Mylan Lorazepam Price Triples; Firm Cites Losses For Many Products

Mylan has increased the price of its generic version of lorazepam more than threefold. On March 3, the price for a bottle of 100 lorazepam 5 mg tablets increased from $16.95 to $64.31.

The Mylan pricing decision appears to be having a ripple effect on other generic suppliers. Goldline, Major, Purepac and Rugby have also sharply increased prices for lorazepam within recent weeks.

For example, Goldline increased its price from $16.50 to $64.25 as of March 1, according to First DataBank.

Other companies are discontinuing the product. On Feb. 11, Warner-Chilcott announced it will no longer sell lorazepam after its remaining stock is sold. Remaining lorazepam supplies are now priced at $64.31 (up almost $48). Schein and Qualitest also have discontinued lorazepam sales.

The new generic price is approximately 10% below Wyeth's Ativan brand ($71.46). Generic prices previously had been listed for as much as 83% below the brand.

Since late November, Mylan has substantially increased prices for seven products: chlordiazepoxide/ amitriptyline, clorazepate, lorazepam, chlorpropamide, tolbutamide, maprotiline and methyclothiazide.

Mylan declared that "raw material costs, regulatory approval delays and numerous lawsuits filed by brand-name giants that are attempting to suppress competition from generic drug makers have driven up our costs, making it impossible for us to hold the line any longer on these seven products."

"Faced with these harsh realities, Mylan had a clear choice - we could either increase our prices on these seven products or stop making them," the company maintained. "We decided against discontinuing the products because many pharmacists and consumers rely on Mylan for effective, low cost generic alternatives to brand-name drugs."

Mylan emphasized that "we are raising prices for just seven of our 97 generic drug products," and that "even with these price modifications, Mylan's prices are 45%-55% lower than prices for brandname versions made by other drug companies."

Mylan calculates that it lost money on 41 of its 97 generic products during the fourth quarter of 1997.

IMS data for 1995-1997 show that generic drug price erosion appears to have slowed. In 1995, generics prices dropped by 9.3% followed by a 12.7% drop in 1996. The price decline for 1997 slowed to 7.6%.

Mylan's price increases have stirred complaints from retail pharmacists who have been encountering reimbursement difficulties and have triggered calls for antitrust investigations.

On Feb. 18, Mylan wrote pharmacists claiming that "false and misleading information has been circulating throughout the industry for the past several days."

Mylan responded to allegations that it has been cornering the market on certain raw materials: "other sources of finished goods do exist" for the seven products for which prices have been raised. However, Mylan "has always taken a strong position in securing sufficient raw material to provide our customers with a continuous, uninterrupted supply of product."

Mylan has commissioned a study "by an independent pharmacy consulting firm to determine what effect the deletion of [federal upper limit/maximum allowable charge] and an increase in AWP on these items will have on reimbursements."

Mylan observed that "pharmacy reimbursement using the new pricing is showing a significant improvement in gross profit dollars."

Mylan informed First DataBank, MediSpan, RedBook and other sources "of the price adjustments in a timely manner." In addition, "every major payor (i.e.: Cigna, PAID, PCS, Aetna) was notified of the changes by Mylan's Managed Health Care Department." The company also provided price update information "directly to State Medicaid agencies to ensure prompt inclusion of updated prices in their records."

"We still realize that there will be issues with third party reimbursement to address," the company told pharmacists. "We suggest that our customers take steps to closely monitor reimbursements on the seven Mylan products that have increased in price for the next 60 to 90 days. Any negative adjustments in price should be resubmitted to the proper agency for payment."

"We fully understand that these resubmissions will create inconvenience to our customers, for which we apologize," Mylan added. "However, we feel that the overall financial gains based upon significant reimbursement increases will more than compensate in the long run."

During a March 10 press conference, National Community Pharmacists Association Exec VP Calvin Anthony said that "we have pharmacists all over the country selling these products and being paid for way under cost now...and, frankly, it's a nightmare."

Anthony noted that a Mylan representative had attended a meeting between pharmacists and state legislators March 8 upon an invitation from NCPA.

"We were pleased to see they did respond," he remarked, but added that "our concern yet remains that we were not able to get very good answers."

NCPA President Kenneth Epley specifically questioned the lorazepam increase: "I don't know what the deal is in terms of what the sole source is," he said, "but I know that many of the labelers of lorazepam do not have the product at the low price anymore."

Pharmacists are wondering whether any of the other generic suppliers were, "in fact, manufacturers or just redistributors of Mylan's products?"

Pennsylvania Pharmacists Association Executive Director Carmen DiCello added that Mylan's price increases are "not new to us." The industry has seen "other generic companies in the last month or so...slowly increasing" prices, he said.

The generic pricing issue has attracted the attention of Reps. Stark (D-Calif.) and Berry (D-Ark.), who have asked the Justice Department and the Federal Trade Commission to review the Mylan price increases.

A March 2 letter from the two legislators asks the antitrust regulators "to ensure that various trade laws are not being violated."

The letter cites information from a New Jersey buying co-operative stating that the price of chlorpropamide (Pfizer's Diabinese) was increased from $19.45 in 1997 to $306.66 in 1998 for 1,000 pills.

Similarly, the March 2 letter states, the price of clorazapate (Abbott's Tranxene) increased from $8.78 per 500 (7.5 mg ) to $368.16.

Stark and Berry suggested that "increases in the price of some generic drugs within the past month look suspiciously like price gouging."

"Mylan Labs is just one example of a troubling trend in generic drug pricing, under which companies raise prices substantially - but still keep them somewhat cheaper than the comparable brandname product," Berry said. Stark previously wrote to FTC seeking an investigation into price increases for generic versions of Searle's Lomotil ("The Pink Sheet" Feb. 23, p. 12).

Berry, who is a pharmacist, has said that he is planning to introduce legislation to reduce the cost of prescription drugs in coming months. He has asked the General Accounting Office to study the issue of generic drug pricing.

The generic price increases mark an unusual avenue for the return of the drug price inflation as a Capitol Hill issue. Berry attacked Mylan using some of the same rhetorical devices used against brandname companies in the early 1990s.

For example, the Arkansas democrat cited Mylan net earnings increases of 22%, 75% and 18% during the first three quarters of fiscal 1997. He also raised the image of "senior citizens in this country who are being forced to choose between buying food and buying the medicine they so desperately need."

The response to Mylan's pricing action suggests that lawmakers remained focused on large price increases for specific products.

The brandname industry has been able to avoid criticism over pricing by shifting to a strategy of premium pricing for new products (often supported by cost-effectiveness research) and relatively small increases thereafter.

The response to generic price increases can also reinvigorate the sales of older brands like Ativan. When faced with a sharp jump in the generic prices, pharmacists may encourage physicians to write "dispense-as-written" scripts for the brand to avoid the uncertainty over reimbursement of the generic.

The focus on generic price increases could hurt the generic industry as brandname companies push for longer exclusivity periods for their products. While a full-fledged reworking of the Waxman/Hatch compromise appears unlikely during 1998, the issue is likely to return during the new Congress.