Policymakers continue to hunt for durable prescription drug affordability measures that can meaningfully impact patients. Time and again, the highest-yield lever is not a one-off negotiation, a temporary discount, or government price setting – it’s competition, including generic and biosimilar market entry that is repeatable, science-based, and scalable. For small-molecule drugs, that means Food and Drug Administration (FDA)-approved generics that demonstrate bioequivalence. For biologics, it means biosimilars that show they are highly similar to a reference product with no clinically meaningful differences. When competition arrives with stability and predictably, prices move for structural reasons, not because a particular deal happened to be struck.

In the United States, 9 out of 10 prescriptions filled are for generic drugs, making generics the default in day-to-day dispensing. Biosimilar uptake is much smaller, projected at only about 5 percent, yet the FDA has also emphasized that biosimilars’ market share remains below 20 percent, suggesting that most biologic utilization is still concentrated in originator products. And when market conditions do line up, adoption can move fast: IQVIA finds some recent biosimilars have reached more than 60 percent of a molecule’s usage volume within the first three years, illustrating how far current averages are from the attainable ceiling. The generic and biosimilar pipeline is not just a scientific question; it is an incentive, process, and market-design question.

Predictable, well-resourced regulatory review

The simplest truth is also the most underappreciated: Approvals require throughput. A well-functioning generic and biosimilar marketplace depends on an FDA review program that is staffed to meet workload, has modern analytics and inspection capacity, and can deliver predictable timelines. Developers can tolerate stringent requirements; what they struggle to finance is uncertainty. When review timelines drift, information requests become iterative, or facility inspections experience backlogs, capital gets repriced – and smaller or more complex entrants drop out. In contrast, predictable review performance reduces the cost of capital and increases the number of firms willing to take a shot at “hard” products, including complex generics and more challenging biologics.

Clear evidentiary expectations that match modern science

A pro-approval environment is not “lower standards.” It’s right-sized evidence. For generics, the core concept is bioequivalence – showing that the generic performs the same in the body, within defined parameters, as the reference drug. For biosimilars, it’s interchangeability: advanced characterization to show high similarity and no clinically meaningful differences. The central goal is to avoid requiring studies that are expensive and time-consuming yet add only marginal information – particularly when analytic tools have advanced.

When expectations are unclear or drift toward “prove it like it’s brand-new,” developers make an easy choice: Invest elsewhere. That is especially acute in biosimilars, where development costs can be high and the U.S. market has historically been less predictable than hoped.

Incentives that pull firms toward thin or difficult markets

Left to pure market forces, generic developers cluster in products that are easier to manufacture, easier for which to demonstrate bioequivalence, and more commercially attractive. That’s rational – but it leaves pockets of persistent single-source markets, drug shortages, and fragile supply chains. A pro-competition strategy recognizes that some markets need targeted pull incentives to justify investment, particularly where there are few competitors, technical barriers are high, or the supply chain is brittle. These incentives can take many forms (review prioritization, temporary exclusivity, procurement commitments, or “first-to-enter” advantages), but the principle is the same: Make it economically rational to be the entrant that opens the market.

Market rules that convert approval into actual utilization

Approval is necessary but not sufficient. The United States has repeatedly shown that you can have competition on paper but without meaningful market share if substitution is administratively hard, if contracting practices foreclose access, or if provider incentives reward the reference product. For generics, the system generally converts approval into use relatively well – though “authorized generics,” contracting dynamics, and distribution arrangements can still complicate price formation. For biosimilars, the challenge is more pronounced: Buy-and-bill economics, formulary design, interchangeability perceptions, and rebate structures can all slow adoption even when lower-cost alternatives exist.

A supply chain that can scale reliably

Finally, competition fails if the supply chain is fragile. A marketplace dominated by a small number of manufacturers, facilities, or geographies may deliver low prices – until it doesn’t, and shortages emerge. Policies that support manufacturing quality, redundancy, and reliable inputs are not “industrial policy for its own sake”; they are competition enablers because they prevent shortages and stabilize the economics of entry.

Sustainable prescription drug affordability isn’t achieved by normalizing one-off workarounds or imposing price caps on industry. It comes from designing a system where high-quality competitors can predictably enter – and then gain – market share. That requires regulatory throughput, right-sized evidence, targeted incentives for thin markets, and payment and formulary rules that enable usage of lower-cost substitutes once they are approved. The objective should be straightforward: Make competitive market entry routine, make adoption frictionless, and let competition do the heavy lifting on price.