Drugmaker-Funded Study Blames Walmart, Not Drugmakers, for High Drug Prices
At Walmart (WMT), there is no such thing as a free lunch for diabetics, according to a study that suggests the discount store increased prices for brand-name drugs after it lowered generic prices to as little as $4 a prescription. The study blames Walmart -- and other pharmacy discounters such as Kmart and CVS -- but, oddly, has little to say about the drug companies that ultimately approve or veto prices of their own drugs. Perhaps that's because the study was funded in part by Eli Lilly (LLY) and Sanofi (SNY) previously employed the author as a consultant.
The author, Dr. Ronald Tamler of the Mount Sinai School of Medicine in New York City, suggests that Walmart is not doing diabetics a favor with its $4 generic diabetes medicine prescriptions. Because diabetes patients must take an average of nine medicines a day, Tamler says, they also end up paying for brand name drugs. Brand prices rose 24 percent since Walmart began its push for rock-bottom generic prices in 2008, while generics declined 60 percent. The price differential between generics fell 58 percent and the brand-name price differential rose 113 percent, Tamler says.*
Walmart isn't a monopoly, however, and although it is a powerful negotiator of its own prices it cannot ultimately control them. Pharmaceutical companies, however, do control monopolies on the brand name drugs they sell. By definition, until their patent rights expire and the drugs "go generic," they can charge whatever they like. So it's a little odd that Tamler's studies seems so heavily focused on what patients pay at the Walmart checkout and not what companies' list prices are.
According to MedPage Today, Lilly funded the study and Sanofi has paid Tamler as a consultant. Both companies make and sell diabetes drugs.
The study doesn't exactly make either company look good, given that it suggests they've clawed back through branded price rises what they may have lost through generic discounts. So kudos to them for providing some extra transparency in an area not known for it.
But Lilly and Sanofi also have agendas of their own. They sit across the table from Walmart in pricing negotiations, and they need every weapon at their disposal to pressure Walmart to give them the margins they want. How the study helps them isn't clear, but positioning Walmart as the bad guy from the get-go can't hurt.
Correction: This item originally misstated the price rises and declines of brands and generics. The percentage differential is the increase or decrease in the difference of prices, not the absolute change in prices.
Related:
- 20 Drugs That Waste Tax Money Because States Don't Buy Generics
- How Pharmacists Keep Cash That Could Be Yours on Each Generic Prescription
- 4 Pharma CEOs Admit They Jack Up Drug Prices for the Hell of It
- 10 Reasons Drug Prices Always Go Up -- and What We Can Do About It