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Prescription Drug Prices – How Generic Drugs Can Help If Legislators Let Them (Guest: Chip Davis)

February 26, 2019

When tempers flare on rising health care costs, prescription drug prices often come under attack. There is a solution, and one that is not new: generic drugs. For generics to do their market magic, legislators need to back off from price controls.

Everyone wants the latest and greatest drug treatment at a reasonable price. The best way to do this is with a robust generic drug industry.  The generic drug industry allows brand name drug makers to focus on drug development by offering an affordable option later in a drug’s life cycle.  Chip Davis, president and CEO of the Association of Accessible Medicines (AAM), discusses how generics are saving consumers millions of dollars. He explains why there can be price volatility with generics, how shortages in generics can affect prices and why those shortages occur.

Davis explains the danger in setting price controls on generics. Through the supply chain, prescription benefit managers can impact generic drug prices and generics role in the opioid epidemic. Davis explains why reducing supply may not be the solution to addressing the epidemic.  According to AAM, generics represent 90 percent of all US prescriptions dispensed, but only 23% of what the US spends on medicine. Davis also provides an update on the lawsuit the industry filed against the state of Maryland when it attempted to control generic drug prices.

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AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland's monthly newspaper for health care reform. @HCPolicy