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Generics’ value goes beyond price to quality, efficacy

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Dan Leonard

U.S. patients may not fully understand the complex manufacturing and market dynamics that allow them to pay an average of just $6.61 for their generic prescription medicines at the pharmacy counter. That’s why tens of millions of Americans entrust their health to generics and biosimilars. In fact, fully 90% — nearly 4 billion in 2020 — of prescriptions in this country are filled by generic and biosimilar medicines.

The value proposition of generics goes beyond price. On quality and effectiveness, too, generics are the value choice. A recent JAMA Network Open study found that 252 of 252 generic drug product samples met the U.S. market standards for major quality attributes. The findings apply to internationally as well as domestically manufactured medicines.

While rising prices for fuel, cars and other products dominate the news, prices of generic medicines (in sharp contrast to those of brand-name drugs) are actually falling. This is a welcome development for patients and their families, but for the industry represented by the Association for Accessible Medicines, it represents an ongoing challenge. While the generics and biosimilars industry withstood the logistical and supply chain complications of the global COVID-19 pandemic, we’re coming out of the pandemic facing the very issues that challenged us beforehand, including:

  • Brand-name manufacturers constructing so-called patent fortresses that keep affordable generic and biosimilar products off the market.
  • The consolidation and growing power of stakeholders in the distribution chain.
  • Well-intentioned policy makers who fail to understand the market dynamics in which our manufacturers operate. The heart of the matter is this: While generics function the same way as brand-name drugs, generic and brand markets function very differently, and policy shifts need to account for these differences.

Unless something changes to alter the trajectory, pressure on the industry could result in shortages and a curtailing of the accessibility that tens of millions of patients have come to depend upon. Safe, affordable and effective generic drugs only exist when their manufacturing makes sound business sense.

AAM and its members work tirelessly to promote and protect accessibility, educating federal and state policy makers, the health care sector and the general public about the industry’s value proposition through resources such as:

  • The U.S. Generic and Biosimilar Medicines Savings Report, which highlights $338 billion in savings in 2020, and nearly $2.4 trillion in the last decade.
  • Voices of Access 2022, which showcases patient stories, in their own words — along with perspectives from health care professionals and the AAM team. “I’m on Medicare,” says K.C., 73, of Seattle, and when I pick up my prescriptions, it doesn’t cost me anything. That’s a pretty good deal.”
  • Our Blueprint for Enhancing the Security of the U.S. Pharmaceutical Supply Chain, which makes the case for incentivizing U.S. manufacturing, securing the active pharmaceutical ingredients (APIs) supply chain and expanding the market.

AAM welcomes the partnership of the retail pharmaceutical industry to protect existing accessibility through a focus on establishing a regulatory and legislative climate that encourages generic and biosimilar entry, to ensure that only true innovation is rewarded and anticompetitive tactics are eliminated, and to align Medicare policies (for seniors like K.C.) to encourage use of lower-priced generic and biosimilar medicines.

Our association also counts on champions of access within the drug store industry to anticipate and prepare for industry changes of the coming decades. Among the trends we are watching, the most critical may be the rise of biosimilar and specialty medicines. As Heidi Hunter, president of Cardinal Health Specialty Solutions, recently told Chain Drug Review, “While market challenges remain, most health care providers have a strong interest in using biosimilars to broaden patient access and drive more affordable care for their patients.”

Many readers of this publication already know about the promise of biosimilars, but to refresh you on the facts:

  • Brand-name biologics are the most expensive prescription drugs on the market. Although they represent around 2% of U.S. prescriptions filled in the United States, they are responsible for nearly half of all U.S. prescription drug spending.
  • Biosimilars, which are highly similar to brand-name biologics with no clinically meaningful differences in safety, purity or potency, have yielded over $12.6 billion in savings since 2011 and are projected to yield $133 billion in savings over the next five years, given policies that ensure entry and coverage.
  • The Food and Drug Administration has approved 31 biosimilars; 20 are on the market, with prices that average 30% less than their reference brand biologic.
  • As a direct result of biosimilar competition, oncology spending growth declined from about 16% in 2018 to 10% in 2020, and these declines are projected to decline further.

Last month, at AAM’s annual conference, we welcomed Dr. Alex Oshmyansky, founder and chief executive officer of Mark Cuban Cost Plus Drug Co., who said of our industry: “It’s hard to see a better, more effective part of the health care system as a whole.” We’re proud of this recognition and look forward to protecting and advancing access to medicines throughout the country.

Dan Leonard is president and chief executive officer of the Association for Accessible Medicines. He can be reached at [email protected]


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