Jim Makichuk bought a 5-gram tube of Zovirax, a prescription cold-sore cream, a few years ago in Canada for $34.65. That was the over-the-counter price; no insurance involved.
He recently purchased a fresh 5-gram tube from a Kaiser Permanente pharmacy in Los Angeles. It cost him $95, or nearly three times as much as the Canadian price — with insurance.
But that’s not what raised Makichuk’s eyebrows.
What surprised him was a report Kaiser sent him on prescriptions he filled in January. There was the tube of Zovirax, and there was the $95 payment Makichuk made.
And beside that was a listing for what Kaiser paid for the cream: $2,532.80.
“I don’t get it,” Makichuk, 68, of Sherman Oaks, told me. “How could they possibly pay that much?”
The answer to that question leads down the rabbit hole of U.S. healthcare costs and the frequently inexplicable prices of prescription drugs.
It also highlights the fact that Americans pay more for meds than citizens of most other developed countries, which regulate drug prices to prevent price gouging.
Makichuk said he contacted Kaiser to see if a mistake had been made about the total price tag.
“I talked to a couple of people,” he recalled. “They said that’s just how much it costs.”
It isn’t. I found a Canadian site called Universal Drugstore selling acyclovir, the generic equivalent of Zovirax, for $21.
I found another site, Canada Drugs, selling a 6-gram tube of acyclovir for $47.88. Six grams of name-brand Zovirax could be had for $44.94.
The manufacturer of Zovirax, Britain’s GlaxoSmithKline, says the major markets for the drug are Europe, Russia and Australia. Along with cold sores, Zovirax is a leading treatment for genital herpes.
Glaxo sold the U.S. and Canadian rights for Zovirax in 2011 to Canadian company Valeant Pharmaceuticals for $300 million.
In 2012, the U.S. Food and Drug Administration said Valeant was making unsubstantiated claims about Zovirax on its website. It said the company was overstating the effectiveness of the drug and ordered it to stop.
A year later, Valeant agreed to supply what it called an “authorized” generic version of Zovirax to Irish drug company Actavis, which would have the exclusive right to market and distribute it in the United States.
Now, I need to clarify a key point. Actavis and two other generic-drug makers, Mylan and Amneal Pharmaceuticals, market a generic version of Zovirax ointment. There’s no generic version of the Zovirax cream prescribed for Makichuk.
What’s the difference?
“There really isn’t any,” said Dr. Boris Zaks, a Beverly Hills dermatologist. “Creams are more cosmetically elegant because you rub them in. Ointments can leave some residue. They can be a little greasier.”
Technically speaking, an ointment is 80% oil and 20% water. A cream is 50% oil and 50% water. Both Zovirax cream and Zovirax ointment have the same amount of the same active ingredient, acyclovir.
“An ointment can be more soothing,” said Dr. Dale Westrom, a dermatologist in Santa Rosa, Calif. “People with sensitive skin do better with ointments.”
Both Westrom and Zaks said they prefer the pill version of generic acyclovir for their patients. It works better, they said, and is cheaper than the cream or the ointment.
Makichuk said neither the Kaiser doctor nor the pharmacist balked at providing him with 5 grams of cold-sore cream costing more than $2,500. Also, neither mentioned the far cheaper ointment, he said.
John Nelson, a Kaiser spokesman, declined to discuss specifics of Makichuk’s experience for privacy reasons.
He said only that there’s no generic available for Zovirax cream and that “the price we have is very similar to others in the market.”
That’s true, as a search for Zovirax cream on the price-comparison website GoodRx will show. But it doesn’t remove the stench from all this.
Why is name-brand Zovirax cream priced at such a ridiculously high level? I put that to Valeant Pharmaceuticals.
Laurie Little, a Valeant spokeswoman, said the cost of the cream “takes into account many factors, the cost of the active and inactive ingredients, the manufacturing process, the packaging and its related process, as well as the distribution and a myriad of other expenses.”
As for why the Zovirax cream available in Canada is so cheap, that’s simple: It’s manufactured in Britain, not the U.S., and British law requires that drug prices be reasonable. So does Canadian law.
If there’s a take-away from Makichuk’s story, it’s that America’s healthcare system is designed to maximize cash flow for its corporate players and that there are few safeguards to keep costs down.
Not coincidentally, according to the financial-advice website NerdWallet, healthcare bills are the No. 1 cause of personal bankruptcy in this country.
And no amount of skin cream will make that sting go away.