The rising cost of health care – more than $7,500 a year on average – is making it harder for Californians to make ends meet. Making it affordable to stay healthy should be a bipartisan priority, so we understand the urge for legislation addressing drug prices.
However, if you are going to tackle drug prices, it’s vital to safeguard the savings that generics bring Californians. In 2016, these include $4 billion savings in Medicaid, $6.8 billion in Medicare Part D, $1.15 billion for people who pay cash for their prescriptions and $9.6 billion for commercially insured patients.
Some legislation targeting drug prices, such as Senate Bill 17 by Sen. Ed Hernandez, D-West Covina, would take the state in the wrong direction. As the U.S. Department of Health and Human Services reported last year: “Generic drug prices are not an important part of the drug cost problem facing the nation.”
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The general trend is clear: Brand prices are rising while generic prices are falling. The Wall Street analysts at Raymond James & Associates recently found generic drug prices are decreasing at over 7 percent year-over-year, the fastest in the industry’s history. At the same time, AARP’s most recent study found brand drug prices increase almost 130 times faster than general inflation, 15.5 percent vs. 0.1 percent.
A one-size-fits-all approach to prescription costs will have the unintended complication of unsettling a generic drug market that works for Californians. SB 17 would place large regulatory burdens on generic manufacturers who produce hundreds of drugs.
The additional costs and commitments anticipated in SB 17 will require individual generic manufacturers to evaluate whether it makes financial sense for them to continue offering safe, effective and affordable alternatives to high-priced branded and specialty medicines. If companies decide to leave the generic drug market, then there will be less competition, driving up overall prices even further.
Legislation painting all prescription drugs with a broad brush risks the generic savings that benefit everyone. That is why lawmakers must ensure valued generics are not adversely affected and that the patients of California are protected.
Chester Davis Jr. is CEO of the Association for Accessible Medicines. He can be contacted at firstname.lastname@example.org.