Generic drugs save U.S. $227 billion

Generic drugs produced $227 billion in savings for the U.S. healthcare system in 2015 and $1.46 trillion from 2005 through 2015, according to a new report from the Generic Pharmaceutical Association (GPhA).

Plus, annual savings from generic prescription drugs increased 328% from 2005-2016, according to the “2016 Generic Drug Savings and Access in the United States” report, compiled by the QuintilesIMS Institute on behalf of GPhA.

And the percentage of generic prescriptions in overall drug spending rose from 88% in 2015 to 89% in 2016, according to the report. At the same time, generics accounted for 27% of overall U.S. drug spending, down from 28% in 2015. “Year over year, this report reiterates that generics continue to be one of the most reliable sources of cost savings in healthcare,” Steven Arnoff, a spokesperson for GPhA, told Drug Topics.

"Generic drugs are the foundation of any successful effort to lower health spending and increase patient access to affordable medicine,” said Chip Davis, President and CEO, GPhA. “A diverse group of experts - the federal government, pharmacy benefit managers, consumer groups and others - agree that generic drugs drive system savings, not costs.”

The top 10 generic drugs, ranked by savings, are: atorvastatin (Lipitor), ondestran (Zofran), omeprazole (Prilosec), simvastatin (Zocor), amlodipine (Norvasc), gabapentin (Neurontin), clopidogrel (Plavix), montelukast (Singulair), quetiapine (Seroquel), and sertraline (Zoloft).

“Each is available at a savings of more than 90% from the brand price,” Arnoff said.

However, Barclays Equity Research reported there is price inflation on a small number of generic drugs, including naproxen sodium – which had a 110% in September. The firm also found big price hikes on the anti-psychotic medication aripiprazole and on esomeprazole magnesium for ulcers and acid reflux.

In addition, a recent U.S. Government Accountability Office report found that, while the price for generic drugs under Medicare Part D fell significantly since 2010, there were "extraordinary" price increases for 315 generics. More than 300 of the 1,441 established generic drugs analyzed had at least one extraordinary price increase of 100% or more between first quarter of 2010 and the first quarter 2015, GAO said.

However, Davis said that when GPhA examined the report, the organization found that the average unit dollar increase of the products cited in the report – for which data are publicly available, from 2013-2015 –was only $0.65. The average unit price rose from $1.62 in 2013 to $2.28 in 2015, according to Davis.

“A conversation about percent increases in a small minority of generic drugs distracts from the overarching reality that generic drugs experience deflation and save the American health care system $5 billion per week,” Davis said.

Other key findings from the report include:

• The most savings from generic drugs were found in mental health ($34.4 billion), hypertension ($25.8 billion), and cholesterol ($24.5 billion) treatments.
• Medicare savings from generics reached $67.6 billion in 2015-- or $1,737 per enrollee. Meanwhile, Medicaid savings were $32.7 billion-- or $450 per enrollee.
• On average, each state saved $4.4 billion from generic drugs in 2015. California, Florida, New York, and Pennsylvania had the highest savings from generics.
• Generic medicines prescribed to adults ages 40 to 64 accrued the most savings ($100 billion), while drugs prescribed to seniors (65 and older) accounted for $75 billion in savings.