U.S. Consumers Overpay for Generic Drugs

Abstract

Growing evidence indicates U.S. consumers and employers and the government often overpay for generics as pharmacy benefit managers (PBMs) and their affiliated insurer companies game opaque and arcane pricing practices to pad profits. PBMs played an essential early role in driving U.S. uptake of generics. However, PBMs’ current practices—coupled with market distortions within the pharmaceutical supply chain—have inflated retail generic prices. Commercial tactics such as spread pricing, copay clawbacks and formularies that advantage branded drugs over less expensive generics have funneled the savings from low-cost generics into intermediaries’ pockets, rather than the pockets of patients. Greater transparency across the generic supply chain and policies to spur competition within the generic industry can help ensure that patients continue benefiting both clinically and financially from generics.

Key Takeaways

• Generic prescription drugs save the U.S. healthcare system money overall.
• Growing evidence shows that U.S. consumers often overpay for generics as pharmacy benefit managers game opaque and arcane pricing practices to pad profits.
• Greater transparency across the generic prescription drug supply chain and policies to spur competition and deter anticompetitive practices can reduce generic drug costs for patients.

#This summary was reprinted with permission. The full article can be found here.