The biopharmaceutical sector has made significant strides in developing and delivering effective drugs to improve health and combat diseases. However, the high cost of prescription drugs remains a significant barrier to access for many patients. One key solution to this issue lies in the role of generic drugs, which are significantly cheaper than branded products and can help reduce the financial burden on patients and the healthcare system.
Table of Contents
The Importance of Generic Drugs
Generic drugs are copies of branded drugs that are produced by companies other than the original developer. These drugs are often much less expensive than their branded counterparts, making them a crucial component in the effort to make medicines more affordable. According to the National Academies of Sciences, Engineering, and Medicine, generics represent 89% of all prescriptions written and 24% of the total cost of all prescription drugs. This is because generics are typically priced lower than branded drugs, which helps to reduce the overall cost of prescription drugs.
The Impact of Generic Competition
The entry of generics into the market can significantly reduce the price of the original patented drug. For example, when the patent protection for Lipitor, a widely used anti-cholesterol drug, expired, its price dropped from $3.29 per unit to 11 cents. This price drop is a result of the increased competition from generic manufacturers, which forces the original developer to lower its price to remain competitive.
The FDA has also demonstrated that greater competition among generic drug makers can lead to lower generic drug prices. Studies have shown that the market entry of just a few generic competitors can yield generic prices below the brand price, and that generic drug prices decline with additional competition. This competition is essential in driving down costs for patients and the healthcare system.
Barriers to Generic Market Entry
Despite the importance of generics, there are several barriers that can delay their entry into the market. Industry practices such as “evergreening” (extending market exclusivity through new patents or patent extensions) and “pay-for-delay” agreements (where branded drug manufacturers pay generic manufacturers to delay the release of their generic versions) can limit the availability of generics. Additionally, the review processes required for generic drug approvals can be slow, which can also delay their entry into the market.
Policy Recommendations
To enhance the role of generics in making medicines more affordable, several policy recommendations have been suggested:
- Reduce Barriers to Generic Market Entry: Policies should be implemented to prevent industry practices that delay the entry of generics into the market and extend market exclusivity of branded products. This can include reducing the use of “evergreening” and “pay-for-delay” agreements.
- Speed Up Review Processes: The review processes for generic drug approvals should be expedited to ensure healthy competition and lower costs.
- Promote Transparency: Biopharmaceutical companies and insurance plans should be required to disclose net prices received and paid, including all discounts and rebates, at a National Drug Code level on a quarterly basis.
- Encourage Competition: Policies should be implemented to encourage the entry of additional domestic and international providers of generics and biosimilars, particularly including those not marketed by the original patent holder.
Conclusion
In conclusion, generic drugs play a vital role in making medicines more affordable for patients. By reducing barriers to generic market entry, promoting transparency, and encouraging competition, policymakers can help ensure that patients have access to affordable and effective therapies. As Hussain Lalani, a Harvard T.H. Chan School of Public Health researcher, noted, “Everything is clear, and there are no hidden fees” when it comes to generic drugs. By focusing on generics, we can take significant steps towards making medicines more affordable and improving public health.
References:
- Accessible Medicines. (2017). Generic Drug Access & Savings in the U.S. Retrieved from https://accessiblemeds.org/sites/default/files/2017-07/2017-AAM-Access-Savings-Report-2017-web2.pdf
- FDA. (2023). Generic Competition and Drug Prices. Retrieved from https://www.fda.gov/about-fda/center-drug-evaluation-and-research-cder/generic-competition-and-drug-prices
- Harvard T.H. Chan School of Public Health. (2023). Making Prescription Drugs Affordable. Retrieved from https://www.hsph.harvard.edu/news/features/making-prescription-drugs-affordable/
- National Academies of Sciences, Engineering, and Medicine. (2018). Making Medicines Affordable: A National Imperative. Retrieved from https://nap.nationalacademies.org/read/24946/chapter/1
- National Academies of Sciences, Engineering, and Medicine. (2018). Summary. Retrieved from https://nap.nationalacademies.org/read/24946/chapter/2
