It’s PBMs, not patents, blocking competition 

Patents are clearly not stopping biosimilar and generic medicines from getting developed and reaching the market.

Megan Van Etten
Megan Van EttenSeptember 14, 2023

It’s PBMs, not patents, blocking competition .

Our intellectual property (IP) and patent system supports a competitive market where more than 90% of prescriptions for drugs are filled with generics and biosimilars. The FDA has approved 42 biosimilars. Of those, 37 are already on the market in the United States. The use of generics and biosimilars saved the U.S. health care system $2.9 trillion over the past decade.

Patents are clearly not stopping biosimilar and generic medicines from getting developed and reaching the market. It’s the middlemen — like insurance companies and pharmacy benefit managers (PBMs) — who team up to keep low-cost alternatives off their formularies that could offer to lower out-of-pocket costs for patients. According to a report by Xcenda:

  • Starting in 2018, the three largest PBMs began excluding biosimilars from their formularies for patients with commercial insurance. The prevalence of this practice has skyrocketed since.
    In 2022, 14 biosimilars were excluded from the formulary of at least one of the three largest PBMs.
  • PBMs have excluded coverage of other medicines that would lead to lower out-of-pocket costs for patients, including authorized generic and biosimilar insulins.
  • Xcenda notes that “PBMs often exclude these insulins from their formularies in favor of products with higher list prices and larger rebates.”

Net prices for prescription medicines were flat last year. But that hasn’t stopped middlemen from taking a greater share of every dollar spent on medicines. Insurers, PBMs and other entities capture more than 50 cents of every $1 spent on brand medicines. 

Just three PBMs control 80% of all prescriptions in the United States, and the largest PBMs own or are owned by the largest insurance companies. It’s PBMs that decide what medicines patients can get and what people pay out of pocket.

These health care middlemen are drawing increasing scrutiny in the media and on Capitol Hill for abusive practices that drive up the cost of medicines for patients. Now, in an attempt to escape meaningful accountability, insurers and PBMs are undertaking a coordinated campaign to upend the patent protections that make America the top biopharmaceutical innovator in the world

When it comes to this critical issue of patents, don’t fall for the middlemen’s deflection campaign calling for patent legislation that will harm life-saving innovation. Afterall, it’s PBMs, not patents, blocking competition. Tell Congress to lower drug costs for patients by holding middlemen accountable. 

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