Savings from generics and biosimilars totaled $338 billion in 2020.
When patients receive their prescriptions at the pharmacy counter, the pharmacist is handing them a generic medicine nine times out of 10. Because of that, their co-pay is about 8.5 times more affordable than those for brands; 93% of the time generic co-pays are below $20.
Doctors, pharmacists and patients count on the value proposition of these safe, effective, affordable medicines. In 2022, the generic and biosimilars industry is poised to build on the historic gains of recent years — delivering ever-increasing savings to U.S. patients and the health care system. As the latest edition of AAM’s “U.S. Generic & Biosimilars Savings Report” (based on data from IQVIA) reveals:
• Savings from generics and biosimilars totaled $338 billion in 2020 — a $23.5 billion increase from the previous year.
• New generic and biosimilar entrants generated have $124 billion in savings in 2020; the annual growth rate of savings from this category exceeds 20%.
• Generic medicines used by seniors in the Medicare program account for $120 billion in savings. Nonetheless, many seniors are paying too much for their generics as a result of increasing co-pays, even when the generic price has declined. In fact, almost half of all seniors in Medicare paid the full cost of their generic at least once in 2017 because they faced co-pays higher than the actual cost of the drug.
• Biosimilar savings are projected to reach $133 billion through 2025. The increased adoption of biosimilars is bending the curve in oncology spending, cutting the growth rate roughly in half since 2019.
• Together, biosimilar and generic medicines generated $16 billion in oncology savings in 2020, up from about $13.5 billion in 2019. Nevertheless, IQVIA’s “Settings of Care” report from March 2021 underscores the need and potential for policy proposals to encourage physicians to leverage biosimilar competition for their patients.
• Altogether, generics and biosimilars treat psychological disorders, infectious diseases, cardiac and respiratory conditions, diabetes, and a broad range of cancers. However, unfortunately, proposals that threaten to reduce incentives for patent challenges and early generic entry hamper generic competition and delay patient access.
At the federal and state levels, some proposed legislative solutions are intended to aim at skyrocketing brand-name drug prices but inadvertently target generics and biosimilars — the primary driver of savings. AAM and the Biosimilars Council will be working throughout 2022 to educate policy makers and to advance concrete solutions to preserve and expand savings, including:
• Modernization of Medicare Part D to correct perverse incentives and expand access to new, lower-cost generics; aligning plan incentives for using low-cost medicines by decreasing plan liability for biosimilars and generics; requiring Part D plans to review first generics and biosimilars within a specified time frame after their launch; mandating a preferred specialty tier with lower cost-sharing option for generic and biosimilar products; and prohibiting or restricting plans’ ability to place generic drugs on non-generic tiers.
• Encouraging CMS to allow midyear formulary changes, which clarifies plans may make expedited formulary substitutions for biosimilars at launch paralleling the process new generics undergo.
• Guidance that will give the biosimilar industry a clear, consistent framework to demonstrate interchangeability, which in turn will encourage manufacturers to invest in research and development and to seek the designation of interchangeability for their products.
AAM has developed a blueprint to enhance the security of the pharmaceutical supply chain which highlights incentives necessary for increased U.S. production of medicines that FDA considers most critical to ensuring the health of America’s patients. Additionally, AAM anticipates doing critical work in conjunction with the Food and Drug Administration, including:
• Collaborating with industry and regulatory stakeholders on draft guidance documents providing input on topics such as mitigating nitrosamine impurities.
• Continuing to engage with FDA on in-person domestic inspection ramp-up, foreign inspection restart, and remote interactive evaluations of drug manufacturing and bioresearch monitoring facilities
• Providing the industry’s work and perspective on quality, including quality metrics.
The generics and biosimilars industries recognize the critical role played by pharmacists and pharmacies in keeping patients informed about which medicines to trust. AAM and its members look forward to fortifying this partnership and serving as a resource for critical information in 2022 and beyond.
Dan Leonard is the president and CEO of Association for Accessible Medicines.