GPhA to Congress: Embrace Five Opportunities for More Generic Drug Savings

Press Release

WASHINGTON DC —

Statement by Chip Davis, President and CEO, GPhA:

“Our briefing for Congress today, Busting the Myths on Affordable Medicines: How Generics and Biosimilars Drive Savings, Not Costs, set out to reiterate what was stated last week in a new analysis from the Department of Health and Human Services (HHS): the ‘evidence strongly supports the conclusion that generic drug prices are not an important part of the drug cost problem facing the nation.’ In fact, generic drugs drive savings, not costs. While Congress and others discuss ways to lower health spending, the focus should be on increasing pharmaceutical competition and expanding access to safe, effective and more affordable generic drugs.

The new HHS issue brief, Understanding Recent Trends in Generic Drug Prices, revealed that about two-thirds of generic products appear to have experienced price declines in 2014. This report and many others underscore that generics are essential to health savings and continue to put more affordable treatments within reach for millions of patients.

Generics are 88% of prescriptions dispensed in the United States, delivered at only a third of total prescription drug costs. Generics saved the U.S. health system $254 billion in 2014, according to the most recent Generic Drug Savings in the U.S. report compiled by IMS Health on behalf of GPhA.

Adam Fein’s Drug Channels blog reported that in the second quarter of 2015 almost half (44 percent) of all generic drugs experienced a decline in cost and many others had either no increase or only a modest increase in cost. Thirty of the 50 most common generics declined in price from January to December 2015, according to the website GoodRx. And, the 2014 Express Scripts Drug Trend Report showed that since 2008, the overall price of generic drugs has been cut roughly in half.

It is clear that generics are a long-term solution to rising health costs. That’s why it is puzzling that Congress chose to increase the Medicaid rebate for generic drugs as part of the October 2015 budget agreement. This provision will add significantly to generic manufacturers’ costs, making it much harder to produce generics across many therapeutic classes.

The increased rebate could reduce generic competitors on the market, increasing vulnerable beneficiaries’ reliance on older, more expensive branded products, and causing Medicaid budgets to soar —the exact opposite of what millions of patients need. Congress has put Medicaid savings from generics ($33 billion in 2014) at risk. This provision should be immediately repealed.

The dialogue about what is really happening in the generic market is broken and too often derails the pursuit of viable solutions to rising health costs. Moving forward, Congress should avoid crafting measures detrimental to the entire universe of more than 14,000 generic drugs — a large majority of which continue to decline in cost — in their efforts to address individual outlier company pricing decisions.

Congress and others must exercise more caution to avoid upending our health system. Instead, GPhA supports five solutions for increasing pharmaceutical competition:

• Ensure a fully-resourced Food and Drug Administration (FDA) can address the backlog of more than 3,800 generic drug applications stalled while waiting for approval and shorten FDA median generic drug approval timelines, which, at the industry’s best estimate, currently stand at 48 months.

• Increase generic utilization among the low-income Medicare population, which could save up to $17.7 billion over 10 years.

• Pass the bipartisan FAST Generics Act to curb some brand drug company abuses of FDA safety programs such as Risk Evaluation and Mitigation Strategies (REMS) used to keep generics off the market, an estimated savings of $2.4 billion over 10 years.

• Work closely with industry and regulatory partners to ensure that the framework for biosimilars, safe and effective alternatives to costly brand biologic drugs, expands and expedites patient access. Estimated savings biosimilars savings range from $44 billion to $250 billion.

• Repeal Sec. 602 of the Bipartisan Budget Act of 2015. The Medicaid rebate increase for generic drugs in the budget deal is bad for Medicaid and its beneficiaries, bad for taxpayers, and it should be immediately repealed.

GPhA will continue to highlight the undeniable role of generics in lowering health costs. Together with Congress, the Administration, regulators, stakeholders and others we can do more to ensure the generic pharmaceutical industry continues to enhance patient access and drive patient savings for years to come.”

About GPhA

GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the generic industry. Generic pharmaceuticals fill 88 percent of the prescriptions dispensed in the U.S. but consume just 28 percent of the total drug spending. Additional information is available at gphaonline.org. Follow us on twitter: @gpha.