March 2, 2021

Generics and Biosimilars the Key to Reducing Drug Spending

The soaring cost of new prescription drugs is becoming a major driver in overall health insurance price increases, and some of those drugs are so expensive that they are out of reach for the average patient.

When people can’t afford the drugs their doctor prescribes for their ailments, it can result in either severe financial strain (even for those with insurance) or, if they can’t buy the medication at all, serious consequences for their long-term health. 

What’s driving these cost increases? Patients are paying more because of:

  • High launch prices of new brand biologics and specialty drugs. Specialty drugs are often used to treat complex, chronic conditions, and are among the most expensive medicines on the market.
  • Annual price increases of brand-name drugs that have no real competition.

While generic drugs are affordable for most people, brand-name drugs can cause serious financial pressure on most people. That’s not factoring in the fact that the cost of many popular brand-name drugs doubles every seven to eight years.

Per capita spending on specialty drugs increased by 55 % from 2015-2018 and their average cost hit $4,500 in 2018, according to a study by the American Association of Retired Persons.

According to the association’s report, brand-name medicines account for 77% of all spending on prescription drugs. The numbers are enough to make your head spin.

The answer

One way to tackle these skyrocketing prices is to increase patient access to more affordable generic or biosimilar pharmaceuticals that are approved by the Food and Drug Administration.

Using generics and biosimilars has proven to be the top way to reduce the cost of medicine outlays. For example, generic drugs can often cost 80 to 85% less than brand-name drugs, according to an analysis by the FDA. That’s usually the first option when trying to reduce a patient’s spending.

That gets more difficult when no generics exist, which is often the case for new drugs which still have their patent.

That’s where biosimilars come in. They can be affordable alternatives to expensive brand biologics, and more are coming to the market every year. 

Between 2015 and 2020, the FDA approved 29 biosimilars. If the trend continues, the potential savings could reach $54 billion over the next 10 years, according to a study by the Rand Corporation.

The takeaway

The more biosimilars that come on the market, the less of a burden drug prices will be on those who need them most. Also, as more biosimilars become available, fewer people will opt for abandoning their prescriptions at the pharmacy due to cost.

In addition, when you are being prescribed drugs, you should always talk to your doctor about generic alternatives since 90% of them can be purchased for less than $20 for insured patients.

July 23, 2019

40 States Sue Generic Drug Makers for Collusion

The heat is growing on the pharmaceutical industry after more than 40 US states filed a lawsuit accusing generic drug makers of engaging in a massive price-fixing scheme.

The lawsuit accuses 20 companies of conspiring to fix prices of more than 100 generic drugs, including some that are used to treat cancer and diabetes. The defendants include the largest producer of generic medicine in the world: Teva Pharmaceuticals.

The new lawsuit comes after a five-year investigation that uncovered a scheme through which “coordinated price hikes on identical generic drugs became almost routine,” according to an investigative report by the Washington Post. The suit covers the period from July 2013 to January 2015.

The companies and executives would “routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market” to keep generic drug prices artificially high, the lawsuit says.

The scale of the alleged collusion was summed up by Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut, whose office has taken the lead in the investigation: “This is most likely the largest cartel in the history of the United States,” he told the Washington Post last December.

In announcing the recent lawsuit, he cited e-mails, text messages, telephone records and testimony from former company executives that indicate a “multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs.”

This is not the only litigation. Pharmacies and other businesses have filed their own lawsuits against the generic drug makers. One such suit documents huge price hikes – like a 3,400% increase in the price of an anti-asthma medication – and investigators believe that generic drug producers colluded to raise prices in tandem or not make their products available in some markets or through specific pharmacy chains.

Significance of the states’ suit

The multi-state lawsuit is important because generics account for 90% of pharmaceutical spending in the U.S. Despite that, they only account for 23% of the total drug spend in the country, according to the Association for Accessible Medicines.

With so many prescriptions being written, the savings to consumers could be huge if the drug makers are found to have fixed pricing and they subsequently change their ways. What’s not clear, though, is whether it would actually spur changes in pricing by the companies.

According to the lawsuit, the drug companies allegedly conspired to manipulate prices on dozens of medicines between July 2013 and January 2015.

It accuses Teva and others of “embarking on one of the most egregious and damaging price-fixing conspiracies in the history of the United States.”

Connecticut Attorney General William Tong, who filed the suit, said the investigation had exposed why the cost of health care and prescription drugs was so high in the U.S.