More FDA-approved generic and biosimilar medicines are available now than ever before. Today, America’s patients are benefitting from significant savings at the pharmacy counter and in lower out-of-pocket costs. But those savings are increasingly at risk due to anti-competitive abuses and misguided policies that block access to lower-cost medicines.
With total spending on prescription drugs reaching $453 billion in 2017, patients realize tremendous value in being able to pick up 90 percent of their prescriptions for $104 billion. That’s only 23 percent of all costs and the result of competition in the generic drug market working to drive prices lower by $5 billion less than the prior year.
Patients, however, continue to call for action to address the 10 percent of prescription drugs that accounted for $349 billion in spending (that’s right, 77 percent) and the annual price increases incurred on these treatments that are pushing drug prices out of reach for millions of Americans. In contrast to the deflationary generic drug market, new spending on brand-name drugs and price increases on existing brand medicines pushed up costs by more than $17 billion in 2017.
That’s why the Association for Accessible Medicines is calling on Congress to take meaningful action to lower prescription drug costs with the Prescription for Savings. Patients win when market-based competition from FDA-approved generics and biosimilars deliver savings at the pharmacy counter.
To this end, we recommend these six policy solutions:
- Clear the way for biosimilars in the U.S.
Biosimilar medicines offer enormous promise for patients seeking access to more-affordable versions of biologic medicines to treat complex and chronic diseases. FDA’s record level of biosimilar approvals in 2018 and its leadership with the Biosimilars Action Plan are critical first steps. But as the FDA has noted, competition in the market faces significant challenges. Patients are able to access only six of the 17 approved biosimilar medicines: If FDA-approved biosimilars had been available in 2017, patients could have saved an additional $4.5 billion in lower drug costs. AAM’s whitepaper, Breaking Through on Biosimilars, outlines what is needed to provide regulatory certainty for; address the anti-competitive tactics used to prevent patient access to; and educate patients and providers about these lower-cost, life-saving medicines.
- Combat patent abuse by brand-name drug companies
All too often brand-name drug companies patent features of blockbuster medicines that do not represent true innovation and therefore should not be awarded additional patent protection. One study found that rather than creating new medicines, brand name drug companies are recycling and repurposing old ones. Every year, at least 74 percent of the drugs associated with new patents were not new drugs coming on the market, but existing drugs. Abuses of the patent system are intended to delay competition to more affordable treatments. Until it’s stopped, patients will continue to pay monopoly prices for brand-name drugs and biologics. With the 12 highest-grossing drugs costing $96 billion in 2017 alone, combatting patent abuse is central to lowering prescription drug costs for patients.
- Pass the CREATES Act to end the shenanigans
Preventing generic and biosimilar manufacturers from obtaining the samples needed to seek FDA approval costs patients and taxpayers $13.4 billion annually. Brand-name drug companies withhold these samples to artificially protect and extend their monopolies, successfully delaying and preventing competition from lower-cost medicines. To end the shenanigans, Congress must pass the CREATES Act (S. 340/ H.R. 965), a bipartisan, market-based solution to lower prescription drug costs. Endorsed by more than 90 organizations, CREATES has been estimated by the Congressional Budget Office (CBO) to provide federal savings of nearly $4 billion over 10 years.
- Reduce the out-of-pocket costs for low-income seniors
Low-income Medicare beneficiaries (LIS) typically utilize more expensive brand-name drugs even when lower-cost biosimilar and generic medicines are available. A recent analysis from HHS estimated the Part D program and its beneficiaries could have saved $2.8 billion with full generic substitution in 2016. Reducing the out-of-pocket costs for low-income seniors through policies designed to encourage the greater use of generic medicines could save up to $18 billion over 10 years, according to CBO.
- Eliminate the penalty on generics in Medicaid
Manufacturers of affordable generic medicines are now paying millions of dollars in penalties on prescription drugs that have not been subject to a price increase. These unpredictable, onerous penalties – totaling $1.6 billion over 10 years – make it challenging to continue production of low-margin generics and threaten patient access to life-saving medicine. Repealing the Medicaid Generics Penalty alleviates the harmful and unintended consequences of this policy on patients.
- Increase access to affordable medicines in trade agreements
Increasing patient access to affordable medicines as part of U.S. trade agreements enhances competition and lowers drug prices. The recently signed trade deal with Mexico and Canada (USMCA), however, runs counter to this goal, extending monopolies for branded biologics and keeping drug prices out of reach for millions of patients. Policies to enhance patient access to generics and biosimilars, as well as improvements to align USMCA with current U.S. law, are necessary if we are to be successful in lowering drug prices here at home.