Buying generic medication? You might be paying too much

“If you use your insurance to buy a generic medication in the United States, chances are you are paying too much for it,” said Dr. David Belk, an internist who runs his own practice in Alameda, Calif.

Belk also blogs about health care costs as he looks at ways his patients can save money. He says Americans have been led to believe that all medications are expensive and that insurance saves customers money all the time. As patents expire, Belk says, more companies start making the generic and prices go way down – sometimes to just pennies per pill.

About 20 percent of Americans use at least five prescription medications, and the costs can add up.

Pam Grimes of Johnston County, who has beaten Stage 3 breast cancer, says she takes six prescription drugs – two are name brand and four are generics. With insurance, including her $10 monthly co-pay at the local pharmacy, Grimes spends $40 a month on generic medication alone.

“I know there’s probably something out there cheaper,” Grimes said.

Target pharmacist Thomas Sinodis says people are often surprised to learn that their medications can cost more with insurance.

"Sometimes they’re like, 'But my co-pay is $10,' and we’ll have to explain, 'Actually, this is on our $4 list, so it’s only going to be $4 this month,'" Sinodis said.

Belk says it's "only the chain pharmacies that sell it to you for your insurance co-pay that are most of the time ripping you off."

WRAL Investigates researched how much pharmacies actually pay for pills. The federal government does a weekly survey of hundreds of pharmacies across the country to find out what they pay for nearly every prescribed medication. Six out of the 10 most commonly prescribed medications in the U.S. cost pharmacies 7 cents a pill or less, no more than $2.10 for a month's supply.

So, if many generic medications are that cheap, why do insurance plans still have $10 co-pays? WRAL Investigates reached out to Blue Cross Blue Shield, which said customers can get a plan that has $5 co-pays or no co-pays on prescriptions. But customers might have a higher premium. Many group insurance plans, on average, have $10 co-pays for generics and $20 to $40 co-pays for name-brands.

WRAL Investigates looked at the medications Grimes is taking to see how much they cost. Insurance does save her money on some of the drugs. But hydrochlorothiazide, a blood pressure medication, is just 3 cents a pill, or 90 cents for 30 days. Her insurance co-pay is $10. Another blood pressure medication, metoprolol tartrate, is just 2.3 cents a pill, or 60 cents for 30 days. Again, she pays $10.

Belk calls it the pharmacies' dirty little secret.

“They don’t want you to know that because the insurance co-pay is actually the biggest profit most chain pharmacies get,” he said.

Daniel Barbara, executive director of the North Carolina Association of Pharmacists, disagrees. He says the co-pay “off-sets the cost to the insurance company, not the pharmacy. Often times, the co-pay is substantially more than the profit made by the pharmacy."

Belk maintains, for the majority of commonly prescribed generics, a customer’s co-pay more than covers the cost of the medication.

“No one is talking about it yet. If no one’s talking about it, no one knows, and they get away with it,” he said.

WRAL Investigates found that Costco also offers incredible savings, and customers don't need a membership to buy at the pharmacy. At Costco, two of Grimes' blood pressure medications are just $16 and $18 for an entire year's supply.

“They’re still selling it as a profit,” he said. “And since it’s less than what the chain pharmacies and what you insurance gives it to you for, it looks like they’re undercutting everyone. In reality, they’re just selling it for what it’s worth.”

Joel Farley is a licensed pharmacist and associate professor who studies drug pricing and policy at the University of North Carolina at Chapel Hill. He says there’s much more to drug pricing than the pills.

“For a lot of companies, $4 generics are a way to bring people in the store and buy other things while in the store,” Farley said. “They’re able to offer that because the ingredient costs of medication are less than $4, but I don’t think they’re adequately building in cost of dispensing medication (and the) cost of clinical consultation the pharmacist has, for example.”

Farley points out the important role pharmacists have in making sure patients are getting the right drugs and checking for drug interactions and side effects. 

A corporate pharmacy director at Blue Cross Blue Shield says it's important to show your insurance card. The drug interactions can’t be tracked without using one’s insurance card. 

For Grimes, shopping around and getting to know a new pharmacist is well worth the savings.

“That (savings) goes toward the phone bill or light bill or mortgage payment or groceries,” she said.

Of course, insurance does save customers money on many brand-name and generic drugs, but don't assume the co-pay is the best price.

WRAL Investigates heard from a number of pharmacists about this topic. They pointed out the danger of shopping around for medication and the risk of dangerous drug interactions. Patients should have a conversation about it with their doctor and always have a list of all the medications they’re taking to discuss with their pharmacist.

According to the IMS Institute of Healthcare Informatics, a company that tracks sales at the pharmacy level for drug companies: