This article first appeared in Managed Healthcare Executive on February 1, 2021.
Generic drugs account for 90% of the prescriptions filled in the United States. They are the backbone of health care providers’ treatment protocol and they are remarkably cost effective: Despite being 90% of the prescriptions filled, generics account for only 20% of drug spending. But, while generics are indispensable to the American health care system and central to the treatment of COVID-19, the industry’s future still remains uncertain.
As President Biden takes office amid a second wave of COVID-19 infections, it’s never been more critical that policymakers recognize the lifesaving role that generic drugs serve. While generic drugs have long been proven to drive down health care costs, the essential role they’ve played during the global pandemic has reinforced the necessity of a healthy generics marketplace and emphasized the need for policy that will support the sustainability of the generics and biosimilars industry.
Over the past year the pharmaceutical supply chain has been scrutinized more closely than ever before. Generic medicines, from anti-inflammatory corticosteroids to sedatives used for intubation, have been the first line of treatment for COVID-19. Increased demand sparked by the pandemic caused strain on supply of medicine and shut down shipping channels. Through innovation, perseverance and grit the system performed and hospitals received the drugs they needed to treat COVID-19 patients.
Today, supply chain discussion is focused on the last mile of vaccine delivery. Public and private sectors have mobilized to distribute tens of millions of doses throughout the country, while getting shots into arms has been more difficult. But as we wait for widespread vaccination, hospitals and patients will continue to rely on generic drugs, reinforcing the purpose that generics serve in keeping American patients alive.
Over the last two years, bipartisan action in Congress and cooperation between government and industry contributed to policy initiatives like passage of the CREATES Act and ratification of the USMCA. More must be done. The generics industry is the only part of the health care sector that experiences price deflation year after year. This deflationary trend combined with fierce competition and anticompetitive abuses from brand-name drug manufacturers can drive manufacturers out of the market. Fewer generic manufacturers will lead to higher drug prices or drug shortages, which would be a disaster for patients.
President Biden’s nomination of Xavier Becerra to lead the Department of Health and Human Services will have far-reaching ramifications on America’s ability to combat the virus and ensure patient access to high-quality, low-cost prescription drugs. Against the backdrop of the COVID-19 pandemic, it will be essential that Attorney General Becerra recognize the essential role that generic and biosimilar drugs play and help advance policy to support the sustainability of the generic pharmaceutical industry in the United States.
It is critical that the 117th Congress, working with Secretary-Designate Becerra and other health care leaders in the Biden administration, make it a priority to address market failures and protect the long-term viability of the industry. Catching up to Europe in the use of biosimilar drugs in place of expensive biologic therapies; ensuring that generic drugs are placed on the correct, lower-cost generic formulary tiers in Medicare Part D; and fixing the Medicaid generics penalty that unnecessarily increases costs and fighting back against patent abuses by brand-name drug manufacturers are bipartisan priorities that will protect America’s patients now and into the future.
AAM’s Prescription for Savings includes specific details on what Congress can do to expand access to low-cost generic and biosimilar medicines.
The health of the generics and biosimilars industry has never been more important to America’s patients. In a letter to Congress, I outlined the specific policy measures that legislators can advance to make a real difference. Working together, we can support the long-term sustainability of this essential industry and continue to expand access to high-quality, affordable, reliable generics and biosimilars.
By Dan Leonard, AAM President and CEO