Would Drug Merger Mean Lower Prices for Consumers? Some Say No
The planned merger of Bergen Brunswig Corp. and Ivax Corp. would be an unprecedented combination of a distributor and a generic-drug maker that promises to provide safe drugs at lower cost to consumers.
But consumer groups say it’s unclear whether that would happen. Other kinds of mergers, especially those between drug companies and managers of prescription benefits, haven’t halted the soaring costs of drugs.
And the pipeline being created to deliver Ivax drugs through Bergen’s network to hospitals and pharmacies would probably lead to less competition among generic drug makers, analysts predict.
Here are answers to some questions the merger poses:
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Q: Would this mean that drug costs would go down?
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A: Bergen and Ivax believe that providing a direct pipeline from manufacturer to pharmacy will eliminate the middleman and lower drug costs. Independent pharmacists, such as Anaheim Rx Health Care Center, think they might get a break. Owner John Arnold says Bergen has been trying to establish a network of independent stores that operate under the name Good Neighbor Pharmacy. The plan is similar to the old Rexall drugstore model and could mean lower prices for independents.
But others in the industry aren’t so sure. “I’m skeptical that this merger will have any affect on anyone’s ability to purchase drugs that are anywhere close to affordable,” says Greg Marchildon of Families USA, a consumer group in Washington. Hospitals and health maintenance organizations expect prices in general to go up in the next few years, eventually leading to higher prices for consumers.
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Q: But aren’t the companies promising lower prices?
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A: Yes, but a number of drug company mergers in 1992 also promised lower prices, but they never delivered. Marchildon’s group checked the mergers two years later and found that prices actually soared four to eight times higher than inflation for the 20 most-prescribed drugs for such ailments as high cholesterol, high blood pressure, diabetes and stomach problems.
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Q: Would consumers have more choices in drug companies?
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A: Though consumers may know who makes certain brand-name drugs, they probably know little about who provides generic drugs. But pharmacies do. Bergen would drop some generic companies from its vast distribution network, and that means pharmacies and hospitals would have fewer choices. Essentially, the merger is eliminating competition, says Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group in Washington. Reduced competition is a major reason many predict price increases.
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Q: Would the combined company put more money into research and development?
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A: Industry experts doubt that the new company would do much more. Although Ivax has a research and development department, it is basically a generic-drug maker. It produces drugs that have gone off patents, which means the formulas are available to all manufacturers. In addition, Ivax is struggling financially and needs to get products that it can make quickly and cheaply into Bergen’s vast pipeline.
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Q: Is there any concern about quality?
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A: Not any more than usual. Studies show that brand-name drugs are recalled as much as or more than generic drugs. “Some manufacturers of generics do a better job than others,” says Wolfe. The biggest problem leading to recalls is improperly formulated drugs that don’t dissolve correctly, providing patients with less of the medicine. Proper dissolving is critical to some drugs. An asthmatic can suffer an attack if the medication doesn’t dissolve fast enough, or suffer a toxic reaction if it dissolves too quickly, Wolfe says.
