Treating generic drugs as something special can wreck affordability
5 hours ago
- #Medicare Part D
- #Drug Pricing
- #Generic Drugs
- CBO requested research into higher-than-expected Medicare Part D spending increases projected for 2026, indicating structural issues.
- Generic drugs are often misclassified as 'specialty' drugs by PBMs, leading to inflated prices despite low acquisition costs.
- Abiraterone, a generic prostate cancer drug, is priced up to $12,000 by PBMs but can be acquired for under $100, showing extreme price distortion.
- Lenalidomide (generic Revlimid) accounted for $1.7B in Medicare Part D spending in 2023, with high prices sustained by restricted distribution and lack of price benchmarks.
- Medicare Part D spending on generics rose 13.3% from 2015 to 2023, with nearly half of generic drugs increasing in price, contrary to typical deflation expectations.
- PBMs use opaque pricing and tiering to classify generics as specialty drugs, allowing high reimbursements that don't reflect actual drug costs.
- Vertical integration among PBMs, insurers, and specialty pharmacies creates conflicts of interest, limiting competition and price transparency.
- The lack of a universal definition for 'specialty drugs' and reliance on list prices rather than acquisition costs contribute to pricing distortions.
- Misclassification of generics as specialty drugs blunts expected savings, potentially adding hundreds of billions in federal spending over a decade.
- The drug pricing system lacks incentives for lower prices, favoring intermediaries that profit from high list prices and cross-subsidization.