Matrix Global Advisors analysis shows quantifiable negative impact and a less competitive marketplace with potential lost savings of billions per year
WASHINGTON (July 14, 2025) — The Association for Accessible Medicines today commented on a white paper released by Matrix Global Advisors, Long-Term Effects of Medicare Price Negotiations on Drug Competition, which analyzes the impact and unintended consequences of the Medicare drug price negotiation program on generic and biosimilar medicines, the affect it will have on patient access to life-saving and cost-effective medicines, as well as the long-term impact on development of new lower-cost medicines.
“Almost all the Medicare negotiated drugs have a generic or biosimilar equivalent in the pipeline, which in turn have a significantly lower cost,” said John Murphy III, President and CEO of AAM. “The Medicare drug price negotiation program artificially extends the lifecycle of the brand version, resulting in higher costs for seniors. The MGA analysis quantifies the real-world implications not only on the cost of medicines, but the long-term negative impact on future development of generics and biosimilars, resulting in fewer competitors and more delayed competition. The better option is the proven success of reducing drug prices through generic and biosimilar competition.”
The white paper, by Alex Brill and Christy Robinson, concludes: “A significant unintended consequence of Medicare price negotiations will be a chilling effect on the development and launch of new generic small-molecule drugs and new biosimilars. The threat of a brand drug being selected for price negotiation reduces the willingness of these competitors to undertake the significant risk and expense involved in trying to enter the market. As our analysis demonstrates, there is a quantifiable negative impact on the US healthcare system and patients from a less competitive pharmaceutical marketplace. By our estimate, lost savings from Medicare price negotiations could total billions of dollars annually.”
Brill stated, “Government price-setting introduces uncertainty for generic and biosimilar manufacturers as they weigh which product markets to pursue. This uncertainty will deter or delay competition, and the ensuing lost savings could outweigh the initial savings from price negotiations.”
The Inflation Reduction Act allows, for the first time, the government to negotiate drug prices in Medicare. Ten medicines, all brand drugs, will begin under the negotiated price in 2026. An additional 15 brand drugs have been selected for negotiations for 2027. Almost all 25 medications have a generic or biosimilar equivalent in the pipeline. The price for the generic or biosimilar versions of the program’s medicines are significantly less expensive than the brand version or the Medicare negotiated price.
The MGA analysis estimates unrealized annual savings of up to 88% of brand sales per affected generic drug and 54% of brand sales per affected biologic. The lost savings could persist for years and could total billions of dollars. MGA estimates lost savings over a four-year period of $2.5 billion for a lower-sales drug and $12 billion for a higher-sales drug. Up to 22 new molecular entity generics and 3.7 biologics could potentially be impacted every year. The report points out that generic drugs can achieve discounts of up to 97% compared to brand prices.
Blog: Long-Term Effects of Medicare Price Negotiations on Drug Competition
AAM Statement on Medicare Drug Price Negotiation List
Blog: The IRA Hurts Generic and Biosimilar Medication Competition
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About AAM
The Association for Accessible Medicines, your generics and biosimilars industry, is driven by the belief that access to safe, quality, effective medicine has a tremendous impact on a person’s life and the world around them. AAM represents the manufacturers of finished generic pharmaceuticals and biosimilars, manufacturers of bulk pharmaceutical chemicals, and suppliers of other goods and services to the generic industry. Generic pharmaceuticals are 90 percent of prescriptions dispensed in the U.S. but only 13.1 percent of total drug spending.
About the Biosimilars Council
The Biosimilars Council, a division of the Association for Accessible Medicines, works to ensure a positive environment for patient access to biosimilar medicines. The Biosimilars Council is the leading source for information about the safety and efficacy of more affordable alternatives to costly brand biologic medicines. Areas of focus include public and health expert education, government affairs, legal affairs, and regulatory policy. More information is available at biosimilarscouncil.org.
