After years of price pressures, the trade group argues “the economics of generics have deteriorated to the point where sustainability of the industry is in peril.”
The Association for Accessible Medicines (AAM) has reiterated its concerns about the sustainability of prices for off-patent drugs, warning that a “race to the bottom” may force companies to exit the market.
America could lose “the backbone of affordable healthcare” unless policymakers “roll back the risks and threats to the generic and biosimilar medicines industry,” AAM CEO John Murphy wrote in the trade group’s annual report on the U.S. market for off-patent medicines. Murphy argued that the forces that make off-patent drugs affordable are now destabilizing the market.
Three buyers account for 90% of the market for traditional generics and control two-thirds of revenue for specialty generics, AAM said. The concentration means “constant downward contractual pressure used by the supply chain purchasers can result in unsustainably low prices,” AAM said.
“Without intervention, the U.S. is at risk for supply chain disruptions, including drug shortages, or worse, U.S. market exit,” Murphy said.
Thirty years of significant price deflation have “created conditions in which essential products are sold below sustainable cost levels, forcing players to leave the U.S. market,” AAM said.
The trade group cited Nephron Research data to support the argument. Last year, generic drug prices fell by 5.8%, adding to the 6.3% decline reported in 2024. This year, Nephron has forecast that deflation will “run at the high end of the mid-single digit long-term trend,” AAM said.
Generic drugs accounted for 89% of total U.S. prescriptions filled last year. While generic drugs dominate in terms of volumes, the off-patent medicines accounted for 11.6% of spending on prescriptions. The figures are largely unchanged from the data AAM previously quoted for 2024. AAM also again pointed to a 2023 IQVIA analysis showing a $6.4 billion decline in generic drug sales since 2019.
The biosimilar market has higher barriers to entry than the generic sector in terms of R&D requirements and manufacturing complexity. Very few originator biologics have multiple biosimilar competitors, a 2024 paper found, meaning there is less competition and pricing pressure than is typical in the generic sector. Still, AAM is also concerned about a race to the bottom for off-patent biologics. The concerns reflect a reimbursement model that predates the launch of biosimilars in the U.S.
Providers are incentivized to prefer branded drugs, even when biosimilars are available, AAM said. The trade group argued that “biosimilar manufacturers are often forced to offer substantial rebates to gain favorable formulary placement.”
AAM’s warnings build on years of messaging from the trade group, which in 2023 argued that a “race to the bottom” raised questions about the generic market’s long-term viability and that the biosimilar sector was facing its own sustainability challenges in parallel. AAM voiced similar concerns in 2024 and 2025.
The trade group is calling for policymakers to address the problems through actions such as streamlining FDA processes, curbing “patent abuse” and stopping policies that deny patients access to new generics and biosimilars. Pharmacy benefit managers must stop prioritizing higher-priced brand-name drugs over generics and biosimilars, AAM said, and Medicare should modify its formulary review and approval criteria.
