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The Price We Pay

Consumers remain distrustful of generic medications -- thanks in part to the marketing efforts of brand-name drug makers. Ignored in all the rhetoric over high drug prices is a solution that could save consumers millions of dollars.


Alden Bohlig spent his life teaching teenagers mathematics, so he knows when the numbers don't add up. Why spend up to $30 a month for a brand-name arthritis drug when he could pay only $5 by taking the generic version instead?

By substituting generics for his arthritis and other medication he takes regularly, Bohlig says he saves about $85 each month. "Why pay a premium for the same thing?" asks the 82-year-old retired school teacher from Long Beach. "I appreciate that the drug companies invest money in research. But I don't want to fatten their bank accounts at my expense."

Bohlig is on to something. Like millions of other Americans, he's fed up with the rising costs of prescription drugs, which have been growing four times faster than the rate of inflation. These price hikes are a bitter pill for many of the elderly, who consume the lion's share of prescription drugs, and their plight has become a hot issue in the presidential campaign. But the increases affect everyone, especially those with chronic illnesses and the uninsured.

While health insurers have expanded coverage for prescription drugs, 31% of California's 7.5 million Medicare beneficiaries and 23% of those younger than 65 still have no drug benefits, according to a recent study. And consumers with coverage are affected more indirectly, through higher co-payments and deductibles, and escalating insurance premium costs.

Largely overlooked in the heated debate over drug spending are simple steps consumers can take today to save money. One recent study found that a 10% increase in generic drug use in the United States would cut drug costs by more than $11 billion annually.

"Every percentage point of increased usage translates into a savings of $1 billion annually," says Tim R. Covington, a pharmacist at Samford University in Birmingham, Ala., which released the study last month.

As Bohlig discovered, switching to the generic version of prescription drugs can ease some of the sticker shock at the local pharmacy. When there is no generic substitute, other medicines in a family of drugs--say, antidepressants or ulcer medications--may be less expensive. Sometimes, over-the-counter remedies like Motrin or Zantac can be substituted for their costlier, prescription-strength versions.

While Americans may complain about escalating drug prices, when it comes to medications, we usually want a Ferrari, not a Hyundai. Despite an avalanche of evidence to the contrary, there's a lingering perception that generics are somehow inferior to their brand-name counterparts. So perhaps it's not surprising that even though about 70% of prescription drugs have generic twins, use of these drugs has remained frozen at 40% to 42% of total U.S. prescriptions since 1993, according to the Generic Pharmaceutical Assn., a Washington, D.C.-based trade group.

Some of the skepticism, says Gary J. Buehler, acting director of the Food and Drug Administration's Office of Generic Drugs in Rockville, Md., "stems from consumers' impression that if something costs less, it can't be as good." When they go to the drugstore with a splitting headache, the painkiller in the plain wrap just doesn't seem as potent as the brand name, even though they both have the same active ingredient.

This, more than anything else, is a testament to the powers of the placebo effect. Drug makers subtly reinforce this psychology each time they introduce newer, more expensive drugs, which their ads claim are vast improvements over existing treatments to justify the inevitable price hikes. "But newer doesn't always mean better," says Dr. Carol Ben-Maimon, chairwoman of the Generic Pharmaceutical Assn.

Doctors Are Used to Brand-Name Drugs

Doctors are brand-happy, too, and get seduced by the "newer and pricier equals better" sales pitches made by savvy drug makers, according to a study released this month by the Mount Sinai School of Medicine in New York. The researchers found that doctors are often uninformed about the price of medicines and unaware of less costly alternatives that were equally effective.

"So much of what physicians learn about drugs comes from the weekly visits of the Kens and Barbies," says Robert Seidman, vice president of pharmacy for Blue Cross of California. These are the pharmaceutical company salespeople whose job is to push their products, not those of their rivals. They shower doctors with free drug samples, in part to encourage them to prescribe the product.

Once patients, especially those in fragile health, become accustomed to a particular drug, doctors are reluctant to change a winning formula. Reinforcing brand preferences is the direct-to-consumer advertising of medicines, which boosts brand-name awareness and induces consumers to ask for the drug by name. The ads are everywhere: Television spots extol the wonders of Meridia, an appetite suppressant, or the ulcer drug, Prolisec, while glossy magazine spreads laud the benefits of drugs like Claritin, which combats allergy symptoms.

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