The case for market-driven drug affordability

By John Murphy III

This is a lightly edited excerpt of testimony recently provided to the U.S. House’s Energy and Commerce, Health Subcommittee hearing on titled, “Lowering Health Care Costs for All Americans: An Examination of the Prescription Drug Supply Chain.” 

Generic and biosimilar medicines are a primary driver of prescription drug affordability in the United States. Their use generated $467 billion in savings in 2024 for patients and the health care system. In our view, the savings generated by these medicines are actually depressed in the US market.  A number of aspects of the current market and regulations underlying it are preventing full utilization of many generic and biosimilar medicines.  This Committee, and Congress more broadly, have the opportunity to significantly unlock additional affordability simply by enhancing the market to produce and access lower-cost generic medicines.

These affordability benefits accrue across public and private payers and are particularly important for patients managing chronic and complex conditions. The AAM 2025 Savings Report shows that Medicare and Medicaid together accounted for more than half of total generic and biosimilar savings, underscoring the role that these medicines play in supporting program sustainability and beneficiary access. Biosimilars are also delivering growing savings in high-cost specialty categories, generating more than $20 billion in 2024 alone as additional competitors continue to enter the market. 

Independent analyses consistently find that increased generic and biosimilar competition lead to lower prices without compromising quality or safety. In the healthcare system, generic drugs are the only sector that consistently results in decreased spending. The overall value of all generic sales in the U.S. has declined by $6.4 billion since 2019, despite increased volume and new generic launches. This decrease in spending has consistently been the case since the passage of Hatch-Waxman in 1984. While generic drugs have been consistently nine out of 10 prescriptions, their overall percentage of costs has declined from 27 percent in 2016 to 12 percent in 2024.

Despite the widespread use of low-cost generic and biosimilar medicines, overall prescription drug spending continues to rise due to spending concentration in a small number of high-cost brand and specialty products. As illustrated in the accompanying data, in 2018, it took eight brand medicines combined to equal total U.S. spending on all generic drugs. By 2023, spending on just two brand medicines, Ozempic and Humira, exceeded total spending on more than 1,000 generic medicines combined. This trend highlights how growth in spending on a limited number of high-cost products can outweigh the substantial savings generated by broad generic and biosimilar competition.

For generic manufacturers, increased affordability has coincided with sustained downward pressure on prices. Compared to 30 years ago, generic drugs are launching at lower prices and reaching lower long-term price levels. Historically, generic prices tended to stabilize at approximately 34 percent of the brand product's list price. Over the past decade, that figure has declined to approximately 22 percent, reflecting deeper and more prolonged price competition. 

Too many federal policies actively harm generic and biosimilar competition. Congress should fix the Medicaid Generics Penalty and update Medicaid inflation penalties so that they align with those in Medicare.

Ensuring continued access to affordable medicines requires timely and deliberate policy action. Generic and biosimilar medicines play a central role in controlling prescription drug costs and expanding treatment options for patients across the health care system. Policies that support robust competition, predictable market entry, and sustainable manufacturing are critical to maintaining these benefits. Without such measures, patients may face higher costs, reduced access, and fewer therapeutic options. A stable and competitive generic and biosimilar market is therefore essential to protecting both patient access and the long-term affordability of prescription medicines.

Read the full testimony here.

Watch the full House subcommittee hearing here.

John Murphy III is the President and CEO of the Association for Accessible Medicines.

_{*The opinions expressed in this column are those of the author and do not necessarily reflect the views of HealthPlatform.News.}