PBM practices lead US consumers to overpay for generics by 20%

Home/Reports | Posted 01/07/2022 post-comment0 Post your comment

Consumers in the US are overpaying for generics medicines by as much as 20%, a University of Southern California study reports [1]. The white paper calls for transparency across the generic prescription drug supply chain and policies to increase competition and stop anti-competitive practices.

50 MD002352

The report by the University of Southern California’s Schaeffer Center for Health Policy and Economics has found that pharmacy benefit managers (PBMs) are engaging in practices that bring the prices of generics up. PBMs are intermediaries who negotiate price and formulary placement on behalf of health plans.

The report notes that, when available, generics are prescribed 97% of the time. As they are lower-cost alternative to originator products, they can help to bring the cost of medication down overall and provide greater access to treatments.

However, PBM’s have been reported to engage in activities that run counter to the aim of making medicines more affordable to consumers/patients [2, 3]. Their tactics include spread pricing, copay clawbacks and profit-orientated formularies and these advantage branded drugs over less expensive generics. These activities prevent the consumer seeing the financial benefit of using generics and instead the savings end up with the intermediaries. The report highlighted the amount of money that can be funnelled into PBM pockets by citing the case of Medicare Part D standalone drug plans in 2018 where US$2.6 billion more was paid for 184 generic drugs, than was spent by Costco members who paid cash for the same drugs.

Overall, the report notes that these PBM practices are unfair and drive the cost of prescription drugs up.

The USC report concludes by suggesting the implementation of policies that require transparent reporting from PBMs regarding generic drug prices and those that make it possible to audit and review PBM transactions and prices. In addition, it suggests restricting rebate contracting that drives PBMs to prefer brands over generics and using fixed fees per transaction rather than fees based on a share of a drug’s price.

Related articles
Bill introduced in US to cut insulin prices

Spotlight on the role of pharmacy benefit managers in the fight against rising drug prices

LATIN AMERICAN FORUM

The new section of the ‘Latin American Forum’ on GaBI has been launched. The objective of this new section is to provide you with all the latest news and updates on developments of generic and biosimilar medicines in Latin America in Spanish.

View last week’s headline article: Estado actual de los biosimilares de anticuerpos monoclonales aprobados en América Latina

Browse the news in the Latin American Forum!

Register to receive the GaBI Latin American Forum newsletter. Inform colleagues and friends of this new initiative.

LATIN AMERICAN FORUM

Se ha lanzado la nueva sección del ‘Foro Latinoamericano’ sobre GaBI. El objetivo de esta nueva sección es brindarle las últimas noticias y actualizaciones sobre desarrollos de medicamentos genéricos y biosimilares en América Latina en español.

Vea el artículo principal de la semana pasada: Estado actual de los biosimilares de anticuerpos monoclonales aprobados en América Latina

!Explore las noticias en el Foro Latinoamericano!

Regístrese para recibir el boletín informativo GaBI Foro Latinoamericano. Informe a colegas y amigos sobre esta nueva iniciativa. 

  

References
1. Trish E, Van Nuys K, Popovian R. U.S. Consumers overpay for generic drugs. USC University of Southern California. Available from: https://healthpolicy.usc.edu/research/u-s-consumers-overpay-for-generic-drugs/utm_source=newsletter&utm_medium=email&utm_
campaign=newsletter_axiosvitals&stream=top
2. GaBI Online - Generics and Biosimilars Initiative. Reasons and solutions for the high cost of insulin in the US [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2022 Jul 1]. Available from: www.gabionline.net/biosimilars/research/Reasons-and-solutions-for-the-high-cost-of-insulin-in-the-US
3. GaBI Online - Generics and Biosimilars Initiative. Pharmacy benefit managers use spread pricing to increase profits in Michigan [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2022 Jul 1]. Available from: www.gabionline.net/generics/general/Pharmacy-benefit-managers-use-spread-pricing-to-increase-profits-in-Michigan

Permission granted to reproduce for personal and non-commercial use only. All other reproduction, copy or reprinting of all or part of any ‘Content’ found on this website is strictly prohibited without the prior consent of the publisher. Contact the publisher to obtain permission before redistributing.

Copyright – Unless otherwise stated all contents of this website are © 2022 Pro Pharma Communications International. All Rights Reserved.

comment icon Comments (0)
Post your comment
Related content
Brazilian market of biosimilars
Brazil flag V13C03
Home/Reports Posted 20/05/2022
China–EU market expansion for biosimilars
18794124_l
Home/Reports Posted 16/05/2022
Most viewed articles
About GaBI
Home/About GaBI Posted 06/08/2009
EU guidelines for biosimilars
EMA logo 1 V13C15
Home/Guidelines Posted 08/10/2010