Generic Drugs – ScriptSourcing

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.

Generic Drug Makers Sued over Pricing Practices

One of the country’s largest health insurers has sued a number of pharmaceutical companies, accusing them of running a price-fixing cartel of common generic drugs.

Humana Inc. has accused the companies of colluding on the prices of generics to the detriment of health insurers that have to pay for these drugs. Humana said in its lawsuit that this collusion prevented fair competition among insurers that could have reduced the cost of many of these drugs.

The background

The lawsuit comes after 45 states signed on to a suit last year over an alleged scheme among generic drug manufacturers to fix the price of some 300 medications. The states are seeking unspecified damages for what they say they had to overpay for drugs for Medicaid patients as a result of the alleged cartel.

Humana accused Teva Pharmaceuticals, the largest generic drug producer in the world, of being the ringleader of the alleged scheme, which fixed, increased or maintained the prices of more than 100 generic drugs.

“They leveraged the culture of cronyism in the generic drug industry to avoid price erosion, increase prices for targeted products, and maintain artificially inflated prices across their respective product portfolios without triggering a ‘fight to the bottom’ among competitors,” Humana wrote in the complaint, which it lodged with the U.S. District Court for the Eastern District of Pennsylvania.

The lawsuit adds to the troubles faced by generic drug companies. Earlier in 2019, a number of states joined to sue drug makers, including Teva Pharmaceuticals. The suit also named multiple executives from Teva and other generic manufacturers as individual defendants.

An investigation by multiple states led by Connecticut accused generic drug makers of “illegal collusion,” refuting arguments by the manufacturers that price increases were caused by industry consolidation and Food and Drug Administration-mandated plant closures.

Humana says the drug companies conspired to set market shares and customers for each company, and that they also agreed not to compete with each other for those customers so that each company could maintain or raise the price of its generic pharmaceuticals.

This is the second lawsuit Humana has filed against generic pharmaceutical companies. It filed a similar case in August 2018 against a handful of drug makers, accusing them of price fixing. That case listed far fewer drugs than the latest salvo.

Lawsuit highlights industry chasing profits

The generics industry used to be highly competitive, but over the years, things changed and suddenly allegedly “coordinated price hikes on identical generic drugs became almost routine,” the <i>Washington Post</i> wrote in an article last year that covered the alleged scheme and lawsuit by states.

While generics account for 90% of the prescriptions written, they only account for 23% of the total drug spend in the country, according to the Association for Accessible Medicines. Despite that, there has been a noticeable and inexplicable uptick in the price of drugs in recent years, sparking outrage among consumers, health insurers and states that run their own Medicaid programs.

If the allegations are true, the parties affected run the gamut from consumers ― who have high copays or high deductibles for their pharmaceuticals ― to hospitals and insurance companies.

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.