Generics Hold Cost of American Medicines in Check Even as Specialty Drug Prices Soar

Published Online: Friday, March 8, 2013
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GPhA Warns Against Legislative Efforts to Undermine Savings

Washington, DC (March 8, 2013) — For the first time in 20 years, the cost of treating common ailments like high cholesterol, diabetes and high blood pressure dropped in 2012 due to the increased availability of lower priced generic prescription drugs. A report released earlier this week by pharmacy benefits manager Express Scripts showed that, while prices for specialty medications to treat rheumatoid arthritis, cancer, hepatitis C and other serious diseases shot up more than 18 percent last year, the use of generic medicines offset much of the higher cost, resulting in a modest 2.7 percent increase in overall drug spending.

“The Express Scripts study is yet another validation that generic drugs are a key part of the solution to holding health care costs in check,” said Ralph G. Neas, President and CEO of the Generic Pharmaceutical Association (GPhA). “As critical as new drug innovation is to the health of all Americans, access to safe, effective and lower cost generic versions of brand medicines is equally critical in sustaining the health care system,” Neas said.

Government projections show that the average annual growth in health care spending will be 6.2 percent per year through 2018, outpacing annual growth in the overall economy by 2.1 percentage points per year, and comprising one-fifth of the nation’s Gross Domestic Product. “Against this backdrop of escalating costs, it is abundantly clear that Congress must safeguard policies that promote generic use and shun any new legislation, such as restricting patent litigation settlements, that would delay access to affordable generics,” Neas said.

An analysis by the IMS Institute for Healthcare Informatics released in 2012 found that the use of generic drugs saved the U.S. health care system $1.07 trillion over the past decade.* Approximately 45 percent of these savings came from generic drugs that entered the market since 2002, many of which became available months and even years before the expiration of the counterpart brand drug as the result of a patent settlement.

“With generic drugs now saving consumers and the government $1 billion every other day, it would be reckless to disrupt the current process of bringing generics to market. Instead of trying to ‘fix’ what isn’t broken, we should be promoting policies that enhance our current success,” Neas said.

* According to an analysis by the IMS Institute for Healthcare Informatics published August 2012, generic drugs saved the U.S. health care system $1.07 trillion from 2002-2011, $192 billion in 2011 alone.

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