More Generics Aren't A Prescription Drug Cost Silver Bullet

More Generics Aren't A Prescription Drug Cost Silver Bullet
Are more generic prescription drugs the answer to the prescription drug affordability crisis?

President Donald Trump and Health and Human Services Secretary Alex Azar think so. “A key way to bring down costs using our market-based system is through more [generic drug] competition,” said Azar in a speech last week announcing the administration’s drug pricing blueprint.

Secretary Azar indirectly singled out Celgene and its multiple myeloma medication Revlimid as the posterchild of a drug company stifling generic competition. He said it is “a top priority to stop drug manufacturers from gaming our patent system to block generic competitors.”

(Celgene has been accused of blocking generic competition by refusing to provide Revlimid samples for testing outside the tightly controlled supply chain it set up to assure safe use of the drug.)

But it’s not clear that more generic competition would reduce the prices patients pay for multiple myeloma and other prescription drugs. That’s because for most patients the list price of the drug doesn’t matter. It’s their copayment costs that determine affordability. Copays are set by pharmacy benefit managers (PBMs), which control the prescription drug market and often don’t pass along the savings from generic drug prices to patients.

Indeed, while generic drug prices have fallen, copays have increased. According to HHS, PBMs have hiked cost sharing from $130 to $690 a month, a 500 percent increase. A new study by Avalere, a health policy consulting firm, finds that senior citizens with Medicare prescription drug plans are paying more for generic prescriptions even as the market price of these drugs stays flat because the generic drugs are being placed on formulary tiers that require patients to pay higher out-of-pocket costs.

 
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