One Thing You May Have Missed: No, a Version of Generic Prozac Didn't See an 879% Price Increase

As part of my gig running the Value+Access Communications group at W2O Group,* I have to sort through a lot of coverage and background on pricing/access/reimbursement issues every day**. And I’ve found that, every so often, interesting things fall through the cracks.*** So I’ve decided – every Tuesday and Thursday – to share One Thing You May Have Missed.

Here’s what’s on my mind today:

On Tuesday, I mentioned the grave danger of basing pharmaceutical pricing policy on an unpublished Rx Solutions study that found that 3,400 drugs took price increases in the first half of 2019 (especially given that the FDA has only ever approved half that amount).

Today, I have a bone to pick with the other part of the alleged study: the idea that prices rose an “average” of 10.5%. That is clearly absurd. No drug you’ve ever heard of took a price increase nearly that large this year. (Seriously: if you doubt me, PM me any brand-name medication, and I'll give you the list price increase, if any).

So what gives?

One hint was the “smoking gun” that several media outlets used to illustrate how extreme the price hikes were: a generic version of Prozac that rose 879%. That, in turns, screws up the rest of the math: if you take a bunch of drugs with negligible price increases, then mix in an 879% hike, your average will look misleadingly enormous.

But One Thing You May Have Missed? There wasn’t really an 879% increase in the first place.

The “879%” claim is one that fits the current narrative about an uncontrolled pharmaceutical industry perfectly, which is, perhaps, why it escaped scrutiny. Because it’s also a claim that doesn’t fit the economics of the industry in the slightest.

The market for generic Prozac is hugely competitive, so the idea that a company could raise prices 10-fold and compete is laughable. Someone had to investigate.

We looked at the underlying data, and it turns out the truth is mundane: the liquid version of generic Prozac that took the huge price increase had been previously listed in the database of drug pricing – probably in error – at a massively depressed price.

The new list price appears to be the lowest on the market (despite the phantom increase). A look at the liquid-Prozac marketplace suggests it is one of incredible stability and competition, not gouging.

At the risk of being repetitive: the poster-child for out-of-control drug increases actually appears to be a generic drug that is selling at close to a two-decade-low price.

And yet – to repeat my point from Tuesday – that 879% figure was used to calculate an average that fueled a CBS story with 90,000 Facebook interactions and a New York Times editorial that suggest that the government seize patents. Getting this stuff wrong has consequences. 

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* This is LinkedIn, so I should be explicit about a few things. First off, if you’re a communicator with value experience, we’re hiring. Alternatively, if your employer is in need of some been-there, done-that comms counsel, please drop me a line, and I’ll tell you what we can do for you.

** Part of the reason I spend so much time wading in this particular stream is that we put out a number of business-intelligence products. One of them – the Value Report – is a weekly, semi-private e-newsletter summarizing the week’s activity on the pricing and value front. If you want in, let me know.

*** The definition of “between the cracks” here is liberal. Some of the topics will absolutely have been flagged in the media or elsewhere, but – perhaps – received less attention than they deserved.