Generic Drug Makers Resisting Reform

by Toby Roberts on October 19, 2009

The Generic Pharmaceutical Industry Association (GPIA) has released a statement opposing the recently approved bill that will require them to pay substantial rebates to state and federal Medicaid programs as a part of health care reform.  The bill, which passed last week in the Senate Finance Committee, requires generic drug makers to pay $460 million in rebates over a ten year period. The GPIA argues that the rebates will result in fewer companies making generic drugs which will result in higher prices for consumers.

In contrast, a deal recently struck with brand name drug makers requires them to offer $80 billion in discounts over the same ten year period. The benefit to brand name drug makers is that the deal also ensures them 12 years of exclusive production on biologic drugs as well as an agreement that they will sell the drugs at half price to consumers during the period that they fall into the Medicare coverage gap.

Experts disagree with the assessment of the GPIA arguing that the increase in medical coverage in general will lead to higher sales of generic drugs. The degree to which this will offset the $460 million they will owe in rebates remains to be seen.

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