Low-cost generics a mixed blessing for diabetes treatment

July 12, 2011

Low-cost generic drug programs pioneered by Wal-Mart and other big-box retailers are a mixed blessing for patients with diabetes. The loss-leader strategy used by big-box, chain, independent, and online pharmacies has boosted the mean cost of branded diabetes medications by up to 113% since 2008.

Low-cost generic drug programs pioneered by Wal-Mart and other big-box retailers are a mixed blessing for patients with diabetes. While the cost for common generic medications has fallen to $4 and less, the cost of brand-name products has soared. The loss-leader strategy used by big-box, chain, independent, and online pharmacies has boosted the mean cost of branded diabetes medications by up to 113% since 2008.

“As we begin to rely on generics as cost-savers, the money has to come from somewhere,” said Ronald Tamler, MD, PhD, MBA, Mount Sinai School of Medicine, New York. “Pharmacies are getting patients in the door with low-cost generics and making their money on brand-name products.”

Tamler supervised a 2010 price survey for the 10 most commonly prescribed diabetes medications in the New York metropolitan area and presented the results as a poster at the American Diabetes Association's 71st Scientific Sessions in San Diego. The 2010 survey updates similar findings from 2008.

“Everybody has come close to the level of Wal-Mart, Kmart, and Target on generics,” he told Drug Topics. “That means if you are on largely generic meds, you can focus on factors like service, convenience, and a long-term pharmacy relationship. If you are on brand-name products, the price differences can be dramatic.”

The maximum price difference for generic metformin, for example, is $5.66. The CVS product cost least at $3.33, while that of an independent pharmacy was the most expensive at $8.95. Among branded products, pioglitazone (Actos, Takeda) had the largest price gap at $80.62, ranging from $209.38 at Medco by Mail to $290.00 at Kmart. The mean cost difference for generics was $9.28 versus $54.32 for brand-name products.

Most pharmacy retailers have adopted a loss-leader strategy, Tamler said. At least 1 retailer is giving away a 30-day supply of metformin to get patients into the pharmacy. At the same time, pharmacies are increasing prices on branded Rx products to make up for declining generic prices. The survey found that since the 2008 survey, branded prices have risen by 32% at Wal-Mart, by 34% at independents, and by 35% at Kmart.