Generics Saved Consumers How Much Money?

As the debate over health care costs escalates beyond a fever pitch, generic drugmakers are taking advantage of the moment to tout the sort of savings their copycat versions can offer. In a new report, the Generic Pharmaceutical Association boasts that the US saved $193 billion last year and more than $1 trillion over the past decade by using generic medications instead of brand-name drugs.

Here are some other nuggets: Savings from generics last year rose 22 percent, marking the largest year-over-year increase since 1998, and a savings of 10 percent higher than the 10-year average. Savings from newer generics - those that entered the market since 2002 — totaled $481 billion over the past decade. Last year, nearly 80 percent of 4 billion prescriptions written in the US were for generics, but accounted for only 27 percent of total drug spending.

In discussing the report, which was compiled by IMS Health, the trade group dismissed arguments that generic usage has increased so dramatically that incentives to develop new drugs has been harmed. An article in Health Affairs called on Congress to review the 1984 Hatch-Waxman Act to gauge whether the law is balancing incentives for generics and innovation or needs to be amended so that generic competition is not delayed by monopolistic practices (read here). The trade group argues more new molecular entities were approved last year than at any time in the past decade when including orphan drugs.

By the same token, the trade group used the report to argue against any restrictions on so-called pay-to-delay settlements in which brand-name drugmakers and their generic rivals reach settlements on patent litigation that forestall entry of copycat meds into the marketplace. Generic drugmakers argue the deals are legal and do not delay generic versions but, rather, actually accelerate the pace at which copycats become available because lengthy litigation is ended. However, a recent federal appeals court ruling found the deals are questionable and some legal experts believe the issue may be reviewed by the US Supreme Court (see this).

Back to the report. The trade group noted that the increase in generics usage was spurred by patents that expired for big-selling brand-name drugs, including the Zyprexa antipsychotic, the Lipitor cholesterol pill and the Concerta ADHD medication. Meanwhile, generic versions of central nervous system drugs, such as antidepressants and anticonvulsants, and cardiovascular drugs accounted for 57 percent of the annual savings.

The greatest one-year savings growth rate came in the cancer treatment category. Savings from generic oncology products topped $10 billion in 2011, more than three times higher than the $3 billion that generic cancer drugs saved in 2010. Larger savings primarily were driven by the introduction of generic versions of two aromatase inhibitors, Taxotere and Gemzar for which the brand patents expired (here is the complete report).

Looking ahead, between 2012 and 2015, brand-name drugs with $67 billion in annual sales will lose patent protection. Patents also will expire for brand-name biologics with more than $25 billion in annual sales. As a result, IMS forecasts that generic utilization will reach nearly 87 percent by 2015, assuming that the FDA can establish a biosimilar pathway.