Generic Pharmaceutical Association (GPhA) CEO and President Chip Davis recently stated that generic drug savings were imperative to long-term solutions to rising health costs, and explained that the focus should be on increasing pharmaceutical competition and expanding access to safe, effective and more affordable generic drugs.
“Generic drugs live at the intersection of innovation and affordability, increasing patient access to essential medicines and generating cost savings,” Steve Arnoff, associate director of communications at GPhA, recently told American Pharmacy News. “Over the last 10 years, it has recently been reported that generics saved the United States over $1.5 trillion dollars and $254 billion in 2014 alone.”
Arnoff also explained that recent research revealed generic drugs make up 88 percent of total prescriptions in the United States, but only account for 28 percent of pharmaceutical expenditures.
“It's hard to imagine another sector that can claim nearly 90 percent of a market while delivering it at nearly a quarter of the total cost,” Arnoff said. “Knowing this, it is difficult to understand why Congress recently changed the Medicaid rebate framework, which risks billions of dollars in patient savings by imposing brand drug rules on more affordable generics.”
GPhA commended Congress’ efforts to address unethical behavior such as that of Turing Pharmaceutical’s excessive cost increases on its drug Daraprim, for example. Congress finalized a budget agreement that included an increase in the Medicaid rebate for generic drugs.
Arnoff explained that, unfortunately, Turing is not a generic drug company, so such regulations do not apply to it or its drugs.
“The new rebate structure fails to reflect very clear differences in the brand and generic business models,” Arnoff said. “Instead, the Medicaid rebate increase will add significant hurdles to generic drug investment and development.”
Arnoff explained that these regulations will make it more challenging for generics to serve as a viable alternative to more expensive brand medications, which has the exact opposite effect of what patients need.
“In order for generics to be sold at a fraction of the brand drug cost, generic drug makers embrace a high volume and low margin business model that is vastly different from the brand model,” Arnoff said. “This means that generic manufacturers are subject to materials cost and supply fluctuations to a much higher degree than most brand manufacturers.”
Arnoff explained that applying a brand Medicaid rebate to generic products can constrict generic drug development and puts Medicaid beneficiaries in a position where they may have no alternative but to rely on costly brand drugs. It can also increase state budgets and create more burden for taxpayers.
GPhA argues that generic drugs provide the largest support against rising health costs, so if Congress really wants to increase health savings and expand patient access, policymakers should embrace policies that increase prescription drug competition from generic drugs.
The GPhA has offered five possible solutions, including fully funding the Food & Drug Administration, and promoting the use of generics in the low-income Medicare population.
“Each suggestion has the potential to generate significant health system savings and should all be utilized," Arnoff said.
“Generic drugs live at the intersection of innovation and affordability, increasing patient access to essential medicines and generating cost savings,” Steve Arnoff, associate director of communications at GPhA, recently told American Pharmacy News. “Over the last 10 years, it has recently been reported that generics saved the United States over $1.5 trillion dollars and $254 billion in 2014 alone.”
Arnoff also explained that recent research revealed generic drugs make up 88 percent of total prescriptions in the United States, but only account for 28 percent of pharmaceutical expenditures.
“It's hard to imagine another sector that can claim nearly 90 percent of a market while delivering it at nearly a quarter of the total cost,” Arnoff said. “Knowing this, it is difficult to understand why Congress recently changed the Medicaid rebate framework, which risks billions of dollars in patient savings by imposing brand drug rules on more affordable generics.”
GPhA commended Congress’ efforts to address unethical behavior such as that of Turing Pharmaceutical’s excessive cost increases on its drug Daraprim, for example. Congress finalized a budget agreement that included an increase in the Medicaid rebate for generic drugs.
Arnoff explained that, unfortunately, Turing is not a generic drug company, so such regulations do not apply to it or its drugs.
“The new rebate structure fails to reflect very clear differences in the brand and generic business models,” Arnoff said. “Instead, the Medicaid rebate increase will add significant hurdles to generic drug investment and development.”
Arnoff explained that these regulations will make it more challenging for generics to serve as a viable alternative to more expensive brand medications, which has the exact opposite effect of what patients need.
“In order for generics to be sold at a fraction of the brand drug cost, generic drug makers embrace a high volume and low margin business model that is vastly different from the brand model,” Arnoff said. “This means that generic manufacturers are subject to materials cost and supply fluctuations to a much higher degree than most brand manufacturers.”
Arnoff explained that applying a brand Medicaid rebate to generic products can constrict generic drug development and puts Medicaid beneficiaries in a position where they may have no alternative but to rely on costly brand drugs. It can also increase state budgets and create more burden for taxpayers.
GPhA argues that generic drugs provide the largest support against rising health costs, so if Congress really wants to increase health savings and expand patient access, policymakers should embrace policies that increase prescription drug competition from generic drugs.
The GPhA has offered five possible solutions, including fully funding the Food & Drug Administration, and promoting the use of generics in the low-income Medicare population.
“Each suggestion has the potential to generate significant health system savings and should all be utilized," Arnoff said.
Alerts Sign-up