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Generic drug prices decrease, brand-name prices increase Posted 07/12/2012

Over the last year brand-name drugmakers have raised prices by 13.3%, more than six times the consumer inflation rate. Generic drug prices, on the contrary; actually decreased by 21.9% during the same period.

According to the study carried out by pharmacy benefits manager Express Scripts, from September 2011 to September 2012 the 35.2% net inflationary effect is the largest difference between brand-name and generic drug prices since 2008.

The increase in brand-name drug prices means that drugs which cost US$100 in January 2008 would now cost US$163.08, whereas a generic drug of the same price would now cost only US$60.96.

Despite the widening price gap, the US has only increased its year-to-date drug spending by 3.5%. This is attributed mainly to switching to generics, which has mitigated the inflationary effect, and also caused an average decrease in patient out-of-pocket costs. Although the study points out that there are still huge saving opportunities remaining for patients who continue to choose brand-name drugs when more affordable alternatives exist.

US spending on specialty medicines, such as biologicals, has contributed the most to the spending increases, with an increase of 22.6% in the period September 2011 to September 2012. The reason for this is that while alternatives exist for traditional small-molecule drugs very few exist for more complex biologicals.

The US has yet to approve practical guidelines for biosimilars in the US [1], meaning that any alternatives to current biologicals have to go through the same–expensive and lengthy–development procedure as an originator drug.

The continued rise in spend on specialty medications underscores the US’s need to accelerate the pathway for biosimilars. Additional competition within these therapy classes would provide a necessary market control against specialty drug price inflation.

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1.  GaBI Online - Generics and Biosimilars Initiative. FDA finally issues draft biosimilar guidance [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2012 Dec 7]. Available from: www.gabionline.net/Guidelines/FDA-finally-issues-draft-biosimilar-guidance

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Source: Express Scripts

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