While much of the talk at this year’s annual conference of the Association for Accessible Medicines revolved around the new US president and how the industry would be affected by the second Trump administration, another presidential transition went somewhat less remarked upon: the appointment last year of John Murphy as the AAM’s new president and CEO.
On the sidelines of the Access! 2025 conference in Florida last month, Generics Bulletin caught up with Murphy to find out how the former chief policy officer at the Biotechnology Innovation Organization (BIO) and assistant general counsel at the Pharmaceutical Research and Manufacturers of America (PhRMA) was approaching his new role as head of the generics and biosimilars industry association.
And over the course of the conversation, Murphy made it clear that he plans to take an active role in the AAM’s lobbying initiatives on a range of hot topics – including shortages, tariffs, price negotiation under the Inflation Reduction Act, reform of pharmacy benefit managers and biosimilar interchangeability.
Asked first of all how he saw the state of the generics and biosimilars industry, Murphy sounded a note of caution over the fragility of a supply chain that was less sturdy than it might appear. “I think that this is a market that has kind of been the stable steady-eddie for a long time,” he reflected. But there was “a bubbling problem under the surface that is starting to rear itself in a much more public fashion as we see drug shortages and access challenges come to the surface,” with high-profile examples including ADHD drugs and “basic things like amoxicillin, that we’re starting to see come in and out.”
It was “very eye-opening for me, coming into the job, to realize there’s actually a tremendous amount of challenge underlying the viability of the overall marketplace,” Murphy said. And while “we don’t need a reorganization of the whole market to fix that, what we need are a number of targeted policy changes to acknowledge that this is a market that we take for granted, and we want it to be affordable – but we have to figure out a way to at least provide a sustainable reimbursement so that we can see reinvestment in the supply chain to avoid these product shortages.”
During the conference sessions, Murphy had referred to the price disparity for generics that cost less in the US compared to the rest of the world – and he suggested to Generics Bulletin that “we’re going to really press that narrative very hard.”
“If you look at the Canadian experience, if you look at the Nordic experience, part of the EU experience,” he said, while those markets still experienced shortages, “a lot more of those shortages are because there’s a natural disaster that pulls a plant offline, whereas a lot of the shortages in the US are simply because the economic mix doesn’t make sense. And so we’re going to highlight that a lot more.”
“We decry the high cost of drugs in the US, but actually we have a dynamic where we pay too much for brands and we pay far too little for generics,” Murphy suggested. “And so I think a very smart policy for us to adopt is, how do we materially increase the price of a number of commoditized generics? And by price I mean the reimbursement.”
New Trump Administration Offers Opportunities
With the advent of the second Trump administration, Murphy echoed sentiments also expressed by AAM chair Keren Haruvi by suggesting that the political changeover offered a fresh chance for the industry association to get traction for its lobbying priorities.
“We feel very strongly that this is our opportunity for being proactive and really engaging,” Murphy stated. And moreover, he suggested, “the [Trump] administration’s government efficiency narrative, its regulatory reform narrative, that actually really fits with a lot of our own proposals.” These included “streamlining US Food and Drug Administration review of second, third, fourth filers where they’re really benchmarking against products already on the market” to “make that faster, more efficient,” as well as bringing costs down through PBM reform.
“If we can reform how we treat the middleman market in the US, we could actually pull costs out of the system,” Murphy proposed. “So I think our objectives in growing the market and sustaining the market here perfectly align with the Trump administration’s goals.”
On PBM reform specifically, he said, “one of the key objectives we have this year is to engage with the Federal Trade Commission, engage with the Department of Justice and antitrust regulators to talk about: look, we’re at the point now where you’ve done all the research, all the reports exist. Now it’s time to act and it’s time to really weigh in and say, we’re going to fundamentally fix some of these marketplace dynamics – because that aligns again with what the administration wants and what the research has borne out via the antitrust authorities over the past several years.”
“I’m not willing to just sit in my office and order directives. I want to get out and start meeting with the White House, meeting with Congress, and really telling the story.”
Asked whether there were going to be changes in how the AAM sought to get its message across to politicians and policymakers, Murphy was strident. “I think you’re going to see a much more aggressive communications approach from AAM to try and target not just the congressional allies, but to get really in the mindset of trying to get ‘outside the Beltway’, and get our patient groups that represent folks who are having access challenges, the employer groups, that will be a big component of our messaging.”
