Jun 1, 2022 - Health

Americans overpay for generic drugs, paper says

Illustration of a vial with price tags on it showing the cents symbol.
Illustration: Aïda Amer/Axios

U.S. consumers overpay for generic drug prescriptions by as much as 20% and it's largely because of the industry middlemen known as pharmacy benefit managers (PBMs), according to a white paper from the USC Leonard D. Schaeffer Center for Health Policy & Economics.

Why it matters: PBMs are powerful, secretive and heavily consolidated, and have a big impact on drug prices in America.

  • This report focuses specifically on generics, which account for more than 90% of U.S. prescriptions and 18% of drug spending.

The big picture: PBMs are facing increasing scrutiny from both Congress and the Federal Trade Commission — as well as the now customary wrath of drugmakers, pharmacies, hospitals and patient groups.

  • Among the strategies driving up costs for generics, the researchers said, are copay clawbacks where overpayments for drugs are pocketed by PBMs, as well as spread pricing where a PBM charges a health insurer a higher price for a drug than the amount it reimburses a pharmacy for — and pockets the difference.

What they're saying: "Generics are overlooked when we talk about drug pricing issues in this country," said Erin Trish, co-director of the USC Schaeffer Center. "But the same lack of transparency that is causing outrage over high and rising spending on branded drugs is also creating issues in the generic drug space."

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