Last month, lawmakers called a familiar roster of CEOs from major pharmaceutical companies and pharmacy benefit managers (PBMs) to take their annual tongue-lashing about the cost of prescription medications. As ever, the hearing devolved into a finger-pointing blame game and missed the point entirely.
The fundamental truth is that there is one – and only one – mechanism that has proven time and again to lower drug prices: generic and biosimilar competition. According to the FDA, competition from generic versions of brand-name pharmaceuticals result in an astounding 95% price drop in a mature market. As a result, generics and biosimilars account for 91% of prescriptions filled in the U.S. but only 18% of prescription spending.
