US Saved $254 Billion in 2014 From Use of Generic Drugs

The use of generic drugs is saving the United States healthcare system billions of dollars in spending every year, according to the latest Generic Drug Savings in the United States report by the IMS Institute for Healthcare Informatics on behalf of the Generic Pharmaceutical Association (GPhA).

In 2014 alone, the US saved a record $254 billion—an all-time high and almost $8 billion more than the previous year—bringing total savings over the last decade to $1.68 trillion.

“The facts are irrefutable: generic drugs drive enormous health care savings,” Chip Davis, GPhA president and chief executive officer, said in a statement. “This new report reinforces that generic drugs are a critical part of any solution to rising costs for patients, payers and for the entire health care system.”

Generic prescriptions accounted for 88% of drugs dispensed nationwide in 2014, but only 28% of the costs.

The report also examined generic drug savings by therapy area. The therapies targeting mental health, hypertension, and hypercholesterolemia accrued the most savings, followed by pain relief, anti-ulcerants, and antibiotics. Without generic alternatives, annual spending for these therapy areas would soar with an extra $27.9 billion for just hypertension medication itself.

Additional study findings compared generic savings by age, payer (commercially insured patients vs federal government programs), and state.

Medicines for seniors accounted for more than one-third of the total savings, and therapies for older adults accounted for the majority. Medicare saved $76.1 billion, an average of $1923 per enrollee, while Medicaid saved $33.5 billion, an average of $479 per enrollee. As a result, each state saved an average of $5 billion each.

Since data has been so favorable for the use of generics, the study proposed different strategies for maintaining and increasing generic cost savings. The most effective way to keep costs low is to increase competition in the market between generics. This can be accomplished by encouraging Congress to speed up FDA approval of generic drug applications that are awaiting regulatory action, regulating abuse by brand drug companies of programs like Risk Evaluation and Mitigation Strategies (REMS) to keep generic drugs from entering the market, and encouraging the FDA to implement policies to facilitate the approval of biosimilar products. Together, these strategies aim towards a common goal of providing American consumers with more choices in generic medications.

“Patients, taxpayers and others will find no better partner than the generic industry in efforts to reduce health expenses and promote savings and access. The best way to accomplish this is to increase competition from generic drugs,” Davis said. “GPhA will continue advocating for efforts that grow savings and eliminate barriers to patient access.”