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Generic, biosimilar markets at risk despite saving $467B in 2024
Generics and biosimilars cut U.S. drug costs by $467B in 2024, but the AAM warns that PBMs, IRA rules and a lack of competition threaten long-term stability of the market.
In the United States, generic and biosimilar medicines generated a combined $467 billion in savings in 2024, contributing to a cumulative $3.4 trillion in savings over the last decade, the Association for Accessible Medicines' (AAM) annual savings report shows.
Even while saving billions, the generic and biosimilar markets must contend with several challenges that threaten long-term stability and hinder adoption, including falling generic drug prices, anticompetitive pharmacy benefit manager (PBM) practices and a significant gap in the biosimilar development pipeline.
Additionally, the report states that federal policies like the Inflation Reduction Act (IRA) undercut competition through premature price controls and coverage barriers for Medicare beneficiaries.
Generics drive substantial savings
Last year, generics made up 90% of prescriptions filled but only 12% of drug spending. Despite these high sales volumes, generic prices are continuing to fall. Since 2019, the value of all generic sales has dropped by $6.4 billion.
"Within the U.S., due to its highly competitive market, generic drug prices are launching at lower prices and bottoming out at lower prices," the report stated, noting that this has led to generic deflation.
An analysis cited in the report found that U.S. generic prices are, on average, 16% lower than in other developed countries and 30-50% lower than in the United Kingdom, Mexico, France and Japan.
The report attributes these low prices to the highly competitive U.S. market, which has also contributed to a growing problem with drug shortages.
It states that the significant purchasing power of PBMs and low reimbursement rates for generics compared to other countries are key factors behind these shortages.
Biosimilars show mixed results
As of July 2025, the FDA had approved 84 biosimilars, with 67 now available to patients. These drugs have created $56.2 billion in savings since 2015, including $20.2 billion in the last year.
However, the report signifies that adoption varies widely.
While biosimilars have captured more than 80% of the market in two therapeutic areas, their average market share is only 40%.
Uptake for individual drugs ranges from just 8% for insulin lispro to 82% for bevacizumab. For Humira biosimilars, market volume grew from 2% in 2023 to 21% by the end of 2024, but they still hold a minority share.
Hindered adoption
The report highlighted two major factors hindering biosimilar adoption: the role of PBMs and a significant gap in the development pipeline.
PBMs
PBMs continue to favor expensive brand-name drugs on their formularies, even when therapeutically equivalent biosimilars are available at steep discounts, the report revealed.
For instance, while biosimilars to Humira offered price cuts of over 80%, some PBMs still preferred the higher-priced brand, limiting patient access and competition. This type of practice ultimately prevents biosimilars from capturing a larger market share despite their potential for massive cost savings.
Developmental pipeline gaps
Of the 118 biologics expected to lose patent exclusivity by 2034, only 12 have biosimilars being developed. These gaps in the developmental pipeline suggest that the U.S. will miss out on significant future savings opportunities and, more importantly, lower-cost alternatives.
As a result, brand-name drug prices are expected to remain high due to the potential lack of healthy competition
"Closing the biosimilar void in the U.S. will take more than incremental change," Giuseppe Randazzo, Interim Executive Director, Biosimilars Council, wrote, calling for coordinated action across all stakeholders.
Policy and market pressures
The report points to several other policies and market dynamics that threaten generic and biosimilar markets, including the IRA's pricing controls that disincentivize investment and create coverage barriers that favor brand-name drugs, even after a lower-cost version becomes available.
Pricing controls
The IRA allows the government to negotiate Medicare Part D prices for certain high-cost, single-source drugs. However, the law's timeline for negotiation can start before generic and biosimilar competition has a chance to begin.
The report pointed to Stelara as an example, where CMS set a maximum fair price 66% lower than the list price -- only to have nine biosimilars enter the market months later with discounts of up to 90%.
The AAM warned that this kind of premature price setting risks undercutting the competitive environment that encourages the development and launch of generics and biosimilars, which could further exacerbate pipeline gaps.
Health plan coverage
The IRA also requires Medicare plans to provide coverage for a brand-name drug subject to price negotiation. While plans can cover a competing generic or biosimilar as well, this guaranteed formulary spot for the brand can disincentivize plans from fully switching to the lower-cost alternative.
To put this into perspective, among the first generics launched in 2024, only 24% were covered by Medicare Part D plans in 2025, while 78% were covered by commercial plans. Even after approval, more than a quarter of new generic claims are rejected by payers within two years of market entry.
Despite these pressures facing the generic and biosimilar markets, AAM's President and CEO, John Murphay III, said there are solutions that "are not far out of reach."
"Policymakers must streamline FDA processes, curb patent abuse, stop PBMs and Medicare policies from denying patient access and rollback harmful federal policies -- including IRA price controls," he advised.
