What are the criteria used to determine...?

Question

whether an item will be on the $4 generic drug list? The drug I'm speaking of is already a generic (Omeprazole) and I was wondering when they determine to add certain generic drugs to the list?

Answer 1

When a drug first hits the market, its popularity will depend a lot on how it's been advertised to the populace, the doctors, and the managed care (insurance) companies that provide medication coverage. Usually, it's expensive, the prices are set by the drug company and the middle men that sell drugs to hospitals and pharmacies.

Usually, unless it's a new class of drug or has significant increases in safety or efficacy, there are current drugs on the market the new drug has to compete with. So, it's not immediately placed on any formulary (list of approved drugs). It's available, but generally the patient has to pay out of pocket unless they get permission from their insurance company to have it covered.

Over time, as more data comes in on the "usefullness" of the drug, the drug company may put it on a top/higher tier on their formulary. This means that some portion of the cost of the drug is covered, but it's still "name brand". As the popularity of the drug increases and it demonstrates better efficacy in larger populations, drug companies increase production and manufacturing costs decrease. They begin to make deals with insurance companies to offer the drug at a lower price if they lower the tier on the formulary. These are their middle tiers or "preferred brands".

More time passes, the drug loses its patent protection, and then generic manufacturers can come in and make a "generic" form. They then make deals with insurance companies to offer their generic equivalent drug at a *huge* discount compared to the original drug cost.

So, when you buy generic, you're buying a drug that has stood the test of time with a good safety profile, long enough to make it profitable for a generic form to be made. Places like Walmart, that offer $4 prescriptions (with or without insurance) are kind of acting like an insurance company with only 1 tier, the lowest, based only on generic drugs.

They're banking that your faith in their business will keep you coming back for other drugs which may not be generic, in the future, that they can make money on. And frankly, having looked at the list of generics offered by Walmart, they're even making some money on a few of the $4 generics.