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Cheaper generic alternatives to brand-name drugs are supposed to save consumers and the healthcare system money. But a new USC Schaeffer Center white paper highlights tactics used by intermediaries in the pharmaceutical distribution system, including pharmacy benefit managers (PBMs) and insurers, that are costing patients, employers and the government billions for what should be inexpensive medicines.
This summary describes commercial payer tactics such as spread pricing, copay clawbacks and formularies that advantage branded drugs over less expensive generics have funneled the savings from low-cost generics into intermediaries’ pockets, rather than the pockets of patients.
The authors call on policymakers to reduce overpayments for generic drugs by:
- Encouraging transparency in transactions across the distribution chain
- Encouraging competition and deterring anti-competitive practices in the sale and distribution of generic drugs
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