In The truth about generic drugs Fortune magazine reports on its interview with Jacqueline Kosecoff, who runs the pharmacy benefit management (PBM) unit of United Health, called Prescription Solutions. This PBM, like others, wants to drive generic utilization since it’s more profitable for the PBM and less costly for their employer and health plan customers. Prescription Solutions just released a survey, which is designed to push generics.
The findings reveal that Americans don’t really understand that there is a huge cost difference between brand and generic medications. That’s an interesting finding that I would not necessarily have expected.
But there’s another key finding that’s also interesting:
Nearly one-third of Americans do not know or believe that generics have the same active ingredients and effectiveness as brand name drugs.
I’m definitely a supporter of generics from a public policy standpoint. The price differential is so great that we really need to be using generics. And when I need a prescription I allow the pharmacist to substitute a generic.
However, in this case it’s possible that public’s hunch may be equally on target as the expert’s view. I’ve done consulting work for the manufacturing operations of big pharma companies. I’ve toured their facilities and have also toured those of generics manufacturers. I’ve seen that big pharma often struggles to meet its specs, even when it has plenty of resources to apply. If that means scrapping product that isn’t quite right they’ll do it.
Meanwhile there’s a reason Wal-Mart can sell generics for $4. And the reason is that generic manufacturers focus ruthlessly on cost, whereas big pharma is much more focused on security of supply and is less worried about manufacturing cost.
I’m not saying that all products made by big pharma are high quality and those made by generic companies are low quality, but I do worry about quality when there is such an imperative for generic companies to keep costs as low as possible. And while the public’s view may not be based on firsthand experience –and is counter to what the experts say00 it doesn’t mean it’s wrong.June 25, 2009