Price Gap Widens Between Brand and Generics

Aug 27, 2013
The Express Scripts Prescription Price Index shows that the gap between brand and generic prices has widened another 35.2 percentage points in 2012.

Prescription Price Index 

This morning, we launched our inaugural Drug Trend Quarterly, which provides an overview of what U.S. prescription-drug spending looks like so far in 2012.

In the report, our Prescription Price Index demonstrates that this past year’s price inflation for the most highly used brand-name medications outpaced overall consumer inflation by more than six times (13.2% to only 2%).

Even more striking, we’re seeing price deflation for generics of 21.9% during that same period.

Added together, this 35.2 percentage point net inflationary effect is the largest widening of brand and generic prices since Express Scripts began calculating its Prescription Price Index.

The Growing Savings Opportunity of Generic Medications

What it all points to is this: Patients choosing a market basket of brand-name medications instead of clinically equivalent generics are being charged a higher premium than ever before. The financial incentive for both patients and their plan sponsors to switch to generics has never been greater.

Our efforts to help patients transition to generics has mitigated the inflationary effect. Despite the widening price gap, the country has only increased its year-to-date drug spending by 3.5%. Transitioning to generics has also caused an average decrease in patient out-of-pocket costs, saving money for everyone. Still, a huge savings opportunity remains for those patients who continue to choose a brand-name drug when more affordable alternatives exist.

Without Biosimilars, Spending on Specialty Medications Continues to Rise

U.S. spending on specialty medications has increased 22.6% so far in 2012. This continued year-over-year, double-digit increase is striking when contrasted with spending on traditional medications, which has actually decreased in 2012.

And what’s the major difference between the pricing of specialty medications versus traditional medications? In a word, competition. While we’ve all heard about the “patent cliff” and the “generic wave” in regard to traditional medications, few generics exist in specialty therapy classes.

The continued rise in spend on specialty medications underscores the nation’s need to accelerate the pathway for biosimilars. Additional competition within these therapy classes would provide a necessary market control against specialty drug price inflation.

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