By Laura Lorenzetti
December 9, 2015

Drug prices for some older, off-patent medications have skyrocketed this year.

Valeant Pharmaceuticals’s (vrx) heart drugs Isuprel and Nitropress saw their prices increase by 525% and 212%, respectively. The price for Turing Pharmaceutical’s Daraprim jumped over 5,000%, and Rodelis briefly raised the price of a newly acquired off-patent tuberculosis drug by more than 2,000% before returning the drug to its original non-profit owner.

Drugs that once cost dollars per dose now cost hundreds or even thousands per pill, and the effect on hospitals, doctors, and patients has been acute. Health care leaders on the front-lines, including a doctor and hospital pharmacy director, addressed a U.S. Senate committee Wednesday, recounting how these unexpected price increases have led to shortages for those treatments and worse outcomes for patients.

Erin Fox, the director of the Drug Information Service at University of Utah Health Care, said that doctors at her hospital have reduced access to Isuprel, a drug used on cardiac arrest patients. Utah Health Care went from paying $440 a pill for Ispurel last year to nearly $2,700 today. At that increase and at current consumption rates for the hospital, Isuprel would have inflated the health system’s drug budget by over $1.6 million. That was unsustainable, leading Utah Health Care to seek ways to reduce the impact on its bottom line.

“We removed Isuprel from about 100 crash carts, where essential medications are available during an emergency,” said Fox. “Physicians reported that this isn’t the first medicine they use, but it could be critical when heart rate is extremely low.”

The medicine is now stocked in backup boxes and in smaller supply to keep costs in check. It’s treated the same way as if there were a shortage for the drug, Fox said.

Cardiac arrest patients at Utah Health Care at least maintain access to Isuprel, even in spite of the higher cost. The same isn’t true for David Kimberlin’s pediatric patients suffering from toxoplasmosis. Kimberlin, co-director of the Pediatric Infectious Disease division at the University of Alabama Birmingham, recounted a patient that couldn’t access the medicine she desperately needed to treat her soon-to-be child.

The necessary treatment, Daraprim, now costs nearly $750 a pill, up from $13.50 as of this summer. A 12-month course of treatment for a newborn would now cost $69,000. Before the price boost, it would have been just $1,200.

But, Daraprim’s price was simply the first barrier. Kimberlin sought a prescription for the patient in August only to find that the outpatient community pharmacy the hospital typically used could no longer get the drug. It’s now only available through Walgreen’s Specialty Pharmacy, which lacked the expertise needed to properly prepare the medicine for an infant, said Kimberlin.

“We were facing a situation where we might not be able to acquire the drug in a form that could be taken by a baby,” he said.

Fortunately, the story has a happy ending–but not a solution. The community pharmacy had a small supply on their shelves from before the price increase and was able to bridge the gap.

These testimonies captured Senators attention during the Senate Special Committee on Aging hearing, led by Senators Claire McCaskill and Susan Collins. The testimonies pinpointed a key problem that’s led to this breakdown: off-patent drugs lack the necessary competition to keep prices in check.

“Central to the issue of generic drugs is competition,” said Gerard Anderson, the director of the Center for Hospital Finance and Management at Johns Hopkins. “Every time a company enters the market, price goes down by 20% to 25%.”

The problem is that over the past five to 10 years, the competitive market for generic drugs has started to fall apart. Generic drug makers have been increasingly consolidating, including Teva Pharmaceutical’s $40 billion purchase of Allergan’s generics unit, which has shrunk competition, edged up prices and increased shortages on many drugs, Anderson said.

Turing “is only the tip of the iceberg,” he said. “Many other generic companies are doing the same thing–their price increases are just not quite as egregious.”

For example, the widely-used antibiotic doxycycline hyclate went from about 4 cents a pill to nearly $3.70. Cholesterol medication pravastatin sodium jumped from $27 to $196 for a year-long supply. Overall, 27% of the most-widely used generic drugs saw price increases in 2013, according to the AARP Public Policy Institute.

So what about solutions?

Anderson proposed that lawmakers consider expedited reviews for generic medicines where there is no competition, and Mark Merritt, director of the Pharmaceutical Care Management Association, recommended that the Food and Drug Administration keep a list of all drugs that are off patent and don’t yet have generic or other brand substitutes.

“Companies should know they’re on a watch list,” said Merritt. “They should know that there’s going to be a lot of scrutiny on this.”

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