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Dispelling the Myth: Generics Are Not Always Low Cost

 

Dispelling the Myth:
Generics Are Not Always Low Cost

When we hear the terms “generic” or “off-brand,” we typically think that the product would be a significantly cheaper alternative than the name brand. Well, when it comes to generic drugs, that’s not always in the case. Here are five facts plan sponsors should know:

1. Some generic drugs have increased in price by more than 1,000%. This has been drawing the attention of media, lawmakers, the FDA, and the U.S. Department of Justice1,2 — and for good reason.

2. Between 2013 and 2015, commonly used generic medications for blood pressure, inflammation, cholesterol, diabetes, and infections suddenly spiked 300%-500% or more in cost.3

3. 14% of commonly used generic antibiotics sustained large price increases of 90% or more.4

4. Causes of rising generic costs are multifactorial — lack of competition, market manufacturer consolidation, closed distribution systems, stringent manufacturing standards, raw material shortages, and FDA backlog.5

5. The Department of Justice and 45 states are claiming that some generic drug prices are the result of price fixing. This alleged collusion may have cost U.S. businesses and consumers more than $1 billion.6 Congress launched investigations and the Department of Justice issued subpoenas to some generic drug companies executives as part of an investigation into violations of anti-trust laws.

According to the FDA, nine out of 10 prescriptions filled in the U.S. are for generics.7 As we continue to see how rising generics prices put cost burdens on clients and members, how do we lower generic drug spend while ensuring members still get the treatments they need?

The key lies in shifting members from high-cost generics to lower cost, clinically appropriate alternatives — while minimizing member and provider disruption. By tracking list prices, finding alternatives that have similar safety and efficacy, and educating members, MedImpact has saved our clients $30 million since 2015.

Time will tell whether scrutiny of rising generic costs will alter access and affordability. But in the meantime, MedImpact will continue to develop innovative solutions to minimize the impact on plans and members.

Case Study: HCG Spotlight

From a large hospital system to a small self-insured employer, learn how MedImpact significantly reduced high-cost generic spend for five plan sponsors — ranging from $1.30 to $4.33 PMPM savings.

Download the full Case Study to read more.

1. MarketWatch. Why Drug Prices Remain Insanely High and 6 Things You Can Do To Save: www.marketwatch.com/story/six-tips-for-fighting-rising-prescription-drug-costs-2015-09-15

2. JAMA. The High Cost of Prescription Drugs in the US: Origins & Prospects for Reform: https://jamanetwork.com/journals/jama/fullarticle/2545691

3. https://www.courant.com/news/connecticut/hc-news-generic-drug-lawsuit-20190519-ce473szxibc4viu3fpqmxv4sxa-story.html

4. Alpern JD et al. Trends in Pricing and Generic Competition Within the Oral Antibiotic Drug Market in the United States. Clin Infect. Dis. 2017;65(11):1848-52.

5. Academy of Managed Care & Specialty Pharmacy: “High-cost generic programs decrease drug spend in 5 plans” www.managedhealthcareexecutive.com/business-strategy/high-cost-generic-programs-decrease-drug-spend-5-plans

6. NPR. Probe Into Generic Drug Price Fixing Set To Widen; March 2018. 7. New England Journal of Medicine: High-Cost Generic Drugs — Implications for Patients & Policymakers. www.nejm.org/doi/pdf/10.1056/NEJMp1408376

7. https://www.fda.gov/drugs/buying-using-medicine-safely/generic-drugs

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