REMS Abuse Stifling Generic Competition, Increasing Drug Costs

Published Online: Tuesday, August 5, 2014

A report released by the Generic Pharmaceutical Association (GPhA) on July 23, 2014, finds that abuse of FDA drug safety programs to prevent generic competition has delayed the arrival of 40 potential generic drugs, costing patients $5.4 billion annually. 

The report, conducted by Matrix Global Advisors, finds that risk evaluation and mitigation strategies (REMS), originally established to prevent the misuse of high-risk prescription medications, are being used by drug companies to limit generic competition by denying generic firms access to product samples needed to develop new generic versions of medications. The researchers of the report calculated the cost of REMS and other restricted-access program abuse for the health care system and patients. 

Of the total $5.4 billion in annual costs associated with REMS abuse, the federal government lost $1.8 billion, private insurers lost $2.4 billion, and consumers paid $960 million extra in out-of-pocket pharmaceutical costs. The report also estimated that after biosimilars enter the market, the misuse of REMS and other programs would result in approximately $140 million in lost savings for every $1 billion in biologic sales.

“For patients waiting for generic alternatives to expensive brand medicines, every day counts. For lawmakers struggling to balance the budget, every dollar matters,” said Ralph G. Neas, GPhA president and CEO, in a press release. “This study shows that by using safety programs as a smokescreen for anticompetitive practices, some brand companies are delaying generic choices for patients and driving up drug costs.”

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