Free Drug Samples May COST You Money

In the past, I've suggested that asking doctors for free drug samples was a way to save money. Turns out, it may actually cost you money:

A new study that shows patients who get samples end up with significantly higher out-of-pocket costs than those who don’t.

On average, patients who got free prescription samples spent nearly 40 percent more for medication during the six months they received samples, and nearly 20 percent more in the six months afterward, than those who didn’t, according to University of Chicago researchers.

And here's the kicker for our society:

The study, published this week in the journal Medical Care, renews debate about the role of more than $18 billion in free pharmaceutical samples distributed each year, which drug industry representatives have described as a cost-saving safety net for the poor.

“This builds on a growing body of literature that shows that samples are not aimed to help the uninsured and the poor, but to increase the sales of the branded drugs,” said Dr. William Shrank, an instructor at Harvard Medical School, who has studied the issue.

I've always heard that drug dealers give out free samples initially to get people to start using drugs. Who knew that the same tactic would work for legal drugmakers?

Comments

[Jesse]

Wow. I never really thought about that, and the saddest thing is that this appeals most to the less educated because they may not know to compare name brand vs generic.

[Traciatim]

"Who knew that the same tactic would work for legal drugmakers?"

. . . Ummm, every marketer on the planet?

[pharmboy]

i see this on a regular basis at the pharmacy where I work. Someone will be on a blood pressure med and is charged a $60 co-pay. I'll casually inform them that there are multiple alternative medications that work just as well (in my opinion)that are as cheap as $4. I ask if they know why they're on the expensive one. The most common response is "I don't know, the doctor just gave me some samples at first and then wrote me a prescription"

I enjoy helping people stretch their health care dollar...I'm just glad I don't work on commission.

[rwh]

I work in mental health and our patients take a lot of medications. Research also shows that about 70% of the time a patient will be prescribed the drug they ask for. That shows how powerful those commercials are that alway end up with "ask your doctor".

[JK]

It gets even more disgusting too. Say a drug costs $1 per pill to make and they sell it for $20 per pill. Now generous drug company A gives away 1000 pills as samples to doctors offices.

Guess what they get to write off?

Is it $1000 (their cost) or $20,000 (retail cost)?

[MelMoitzen]

JK,

You don't "write off" anything, you incur costs and you lose sales. If it were such a deal for the company, they'd give away all their pills rather than selling them.

For simplicity, let's assume JK Pharmaceuticals faces a corporate tax rate of 10%. By giving away these pills, JK incurred $1,000 in cost and generated no sales revenue.

So that lowers JK's profit and taxable income by $1,000, lowers his tax by $100, and at the end of the day, JK has $900 less in the bank for his generosity.

Sell the same pills for $20,000, subtract the $1,000 cost, pay 10% tax on the $19,000 profit, and you've got $18,100 more in the bank at the end of the day.

For a long-term maintenance medication, giving away $1,000 of samples could lead to hundreds of thousands of dollars of future sales from the satisfied patients who tried them out for free.

Getting people hooked is the idea behind sampling, whether the product is pharmaceuticals, crack cocaine, or pot stickers at the nearby Costco.

[MelMoitzen]

Oops, bad math. $17,100 more in the bank at the end of the day.

[Rich G U Y]

I am a drug rep and I notice the FEWER samples I hand out, the more prescriptions that are written. Many times doctors hand out so many samples, and then the nurses give patients more when they request more, and a prescription never gets written.

Samples are meant to help patients try the drug at no cost to them, make sure it's the proper dose, and doesn't cause unwanted side effects. At that point, a presciption should be filled at the pharmacy. The offices that hand samples out too much are abusing the drug companies generosity and add to the total cost of drugs in the long run.

[JK]

@MelMoitzen-

You are telling me the rules that everyone else has to live by, not the drug companies.

When JK Pharmaceuticals sells $1 million worth of drugs, and gives away $1 million in retail value, they pay NO TAX, even though the COST of the drugs was $50,000.

Must be nice.

[MelMoitzen]

I believe you may be confusing the rules that apply to indigent programs (JK Pharmaceutical's program where the month's course of treatment is provided at no charge with a bottle of 30 pills) versus delivering 15 blister packs with two pills in each to a doctor's office.

I agree that there is favorable tax treatment to the first example, providing free pills to the needy.

But package them two at a time (as that's what this post is focusing on) and their tax benefit is closer to the Costco example. Actual cost to JK, not what JK could have sold them for.