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Where would we be with no generics?

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The numbers are in for medication spending in the U.S. for the year 2015. And the story headline could read: Thank You, Generic Medication Industry.

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Robert Coopman

Another headline for the same story could read: Alarming U.S. Medication Cost Increase of 12% for 2015.

Both headlines would be defensibly accurate. The details are in the continuing bifurcation of increasing costs for brand medications and declining costs for long-standing generic ­medications.

From the brand side, new high-cost biologic treatments skew average brand medication prices greatly to the up-side. Continuing cost increases for existing brands exacerbate continuing higher average brand costs.

Purely from a cost perspective, ignoring the good that comes from brands treating heretofore untreatable maladies, cost control performance of generic medications is the real story. It is so much a positive story that one is left to wonder how the medication industry in the U.S. would perform in the absence of generics.

How would the average individual or family cope with medication prices? What would co-pay structures look like? How would health plans manage the balance of spend among hospitals, doctors and medications? It would be a much different reality than today.

cdr-filler-opinion-750That said, the story of interest is in the details of our current generic ­reality.

Many of the most widely used generic medications were less costly at the end of 2015 than at the beginning of the year. Details to support that claim are available from the drug price comparison site GoodRx.

For example, the cost of atorvastatin, the generic form of Lipitor, dropped more than 8% over the course of 2015. A 30-day supply of montelukast, the generic form of singular, fell nearly 20% to approximately $18. A 30-day regimen of fluoxetine, generic for Prozac, fell more than 30% to a mere $5.

There can be no question that competitive market forces are at work in the generic drug industry.

While this is all good news for total health care spending in the U.S., it must be recognized that there is a bottom at which manufacturers and marketers can still perform financially. So we cannot expect cost decreases of long-standing generic medications to go on forever.

On the positive side for generics, 2016 should see the introduction of generic versions of Crestor, Nuvigil and Gleevec, among others with lower total sales volumes. In the aggregate, these new generics will serve to further continue the decline in overall generic drug costs.

Robert Coopman is president of Robert Coopman Consultants, based in San Antonio. He can be contacted at rcoopman67@gmail.com.


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