Why generic drugs aren’t always cheap for patients

Generic and biosimilar drugs have long been promoted as the main way to reduce healthcare costs. They’re just as effective as brand-name medications but significantly cheaper. Yet, many patients still pay more than expected—even for generics. Why?

The problem isn’t the price of the drug itself, but how patients access them. According to the Association for Accessible Medicines (AAM), structural barriers in insurance coverage and formularies are major drivers of out-of-pocket costs. And as Kazakhstan expands its national healthcare system, this issue is highly relevant.

In the U.S. generics account for 91% of prescriptions. The average out-of-pocket cost for a generic in 2023 was just $7.05—compared to $27.10 for a brand-name drug. But many patients end up paying more due to how insurance plans and pharmacy benefit managers (PBMs) structure drug coverage.

Some generics are no longer placed in the cheapest “tiers” but are instead grouped with expensive brand-name drugs. That means patients may be required to pay a higher co-pay—or even the full price—despite generics being cheap.

Why it matters for Kazakhstan: As the country builds out its insurance-based healthcare system, it’s critical to ensure that generics remain genuinely affordable for patients—not just on paper, but in real life.

From 2011 to 2019 average generic prices dropped by 38%, but patients’ out-of-pocket costs for those same drugs went up by 135%. How? Because insurers and PBMs reclassified many generics into higher-cost tiers.

By 2020 nearly two-thirds of Medicare patients in the U.S. paid full price for at least one generic drug. That’s up from 45% just three years earlier.

What Kazakhstan should watch for: As Kazakhstan rolls out its national formulary, it needs transparent criteria for how drugs are categorized and reimbursed. Otherwise, affordable options could be sidelined by hidden policy choices.

Biosimilars are low-cost versions of complex biological drugs. They saved the U.S. healthcare system $12.4 billion in 2023. But uptake remains slow. For instance, biosimilar versions of Humira captured just 2% of the market in their first year—even with discounts of over 80%.

Why? PBMs and insurers often favor brand-name drugs because they receive large rebates. That keeps biosimilars out of formularies and away from patients.

Kazakhstan angle: As local pharmaceutical companies begin producing biosimilars, they could face the same market access barriers. Anticipating this risk and designing support measures early is essential to ensure uptake.

As drug costs rise, many U.S. patients are skipping insurance coverage altogether for generics. They use discount cards or pay out-of-pocket because it’s cheaper than going through their insurer.

It’s a workaround, but not a long-term solution. Many drugs aren’t available through these channels, and for patients with chronic conditions, out-of-pocket costs can still add up quickly.

Kazakhstan takeaway: As insurance coverage expands, it must deliver real savings. Otherwise, people will opt out—and the system will fail to build trust.

To make generics and biosimilars work for patients, healthcare systems need structural reforms:

1. Revise formulary placement rules

Generics and biosimilars should be in the lowest-cost tiers with minimal patient copays.

2. Reform PBM-style incentives

Kazakhstan doesn’t yet have a PBM industry, but similar middlemen may emerge. Regulators should ensure that financial incentives don’t favor expensive drugs over cheaper alternatives.

3. Ensure pricing transparency

Patients should know what they’re paying for—and what their cheaper options are. Transparency builds trust and encourages fair competition.

Kazakhstan is in the early stages of reforming its drug pricing and insurance policies. The country is building pharmaceutical plants, developing local generics, and investing in biosimilars. But production alone isn’t enough. Ensuring those medicines are affordable and accessible will define whether the reforms succeed. By learning from the U.S. experience—and avoiding its pitfalls—Kazakhstan can build a fairer, more sustainable healthcare system.

Generic drugs and biosimilars can transform healthcare affordability. But without proper policy and regulation, even cheap medicines can become financially out of reach for patients.

Kazakhstan has a unique opportunity: to learn from other systems, build smarter from the start, and make sure that access to medicine is not just a promise, but a practice.