Generic drugs: How to keep those cost savings coming

February 1, 2016

The U. S. healthcare system saved a record $254 billion from generic drugs in 2014 and $1.68 trillion from 2005 to 2014, but much more can be done.

That generic medications provide benefit to patients, pharmacists, physicians, and others is undeniable. In fact, the U. S. healthcare system saved a record $254 billion from generic drugs in 2014 and $1.68 trillion from 2005 to 2014, according to recent data.

However, according to the Generic Pharmaceutical Association (GPhA), much more can be done to maintain the signficant cost savings associated with generic drugs.

See also: Do chains or independent pharmacies offer the best generic pricing?

The numbers speak for themselves

“Generic Drug Savings in the United States,” GPhA’s yearly report compiled by the IMS Institute for Healthcare Informatics, found that 3.8 billion generic prescriptions comprise 88% of drugs dispensed in the United States, but make up only 28% of the drug costs.

"CHip" Davis, Jr.“Safe, effective, and more affordable generic medicines mean increased access for the millions who rely on these life-saving therapies,” said "Chip" Davis, Jr., president and CEO of GPhA.

See also: Any solutions to the sudden price spikes for generics?

For example, the Medicare program saved $76.1 billion in 2014 by using generics, an average of $1,923 per enrollee. Similarly, Medicaid saved $33.5 billion in 2014, with savings per enrollee of $479.

The greatest savings from generic drugs were found in mental health ($38 billion), hypertension ($27.9 billion), and cholesterol ($26.8 billion) treatments.

Rounding out the top 10 therapy areas for savings were: pain medications ($22.8 billion), anti-ulcerants ($19.2 billion), treatments for nervous system disorders ($15.6 billion), antinauseants for cancer ($11.6 billion), antibacterials ($11.3 billion), medications for other central nervous system disorders ($9.4 billion), and therapies for attention deficit hyperactivity disorder ($8.2 billion).

“With respect to oncology treatments, the National Cancer Institute reports that breast cancer affects nearly 3 million people annually, making it the second most common cancer. Generic drugs for breast cancer and other cancers saved $4.1 billion in 2014,” GPhA stated in the report. Meanwhile, savings from prostate cancer generic drugs totaled $765 million in 2014.

Savings from generic drugs used to treat depression, which affects 19 million Americans, totaled $23.3 billion in 2014. And generic anti-seizure drugs saved the healthcare system $13.8 billion in 2014.

In addition to the savings that generic drugs brought to the U.S. healthcare system, the 2014 Express Scripts Drug Trend Report showed that, since 2008, the overall price of generic drugs has been cut roughly in half. And a Drug Channels blog reported that, in the second quarter of 2015, 44% of all generic drugs experienced a decline in cost and many others had either no increase or only a modest increase in cost.

 

Keep it going

While the use of generics has skyrocketed in recent years, the healthcare industry needs to take steps to ensure continued cost savings from generic medications, according to Davis. “To ensure these savings continue, Congress must avoid addressing outlier pricing actions taken by individual companies with sweeping policies that restrict patient access.”

Instead, according to Davis, policymakers should:

• Ensure that a fully resourced FDA can address the backlog of more than 3,800 generic drug applications that have stalled while awaiting approval. The FDA’s current median generic drug approval timelines - an estimated 48 months - must be shortened.

• Increase use of generics by the low-income Medicare population. This could save up to $17.7 billion over 10 years.

• Pass the bipartisan FAST Generics Act, in order to “curb some brand drug company abuses of FDA safety programs such as Risk Evaluation and Mitigation Strategies (REMS) used to keep generics off the market,” Davis said. This would produce an estimated savings of $2.4 billion over 10 years.

• Work closely with industry and regulatory partners to ensure that the framework for biosimilars - safe and effective alternatives to costly brand biologic drugs - expands and expedites patient access. Estimated savings from biosimilars range from $44 billion to $250 billion.

• Repeal Section 602 of the Bipartisan Budget Act of 2015. “The Medicaid rebate increase for generic drugs in the budget deal is bad for Medicaid and its beneficiaries … [and] bad for taxpayers,” Davis said.