Health-care law a boon to generic drug companies

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The Affordable Care Act, which requires that insurance plans pay for prescription drugs, ignited a huge demand for generic versions of medications, according to a report in National Journal. Consequently, makers of generic versions of medications stand to profit.

About 80 percent of prescriptions that are filled in the United States use generic medications, says Todd Campbell, who is the president of E.B. Capital Markets. Prices of generic medications are surging, according to National Journal. However, generic medications overall will remain less expensive than brand-name medications will, according to health insurer Humana, so revenues are expected to remain strong.

Generic-medication manufacturers Mylan (Nasdaq: MYL; Price: $51.62) and Teva Pharmaceuticals (NYSE: TEVA; Price: $54.44) stand out, analysts say. Mylan, which is the third-largest global manufacturer of generic medications based on revenue, has a pipeline of generics that can’t be replicated or replaced easily, thus protecting its revenue and profit.