The use of generic prescription drugs saved U.S. consumers and the nation's health care system $931 billion over the past decade, according to an analysis released by Generic Pharmaceutical Association (GPhA).

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GPhA: Generics saved nation $931B over past decade

September 22nd, 2011

WASHINGTON – The use of generic prescription drugs saved U.S. consumers and the nation's health care system $931 billion over the past decade, according to an analysis released by Generic Pharmaceutical Association (GPhA).

The study, results of which were announced Wednesday, was conducted for GPhA by the IMS Institute for Healthcare Informatics and IMS Health and covers the 2001-2010 time span.

Last year alone, generic drug use tallied roughly $158 billion in savings, an average of $3 billion every week, GPhA noted.

The analysis also revealed that the Medicaid system could save over $1.3 billion annually by boosting generic drug utilization by just two percentage points. Nationally, generics represent about 70% of Medicaid prescriptions, yet outside Medicaid generic medications account for 78% of all prescriptions.

With Medicaid paying on average 80% less for a generic prescription versus a brand-name drug, federal and state governments could save in excess of $600 million for each percentage point increase in generic drug usage, according to the study.

"These findings could not have come at a more critical time," GPhA president and chief executive officer Ralph Neas said in a statement. "The analysis shows beyond doubt that savings achieved through the use of safe and effective generics deliver a huge win to consumers looking to hold down their health care costs. Moreover, the savings provide a winning solution to those in Washington trying to address the sustainability of the nation's health care system, as well as the national economy."

Neas pointed out that the cost savings generated by generic drug use has been greater than anticipated.

"When the generic drug industry was established by Congress in 1984, it was predicted that generic drugs would save our country $1 billion a year," he explained. "As this analysis shows, the savings generated by generic prescription drugs are now three times that amount every week. As a result, millions of Americans are able to get the medicine they need at an affordable cost."

He also noted that the Congressional Budget Office recently cited the rising cost of health care as the chief threat to the nation's fiscal future — a situation where generics could play a key role in reining in medical expenditures.

"It is significant that the savings delivered by generics are systemwide and not the result of simply cost shifting," Neas stated. "As such, the savings gained through the use of generic medicines benefit both the public and private sectors."

Commenting on the analysis, Mylan Inc. president Heather Bresch called expanded use of generics "one of the most effective ways to reduce health care costs."

"It's also one of the only universally agreed upon solutions to concerns related to health care expenditures," Bresch said in a statement. "With one in every 11 prescriptions dispensed in the U.S. being a Mylan product, we are proud to do our part in helping to reduce costs for consumers, payers and the U.S. health care system. While generic drugs now account for more than 75% of prescriptions dispensed in this country, there is still room to increase utilization, expand access and further increase savings.

"The substantial savings generated by generic drugs can be credited in large part to the successful implementation and evolution of the 1984 law, which Congress intended to encourage increased access to generic prescription drugs," she added. "We now have an opportunity to achieve far greater savings through increasing access to biogeneric medicines in the U.S."