AAM Report: PBMs, Health Plans Delay Adoption of Generics


The Association for Accessible Medicines’ report indicates plans, especially those in Medicare, are slower to prefer first generics.

Supply chain middleman, including PBMs and health plans, delay coverage of new generics, according to new report from the Association for Accessible Medicines (AAM), an advocacy organization for generic drug companies.

David Gaugh

David Gaugh

“Patients and the healthcare system win when new, lower-cost generic drugs enter the market,” David Gaugh, interim CEO at AAM, said in a news release. “But too many PBM and health plan formularies are delaying patient access to new generic drugs.”

The report analyzes six years of data from Medicare and commercial formulary data to assess the coverage and management of first generic drugs. The analysis, conducted by Avalere, looked at plan benefit and formulary data for 2022 from the Medicare Part D Public Use Files released in October 2021. Avalere included in the analyses the corresponding brand products matched using drug name from first-to-market generic drugs approved between and marketed from 2016 to 2021.

In 2021, the FDA approved 93 first generic drugs. That year, the top 10 new generics averaged 70% market share of total prescriptions, according to IQVIA. Historically, generics have achieved rapid adoption of 80% or more within only a few months.

Medicare Advantage and Part D plans covered the lower-cost generics that came to market in 2016 only 22% of the time, according to AAM. Six years later, these new generics are covered by fewer than two-thirds of all Medicare drug formularies, the report said. In commercial plans, first generics that launched in 2016 were covered 46% of the time, according to the AAM report. Coverage of these generics eventually reached 90% in 2022.

The Pharmaceutical Care Management Association (PCMA) did not respond to Formulary Watch’s request for comment on the AAM report.

Related: AMA Analysis: Lack of Competition Among PBMs in Local Markets

In a similar recent analysis by the American Medical Association (AMA), the organization said that a handful of PBMs have a large collective market share for three of the PBM services most often used by insurers: rebate negotiation, retail network management and claims adjudication.

“The American Medical Association already has serious concerns about PBM business practices that can have a detrimental impact on patients’ access to and cost of prescription drugs,” AMA President Jack Resneck Jr., M.D., said in a news release in October 2022. “PBM markets require careful scrutiny as less competition and more vertical integration can embolden anti-competitive business practices to the detriment of patients.”

However, in early, December, PCMA released recommendations, Improvements in Medical Benefit Coverageof Biosimilars, to increase patient access to biosimilars, accelerate biosimilar adoption, reduce barriers created by the current system “too often taken advantage of by drug manufacturers, and enable PBMs to negotiate for more affordable biologic medicines,” the organization said in a press release.

“PBMs are strong proponents of a functioning biosimilar market and are committed to removing barriers to patient and provider uptake. Bringing more biosimilars to market, over time, will allow PBMs to more effectively leverage competition to reduce drug costs for health plan sponsors and patients,” said PCMA President and CEO JC Scott.

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