“Also, one of the things I said coming into this role is that I’m not willing to just sit in my office and order directives,” Murphy declared. “I want to get out and start meeting with the White House, meeting with Congress, and really telling the story from my level, and getting business people from the generics industry into Washington to talk about why it’s a challenge.”
For example, he said, “if the administration has a goal of domestic manufacturing, I want them to understand: here’s why it’s hard to raise capital to invest in a generic supply chain in the US, because here are all the factors that are getting in the way – and help us remove those barriers so we can make those investments.”
Industry Hopes For Exemption From Tariffs
One topic that inevitably dominated the AAM conference in February was the tariffs announced by Trump for Canada, China and Mexico, with measures also being mooted for the EU. But while the potential effects of such tariffs could have severe consequences for the off-patent industry and wider pharmaceutical sector, Murphy was hopeful that an exemption could be secured.
“I think if the tariffs do end up going into effect, and it does appear that they’re going to,” Murphy said, “there has been a policy, perhaps unwritten, but a predominant trade policy over the last 30 years that has ensured free trade amongst trading partners on generic and biosimilar medicines, and really on the pharma sector, in a large part. Because you have sick patients all over the globe, and from a business standpoint, in many respects, where a site is located may be the only site necessary to supply the entire globe.”
“So our hope is to really educate the folks making the decisions,” he outlined. “We’re working to try and educate the Department of Commerce folks, US Trade Representative, members of Congress that have a voice in the White House to say, look, this is an area that is really kind of unique, because not only is it a public health priority for us to ensure we have 90% of the medicines that are distributed today, robustly available across the country; but you are also in a unique environment.”
“Whereas it may well be that the lumber industry, oil industry, they have almost a direct line to the consumer – and they can control the cost, they can control the pricing – in the healthcare market for prescription medicines, you can raise your price all you want, but it doesn’t mean that the insurers are going to pay it. And so you’re rate-limited, in effect, in the US market to pass along the kind of cost that would be applied by tariffs.” But ”at the same time, in the generic space, in particularly, your margin compression is so obvious over the past 20 years that your ability to absorb that and still at least make a reasonable return is very, very limited.”
Asked whether the impact of tariffs could push things to a point where the supply chain simply fails altogether, Murphy said it was “unquestionable, in talking to our members, that there are going to be situations where products become economically unviable to bring into the US should they be tariffed. And that is a problem for patients, and it’s a problem for the healthcare system.”
“And honestly, and we don’t talk about this enough, but it’s a problem for the US national security. The drug supply chain is a priority in the national security sense because it is what we need to have as the backbone of responding to natural disasters, keeping our troops healthy, ensuring that Americans have antibiotics in the face of a natural disaster or, God forbid, some sort of a hot war. So we have to really prioritize that viability of the supply chain.”
Domestic Manufacturing Would Take A Decade
Asked whether tariffs may also lead to renewed moves towards building up domestic manufacturing capacity in the US, Murphy said “I think it’s an element.”
“We acknowledge that there are opportunities to expand the manufacturing base of generics and biosimilars,” he offered, “and there’s no special reason that these are in any one place other than, more often than not, we’re a net importer versus an exporter because the economics are too difficult.”
“So we have a suite of proposals that we are going to bring to the White House and say, look, it may not ever be the case that we are 100% domestically manufacturing, but I do think that there is clear bipartisan interest in trying to find a more stable and resilient supply chain in our near-shore capacity.”
But even if that were to happen, Murphy commented, “tariffs aren’t the way to do that, because it is a five to 10 year, at least, proposition of government incentives, private capital investment, to get us to the place where we’re even materially near onshoring. And tariffs have a immediate impact.”
“So how do we bridge the gap while putting those incentives in place? We don’t do that by creating artificial shortages because we’ve raised the cost of imports.”
Thinking Is ‘Evolving’ On IRA Price Negotiation
Murphy also spoke about the Inflation Reduction Act and price negotiation, after the AAM recently criticized the latest list of products selected for negotiation and labelled the mechanism “a short-sighted government price setting scheme that undermines investment in lower priced generics and biosimilars.”
