Medicare and Retirees - Watch Out for Rising Generic Prices

I have noticed an increase of $1.00 to about $10.00 in the cost of generics I use. Perhaps you have had similar experiences,  wonder why and ask yourselves how this will affect your financial security.

The pharmaceutical business is just another free enterprise business which places profits at the top of its accomplishment list when it reports to shareholders and seeks financial support from bankers and investment sources. Brand name drug manufacturers may have subsidiaries which produce generics, and as their patent franchises (i.e.,  Lipitor and Plavix) expire, you can expect those subsidiaries (or competing generic companies) to be producing generic versions of the branded drugs and to reflect their free-enterprise priorities in doing so. The insurance business, another free-enterprise (subject to some regulation) operation, generates profits by contracting to pay less for the drugs sold to you then your premiums reflect. The difference between their revenues (premiums, copays,  rebates, etc.) and their costs (less rebates, etc.) for the drugs they cover pays the big bucks to their executives and more modest returns to individual shareholders.

When the price of a generic increases by a dollar, you, the purchaser, must have $100 in your bank account  (at current interest rates) to generate the interest to cover your extra dollar in cost.  If you fill 30 generic prescriptions a year you must have  thousands of dollars in your bank account to have your interest cover your extra costs.  The "minor" increase in generic prices will soon eat away your savings and assets because with the current rate of generic price acceleration that I have seen, you will have to be well-off to generate the return on investment sufficient to pay for the inflation in your drug charges.  Obama's health reform plan may control the long-term doughnut whole growth that we have seen in the last two years but seniors and retirees need to pay attention to a political environment where formidable anti-health care reform pressures are being exerted by the party in opposition.

The "minor" increase in generic costs will have a major effect on Medicare-covered Americans and retirees.  Make your insurance plan, including Medicare Part D, choice carefully. Shop carefully.  And let your Congress people know that you understand what is going on and you expect them to respond to constituent's needs, and not let "minor" generic price increases bankrupt this voting population.