The patents for 7 of the 20 best-selling drugs are set to expire over the next couple of years, and once that happens, manufacturers will be free to make and sell cheaper generic versions of the meds. Considering that an estimated 15% of the population takes one of these drugs—including Lipitor (for cholesterol) and Plavix (blood thinner)—the impact will be huge.
Generic drugs typically cost a fraction of their brand-name equivalents—easily 20%, and as much as 80% less, according to the Associated Press. Whether patients are insured or not, pay co-pays or not, have deductibles on their drug coverage or not, there are cost benefits to be had once generics begin competing with the brand names that once held monopolies.
For example, Protonix, which is prescribed to treat severe heartburn and just went off patent, costs $170 a month. But the generic version runs a mere $16 a month. The average co-pay for generic drugs, meanwhile, is $6, compared to $24 for brand names.
For some patients, these changes mean more money can be saved for retirement or spent on gifts, dining out, vacations, toys, cars, or anything else they please. For others, the price drops will mean that they’ll finally start taking the meds—because at long last they’ll be able to afford them.
Don’t feel bad for the drug makers that’ll soon be losing their monopolies and be forced to deal with generic competitors. While the R&D costs drug makers incur are enormous, the patent system allows them to sell to the public competition-free for 20 years. And, surprise, surprise, the brand-name drug makers are known to resort to less-than-ethical, but entirely legal tactics to increase revenues. Per the AP, this is what happens:
Typically, they raise prices 20 percent or more in the final years before generics hit to maximize revenue. Some also contract with generic drugmakers for “authorized generics,” which give the brand-name company a portion of the generic sales.
So, in the period before the patents expire—which is right now for the drugs we’re talking about—prices are especially high. Once a generic equivalent hits the market, consumers have a cheaper option, though the big companies making the brand names may still be cashing in. When several generics become available, prices really drop.
An FDA study on generic drugs and competition in the marketplace shows that, in terms of lowering prices, some competition is good, while lots of competition is great. Average prices (of generic and brand name drugs) drop a smidge when there’s one competitor in play with the brand name, and they decrease by nearly one-half when a second competitor enters the field. As more manufacturers get out there competing for customers, prices keep falling, and patients often wind up paying 80% less than they used to.