AAM’s John Murphy III testifies before Congress on lowering health care costs and the Rx drug supply chain

WASHINGTON — The Association for Accessible Medicines President and CEO John Murphy III today testified at a hearing, Lowering Health Care Costs for All Americans: An Examination of the Prescription Drug Supply Chain, before the House of Representatives Health Subcommittee of the Energy and Commerce Committee and released the following excerpt from his statement:

Generics and biosimilars are the single largest driver of prescription drug affordability in the United States. In 2024 alone, they generated $467 billion in savings for patients and the health care system. Those savings flow across Medicare, Medicaid, private insurance, and directly to patients managing chronic and complex conditions.

Yet despite that success, the full affordability potential of generics and biosimilars is being suppressed by market distortions and outdated policies. Congress has a real opportunity to unlock even greater savings simply by allowing these markets to function as intended. Generics are the only sector of the prescription drug market where total spending has declined over time, even as volume has increased.

For manufacturers, the relentless price compression has real consequences. Generic drugs launch at lower prices than ever before and continue falling well below historical norms. At the same time, fixed costs, regulatory burdens, and supply-chain risks continue to rise. When margins collapse, manufacturers exit markets, redundancy disappears, and shortages become more likely.

Biosimilars face an additional challenge. Despite clear evidence of safety and effectiveness, the United States continues to lag Europe and Canada in biosimilar uptake and access. In too many cases, patients cannot reach lower-cost alternatives because of brand patent games, formulary decisions, rebate structures, and reimbursement policies that favor higher-priced brand products.

This is not a failure of science or manufacturing. It is a failure of policy.

There are four areas where Congress can act.

First, regulatory barriers. FDA should be clearly empowered by Congress to streamline outdated requirements that delay competition, including eliminating unnecessary clinical studies for biosimilars and aligning U.S. policy with global standards by deeming biosimilars interchangeable upon approval.

Second, patent abuse. Brand manufacturers increasingly deploy patent thickets to block competition long after true innovation has been rewarded. Congress can curb these tactics by strengthening patent review processes, preserving affordable patent challenges, and protecting legitimate tools like skinny labeling that were built into Congressional legislation establishing these markets.

Third, misaligned incentives in Medicare, Medicaid, and PBM practices. Today, higher-priced drugs often win preferred placement because rebates and fees reward list price, not the lowest net cost to plans or to patients. That hurts patients and taxpayers and keeps lower-cost generics and biosimilars off pharmacy shelves.

Fourth, supply sustainability. Inadequate reimbursement, especially in Medicare Part B and Medicaid, is pushing some generics toward chronic shortage risk. Without predictable and adequate payment, manufacturers cannot sustain reliable supply.

If these issues go unaddressed, the result will be fewer competitors, more shortages, higher costs, and reduced access for patients.

Generic and biosimilar medicines are not a theoretical solution. They are already doing the work. Protecting their future requires deliberate policy choices that restore competition, reward affordability, and keep patients first.