“I would say we are evolving our thinking on this,” Murphy indicated. “The law is pretty specific that there have to be a number of drugs picked, and the Trump administration has evidenced in a release recently that they’re going to proceed with negotiating.”
But “what we’re trying to do is talk to the administration about how they’re selecting products – because if you take Congress at its word, when it passed the IRA, the intent was to target for negotiation those products that have been on the market for a long period of time and don’t have competition. And so as a result, they’re not benefiting from price erosion because of genericization or biosimilar competition.”
However, for the latest 15 drugs selected for negotiation for 2027, Murphy said, “we looked in the FDA database” and “there are 150 abbreviated new drug applications pending for those 15 drugs.” So “it’s not fair to say that those 15 drugs aren’t going to have competition,” he observed, but subjecting these brands to negotiation then “fundamentally changes the net present value of the investment of the biosimilar or the generic manufacturer.”
“In biosimilars in particular,” he pointed out, “the $300m investment that’s made over about a 10-year timeframe for a biosimilar to come to market, that whole $300m calculation has changed if in year nine that reference product gets selected for negotiation, and the price fundamentally changes in the marketplace.”
The AAM’s message to the Trump administration and the Centers for Medicare & Medicaid Services was therefore “let’s rethink what drugs we are selecting,” Murphy outlined, “because certainly there are products out there that are unlikely to see generic competition in the near term that might benefit from this negotiation.”
That said, he reiterated, “fundamentally, we still think the best path forward for lowering healthcare costs is to have robust generic and biosimilar competition. But in those cases where that doesn’t happen, that may be the appropriate target.”
Changes Needed On Biosimilar Interchangeability
Finally, another area where the AAM wanted to see action was on biosimilar interchangeability, Murphy volunteered, especially in light of recent moves by the FDA to minimize the significance of the interchangeability designation and make it easier to obtain.
“FDA has been evolving to a scenario where it’s starting to look at approving a biosimilar as interchangeable the second it’s approved,” Murphy summarized. “That’s the way Europe operates, and it’s not a secret that now that we’ve had time to evaluate the market, that FDA is much more comfortable saying that this is where the science leads us to.”
This would be particularly helpful in light of the “biosimilar void” that was set out in a report presented at the AAM conference, referring to the vast number of biologics going off-patent in the next decade that do not have biosimilar rivals in the works.
In terms of how the US industry moves forward on biosimilar regulation, Murphy said “the way we are thinking about that is: this year we’ll start the process of reauthorizing the generic drug user fee act; and next year we’ll start the process of reauthorizing the biosimilar drug user fee act. And I think it’s right for us to have the conversations now to talk and align – and FDA is moving too – about global comparators, reducing the need for clinical efficacy studies, all of those types of things that will pull costs out of the development phase for a biosimilar and make it potentially more attractive for [developers] to go after those smaller-market biologic drugs.”
“For biologic products that are under $2bn in annual sales in the US, there’s almost no development for biosimilars,” he noted. “And I think that is because if you think about a $300m price tag to bring a biosimilar to market, it’s very challenging for the math to work.”
Meanwhile, “in addition to the FDA reforms, the biosimilar market continues to be stressed by the fact that the brands are simply not exiting upon biosimilar launch. Adalimumab is a good example of that. How do we create a market where a biosimilar head at a large generics company says it’s worth it to compete in that market? Because what they’re staring at now is saying, well, actually, 10 people developed biosimilars for adalimumab and they’re fighting over 8% of the market, and AbbVie dominates.”
“It is going to get increasingly more challenging to make a Sandoz or an Apotex – no company specifically – to want to write that check and go through the development process, if they’re going to go into a market where somebody like AbbVie is bundling and reaping the benefits of still 90% of the market.”
On top of broader systemic reform, he suggested, “maybe we need to start thinking about the Medicare program and the Medicaid program stopping coverage of a branded biologic once there’s real competition from biosimilars, and just having to say, we’re only going to prefer biosimilars. If you think, 25 years ago in the AB-rated generics market, that’s effectively what happened.”
Ultimately, he said, “we cannot continue with a market where 90% of branded biologics get 30, 40, 50 years of exclusivity in dominance. It just won’t work.”
