57% markup to blend two pills into one

Every year during this time, we help Medicare Beneficiaries review their Part D Drug Plans to ensure they have the most cost-effective Part D coverage for the following year.

We save about $2 Million per year for our clients by just finding the most cost-effective Part D Drug Plans.  You can read more about our Part D review process here.

In reviewing thousands of client's drug lists each year, we also uncover some of the seemingly unscrupulous Pricing Strategies of Pharmaceutical companies.

A few years ago, we wrote an article about a specific dosage of Metformin (1000mg XR) which costs 1,000 times more than if you just take two pills of the 500mg XR.  That's right, the retail cost was about $7,000 per month versus about $7/month for the 500mg of the same exact medication.

This year, I would like to highlight another very common issue we see with Pharmaceutical pricing:  Drug Manufacturers taking two less expensive pills, blending them into one pill and charging a huge markup on the price of the medication.

The example I saw today was for "Pioglitazone/Metformin 15mg/850mg".  I was reviewing a Part D analysis for one of our clients and noticed that the only Part D Plans that covered this medication were the higher premium Part D Plans (about $75/month vs about $10-$15/month that most people pay for Part D Premiums).  With some further digging on GoodRx.com, I found that the retail cost for this blended medication is about $260/month. 

This got me thinking... how much would it cost to take the Pioglitazone and Metformin separately.  It turns out the retail cost for Metformin is about $16/month and Pioglitazone is about $150/month.  So, if we simply add up the cost of these two pills, one might think it should cost about $166/month retail cost for the combined medication.  Or perhaps, a slight markup for the convenience of taking one pill instead of two pills.

But no... there is a 57% markup to get the combined pill of Pioglitazone/Metformin 15mg/850mg which has a retail cost of ~$260/month.

Let that sink in. 

What other industry can we add such little value (take 1 pill instead of 2 pills) and justify a 57% price markup?  This is one of the key reasons the Diabetic Medicine industry is approaching $100 Billion per year.

So, when I hear about Pharmaceutical companies justifying their pricing strategies to account for R&D expenses to "innovate" and create new life-saving treatments, it makes me question if these types of  R&D discussions include innovations like blending two pills into one.