Controlling drug costs will be no easy task. One time-tested method, however, is timely access and availability of generic medicines once the patent on brand name drugs expires.
Generic competition has a dramatic impact on pharmaceutical costs.
When a generic drug first comes onto the market, it typically costs 30 percent less than the brand name version, After two years on the market, the prices drop further to 60 or 70 percent of the brand name drug. The price of some generic drugs drop by as much as even 90 percent. While these competitively priced alternatives are good for consumers, employers and government purchasers, they are not good for the brand name producer trying to maintain and protect monopolistic pricing, if there is no generic alternative available, consumers who need medicine have no choice but to buy the available brand drug and pay whatever it costs. It is for this reason that brand name drug companies launch aggressive campaigns to block or delay generic competition. One tactic used by the brand industry to prevent generics from reaching the consumer is to convince state legislatures to pass unnecessary restrictions to the substitution of generic versions of brand name drugs.