Most savings from generics came from retailers during last decade, report finds

U.S. healthcare system saved $217 billion on generics last year

WASHINGTON — The U.S. healthcare system saved $217 billion in 2012 thanks to the use of generic drugs, according to a new report by a generic drug industry trade group.

The report, compiled by IMS Health on behalf of the Generic Pharmaceutical Association, found that since 2003, the healthcare system has saved $1.2 trillion. This year's report was also the first to break out savings by payer type at the retail level, finding in 2012 alone, $171 billion in savings came from retail, while retail savings over the past decade were $931 billion, or 76% of the total. Total generic savings in 2011 were $188 billion, and the annual rate of increase in savings has been about 17% per year since 2007.

Meanwhile, out-of-pocket cash payers have saved $78 billion over the past decade, most of them uninsured and poor customers, and Medicaid beneficiaries who got prescriptions from retailers accounted for $96 billion in savings over the decade. Medicare Part D and other federal programs accounted for $301 billion, while seniors enrolled in Medicare Part D themselves since the program started in 2006 accounted for $180 billion.

"From policymakers to patients, any efforts to curtail health spending must capitalize on the savings from safe, affordable generic medicines," GPhA president and CEO Ralph Neas said. "In a time when cutting costs is everyone's priority, generics continue to put more treatments within reach for so many people. Embracing policy that encourages access to generic medicines goes hand-in-hand with savings."

In total, Americans spent about $325.8 billion on prescription drugs in 2012, according to the report, a figure that could reach as high as $450 billion by 2017 if enrollment in the Patient Protection and Affordable Care Act insurance exchanges reaches capacity and if branded drug prices continue increasing above the inflation rate. "This level of spending would be unsustainable if not for the savings generated by the use of generic drugs," the report read.

More than half of the total savings come from new generics, defines as those introduced in the past 10 years, with $157 billion of the total for 2012, or 72%, coming from the newer generics, compared with $123 of the total in 2011, or 65%.


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