuit against Mylan Laboratories, claiming it cornered the market on the ingredients to make two popular generic anti-anxiety drugs, then raised their price by 25 times.

Reported By John Roberts