Enhancing Meaningful Transparency

In recent years, many of the proposed legislative solutions in states have focused solely on price transparency by pharmaceutical manufacturers. While well intentioned, often transparency legislation does not factor in the difference between brand and generic medicines in the marketplace and ignores the roles others in the medicine value chain play in setting the prices patients pay.

States often group generic and brand medicines into a one-size-fits-all solution by requiring that manufacturers provide information on any price increase over a certain percentage. This approach often captures many generics for whom a large percentage increase equals a very small real-dollar increase. Also, these states rarely capture price decreases, which represent the majority of price changes within the generic industry. These reporting requirements burden generic manufacturers and threaten their ability to provide access to lower-cost medicines.

For example, a 30-day prescription with an average cost of 10 cents per dose that increases to 12 cents per dose is a 20% price increase; however, the real cost to the monthly prescription is minimal. Compared to a $10,000 brand name drug that takes a 20% price increase which results in a $2,000 price increase.

States should also consider including the many players within the medicine value chain to identify the cost drivers that can increase a patient’s out-of-pocket expense. Insurance design and formulary composition also play a role in setting these prices, and any attempt to understand what patients pay at the pharmacy counter must include these players.

$445BN

saved from generics and biosimilars in the U.S. healthcare industry in 2023.

90%

of U.S. prescriptions dispensed are generics.

13.1%

of U.S. prescription drug spending are generics and biosimilars.

Association for Accessible Medicines 2024 U.S. Generic and Biosimilar Savings Report