biosimilars and generics from the manufacturer to the pharmacy to the patients, partners all along the supply chain need to work together. Manufacturers engage with regulators through the appropriate application review and approval processes to ensure that the products being delivered to the market, once approved, are safe and effective.
And when patients have access to generic and biosimilar medicines, the results speak for themselves. In 2019, America’s patients and our health care system saved $313 billion through safe, affordable FDA-approved generic medicines. Medicare beneficiaries saved an average of $1,053 per participant, and Medicaid enrollees saved $770 per individual. Meanwhile, biosimilars saved patients $2.2 billion in 2019. These findings from the Association for Accessible Medicines’ latest annual Access & Savings Report confirm the year-after-year increase in savings across ages, conditions and payers. Generics account for 90% of prescriptions dispensed, but represent just 20% of prescription spending.
In September, I assumed the role of president and chief executive officer of AAM after 12 years leading the National Pharmaceutical Council and seven years with America’s Health Insurance Plans. Throughout my health care career journey, I have seen — and personally experienced — the enormous value that generic and biosimilars medicines provide to patients and taxpayers every day. The industry also contributes to our economy; manufacturers of generics and biosimilars employ more than 52,000 workers across 149 manufacturing facilities in the U.S.
While many challenges remain, Congress made progress toward greater access over the last two years:
- Passage of the CREATES Act (December 2019). This legislation put an end to gamesmanship that brand-name companies have used to prevent generic and biosimilar manufacturers from being able to purchase the drug samples needed to seek FDA approval.
- Ratification of the USMCA (January 2020). Replacing the North American Free Trade Agreement, the U.S.-Mexico-Canada Agreement balances incentives for innovation and enhancing patient access to more affordable generics and biosimilars.
- Increased Transparency of the U.S. Pharmaceutical Supply Chain (March 2020). Thanks to this measure, additional information on potential disruptions, on manufacturers’ contingency plans and on the volume of medicines manufactured will be provided to the FDA to help strengthen the supply chain.
In order to build on past accomplishments and keep up the momentum on behalf of America’s patients, the industry stands ready to partner with federal and state lawmakers of both parties to ensure the sustainability of the generics and biosimilars markets, enhance the security of the U.S. pharmaceutical supply chain and lower prescription costs for Americans. Here are some of the opportunities we see for 2021:
- Increasing Patient Access to Biosimilars. Proposed legislation would modestly increase Medicare Part B reimbursement for biosimilars. Other proposals include establishment of a Medicare shared-savings demonstration program and reduced cost-sharing for patients in Medicare Part B. Each of these efforts would assist patients in enabling their access to important biosimilar medications.
- Lowering Prescription Drug Costs for Seniors in Medicare Part D. Legislation would ensure coverage of newly available generic and biosimilar medicines, reduce patient cost-sharing through proper formulary tier coverage and create a new specialty tier for biosimilars. Ensuring first generics are covered at launch with lower cost-sharing and creating a dedicated tier for specialty generic and biosimilar medicines could save taxpayers more than $7 billion over 10 years and reduce premiums for seniors by more than $2.5 billion over 10 years, while also lowering their out-of-pocket costs.
- Addressing Patent Abuse. The Hatch-Waxman Amendments of 1984 and the Biologics Price Competition and Innovation Act of 2010 gave rise, respectively, to the generic and biosimilars industries in the United States. Both pieces of legislation intended a balance between access and innovation. Anticompetitive tactics to prolong a brand-name drug’s monopoly put a thumb on the scale. Inter Partes Review (IPR) allows patent experts to take a second look at patents and ensure that every granted patent represents true innovation. Legislative proposals to dilute IPR should be rejected in favor of actions that would strengthen and improve it, further lowering prescription drug prices.
- Fixing the Medicaid Generics Penalty. Paid by generic drug manufacturers when the Average Manufacturer Price of a generic drug sold to Medicaid rises faster than the Consumer Price Index over a three-month period, this ill-conceived penalty is often triggered by forces beyond the manufacturer’s control. Proposed legislation would rectify the problem, reducing the risk of drug shortages and benefiting patients through sustainable access to low-cost generics.
The vibrant generics and biosimilars industry is a reliable engine for patient savings, providing great value to the U.S. health care system. Bipartisan action is needed from President-elect Joe Biden and lawmakers in Congress to ensure patients are able to benefit from savings generated and access to medicines is achieved, which is the realization of the promise of the generic and biosimilar industry. The AAM staff and I look forward to collaborating with partners across the health care sector to enhance the savings and value of our medicines in 2021 and beyond.
Dan Leonard is the president and chief executive officer at the Association for Accessible Medicines.