New Campaign Highlights Generic Drug Markups

The Association for Accessible Medicines new “Markup Madness” campaign highlights the markups that middlemen add to the price of a generic drug from the time it leaves the factory until it’s taken by a patient.

Using data from IQVIA, the campaign contrasts the price that a generic manufacturer charges compared with the cash price that a patient pays at the pharmacy counter for a given generic medicine.

Allen Goldberg

Some generics have as much of a 10,000-times increase from the manufacturers weighted average manufacturers price (AMP) to what a patient could pay at the pharmacy if they chose to pay the cash price, Allen Goldberg, senior vice president of communications for AAM, told FormularyWatch®.

For example, gabapentin’s AMP price is $9.04 but at the pharmacy, patients could pay $106 if they were paying cash. Gabapentin is used to treat seizures and nerve pain. Another example is the heartburn medication omeprazole (generic of Prilosec), whose AMP price is $0.90 but cash-paying patients could face a $74 charge.

“All Americans need to question why cash or out-of-pocket costs for generics do not always reflect how affordable these safe, effective medicines really are,” Goldberg said. “Generic manufacturers sell their medicines into the value chain at a very low price point, but that isn’t necessarily the patient’s experience. Unlike brand drugs where the manufacturer stands to profit the most, generic medicines are often exploited by middlemen that seize significant profits at the expense of patients and the companies that make the medicines.”

Policymakers, health care providers, and consumers all need to be educated on the challenges of middlemen markup and other actions that hamper generic and biosimilar usage, according to Goldberg.

“We need to modernize the system that now rewards the brand-name drug manufacturers, benefits the middlemen and allows patient access to lower cost generic and biosimilar medicines to be delayed,” Goldberg said.

Any legislative effort — especially a revived version of the House-passed Build Back Better Act — will fail to meaningfully lower the cost of prescription drugs for patients if it does not address how brand drug rebates “continue to distort Medicare Part D coverage and seniors’ access to lower-cost generic and biosimilar medicines,” Goldberg noted.

“Brand-name drug companies negotiate rebates with pharmaceutical benefit managers (PBMs) in order to secure favorable formulary coverage, in many cases limiting patient access to lower-cost generic or biosimilar medicines,” Goldberg said. “This symbiotic relationship rewards both PBMs and brand drug manufacturers but saddles patients with higher out-of-pocket costs.”

Since 2011, the number of generic drugs on the lowest cost-sharing formulary tier in Medicare Part D declined from 71% to 14%, he pointed out.

In addition, newly approved generic drugs face “unacceptable” delays (up to three years) in Medicare coverage that prevent patients from reaping the savings of lower-cost medicines and getting the full value of their Part D premium, according to Goldberg.

“As a result, patients are now paying more — even sometimes paying the full cost of the drug — even as generic prices have continued to fall. Rebates keep brand drug prices high and access to generics and biosimilars out of reach for far too many patients. More madness,” Goldberg said.