The AAM’s Dan Leonard highlights the savings impact that generic and biosimilar have on US healthcare today and introduces the ‘Secure Our Meds’ campaign which aims to educate policymakers on the importance of generic and biosimilar market competition and how it can be safeguarded.
More than 35 years since the passage of the Hatch-Waxman Act that gave rise to our industry, generics saved patients and the US healthcare system USD 313 billion in 2019. AAM’s latest annual Access & Savings Report reveals that generics account for 90 percent of prescriptions dispensed but represent just 20 percent of prescription spending. Generics drive savings for Medicare and Medicaid participants, holders of private insurance and those who pay cash for their medicines. Across age groups, payer types and conditions, savings are increasing year after year.
AAM strives to educate federal and state lawmakers that securing our generic and biosimilar savings is best accomplished by securing the conditions in which the industry thrives. They have the power to build on past accomplishments and keep savings within reach of America’s patients
Just as the Hatch-Waxman Amendments of 1984 gave rise to the generic industry, the Biologics Price Competition and Innovation Act of 2010 laid the groundwork for biosimilars in the United States. For both pieces of legislation, the critical task was establishing a balance between patient access and innovation. Biosimilars saved patients USD 2.2 billion in 2019. This is the most to date, but clearly there is more to be done to improve patient access to biosimilar medications.
Historically, generic and biosimilar savings have increased with each passing year, but it would be foolish to assume the trends will continue. As the pharmaceutical industry recovers from the disruptions wrought by the global pandemic, manufacturers of generic and biosimilar medicines face unprecedented rates of price deflation that erode the already-slender profits of many products.
That’s why the Association for Accessible Medicines stands up for generic and biosimilar manufacturers—and why we’ve launched our Secure Our Meds campaign to educate policymakers.
Policymakers must safeguard generic and biosimilar market competition by securing continued savings from legacy low-cost generic drugs while crafting policies to realize future savings from new generic or biosimilar competition. Here are some ways to enhance competition—the “active ingredient” in access—and to bolster a more sustainable market:
- Proposed legislation would modestly increase Medicare Part B reimbursement for biosimilars. Establishment of a Medicare shared-savings demonstration program and reduction of cost-sharing for patients in Medicare Part B are worth exploring.
- Seniors who participate in Medicare Part D are paying too much—to the detriment of their health. An independent study by Avalere explains, “Under the benefit design requirements in Medicare Part D, beneficiaries generally pay more cost-sharing for drugs on higher tiers (i.e., Tiers 3 and 4) than those on lower tiers (i.e., Tiers 1 and 2). Therefore, when generic products are placed on higher tiers, they may have higher cost-sharing and, as a result, their utilization may decrease.” Government policies that incentivize high-cost brands and biologics threaten the long-term viability of generic and biosimilar competition. Costs should be lowered through coverage of so-called first generics, reduction of patient cost-sharing through proper formulary tier coverage and creation a new specialty tier for biosimilars.
- Ensuring that newly available generic and biosimilar medicines are covered at launch, with lower cost-sharing, and creating a dedicated tier for specialty generic and biosimilar medicines could save taxpayers more than USD 7 billion over 10 years and reduce premiums for seniors by more than USD 2.5 billion over 10 years. It would also lower their out-of-pocket costs.
- The Medicaid generics penalty is something should never have existed in the first place. Congress should fix it in 2021. When the Average Manufacturer Price of a generic drug sold to Medicaid rises faster than the Consumer Price Index over a three-month period, manufacturers must pay a penalty that was meant to apply to brand-name manufacturers. Such price increases are often triggered by forces beyond the control of a generic manufacturer. Proposed legislation would rectify the problem, reducing the risk of drug shortages and benefiting patients through sustainable access to low-cost generics.
- Fair competition depends on addressing patent abuse. Anticompetitive tactics to prolong a brand-name drug’s monopoly are neither fair nor true to the spirit of the law. Inter Partes Review (IPR) is a moderating force on the brand industry’s patent gamesmanship, allowing the Patent and Trademark Office’s experts to take a second look at patents and ensure that patents represent true innovation. While some legislative proposals aim to dilute IPR, actions that would strengthen and improve it would further lower prescription drug prices for patients throughout the U.S.
Policymakers can do much to preserve and improve access by avoiding several pitfalls.
- Developers of generic and biosimilar medicines are granted 180 days of exclusivity for new generics. A proposal known as BLOCKING would pull the rug out from under manufacturers and introduce destabilizing uncertainty.
- Similarly, so-called “pay-for-delay” legislation would reduce pharmaceutical competition and threaten continued patient savings.Patent settlement agreements have come under fire, but they are vital mechanisms for bringing safe, effective, affordable generics to market earlier than brand name drug company “patent estates” expire. A study by IMS Health found that patent settlements led to savings of more than USD 11 billion.
- Another mechanism, the “skinny label” pathway is in grave danger. Writing in Bloomberg Law, Matthew Lane of the Coalition Against Patent Abuse warns that a recent Federal Circuit’s decision in GlaxoSmithKline v. Teva “will further erode the Hatch-Waxman Act, destroy the balance that was reached by Congress after months of deliberation, and cause higher drug prices for patients.”
- In state capitals across the country, legislators are considering actions intended to lower prescription drug costs. Many of their solutions involve “price transparency” or pricing limitations but do not account for the differences between how the brand and generic markets operate. When state policymakers emphasize isolated price spikes in terms of percentage increase, they overlook the overall price decreases the vast majority of generic medicines make possible. Rather than simply shifting costs among healthcare stakeholders, state legislation should increase pharmaceutical competition by decreasing burdens on more affordable generics and biosimilars.
AAM strives to educate federal and state lawmakers that securing our generic and biosimilar savings is best accomplished by securing the conditions in which the industry thrives. They have the power to build on past accomplishments and keep savings within reach of America’s patients.
Competition is the force that drives pharmaceutical innovation, with brand-name companies striving for better and more efficient cures and treatments to gain market share. It is also competition—in the form of generic and biosimilar medicines—that keeps prices down and accelerates accessibility. When legislators and regulators balance these two kinds of competition, patients win.
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