Why Generic Drugs Aren’t Getting Cheaper for You
Written by
Laura Bogart
Edited by
Chris Cluff
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One of the common causes for people existing across the political aisle is the cost of prescription drugs. In fact, one study published by JAMA indicated that roughly 79% of surveyed adults found the price of prescription drugs was “unreasonable” — even as 59% of respondents claimed that accessing these drugs made their lives better.
No wonder that many people with health conditions have come to rely on generic drugs to help their bodies — and their budgets.
When the patents on brand-name medications expire, drugs that are chemical copies can enter the market after a shorter FDA approval process that ensures they’re as safe and effective as the original. Ideally, these generic drugs are significantly less costly than their brand-name counterparts.
Despite the cultural and political push to make prescriptions less expensive, some generic drugs for serious conditions like cancer and multiple sclerosis are still incredibly expensive. The Wall Street Journal reported that companies like CVS Health and Cigna priced some specialty generic drugs “at least 24 times higher on average than roughly what the medicines’ manufacturers charge.”
That report disclosed that these companies, along with UnitedHealth Group, which owns a large health insurer, also own the country’s three biggest pharmacy-benefit managers (PBMs). PBMs administer prescription drug benefits on behalf of health insurers, employers, Medicare Part D plans and other payers — giving them incredible power in determining the medicines our health plans cover and how much each of us must pay via out-of-pocket costs such as coinsurance and deductibles.
While PBMs are incentivized to minimize costs for medicines from independent pharmacies, they benefit from higher prices for drugs dispensed from their own pharmacies.
The role PBMs have played in keeping certain drug prices higher for consumers has not gone unnoticed by legislators. In a display of bipartisanship, Republicans and Democrats on the House Oversight and Accountability Committee started investigating PBMs, looking into drug price rebates and fees. This investigation comes on the heels of inquiries from the Federal Trade Commission and several state governments.
However, representatives from PBMs claim that pharmaceutical companies and manufacturers should shoulder the blame for manipulating the patent system to avoid competitiveness with pricing.
This argument does carry weight with a broad swath of Americans. In a poll conducted by KFF, a non-partisan group focused on health policy research, polling and news, about eight out of 10 respondents said drug company profits are a major factor in prescription drug costs. Polling also showed that three out of four adults surveyed believed there was “not as much regulation as there should be” regarding drug prices.
While there seems to be a range of reasons that some generic drugs can’t get away from the pricing pinch, a very clear group suffers the most under higher costs: patients and consumers.
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