Prescription for Sequestration Pain: Generics Industry Offers Congress Six Solutions to Save Tens of Billions, Reduce Debt

Published Online: Wednesday, March 13, 2013
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WASHINGTON, DC (March 13, 2013) — The Generic Pharmaceutical Association (GPhA), which represents the world’s leading generic drug manufacturers and suppliers, sent a letter to both houses of Congress outlining six key ways to lower government spending through a simple and proven means: by increasing the use of life-saving and affordable generic medicines.

“So many ways to cut costs require enormous sacrifice,” said Ralph G. Neas, President and CEO of GPhA. “But generics have proven that drug cost reductions are available while maintaining safety, efficacy and improved health outcomes. We can offer patients quality, FDA-approved medicines at a fraction of the price, and save billions in the process. Over the past decade, generic medicines have saved the health care system more than $1 trillion. In 2011 alone, the use of generic prescription drugs saved consumers, patients and the U.S. health care system $193 billion -- a rate of $1 billion every other day. If we work together to maintain those gains, and to increase the use of generics, we can save billions more.”

The letter includes a mix of approaches, including positive steps like providing incentives for states that promote the use of generics, and encouraging generic use by key populations, such as those in government programs with low utilization rates, and among people with chronic conditions. It also calls for removing barriers to generic competition by prohibiting both state-level “carve-outs” that provide unnecessary preferences for brand medicines and the abuse of federal-level safety measures to delay competition. The letter also recommends limiting the ability for biotech companies to extend their exclusive place in the market through “evergreening.” Specifically, the letter outlines six ways to maintain or grow the use of generic medications, including:

  1. Encourage generic drug use for the Medicare Low Income Subsidy (LIS) population;

  2. Close the loopholes in the current “REMS” policy;

  3. Pass policy prohibition against state carve-outs that block generic access;

  4. Integrate incentives for generic utilization/adherence in chronic management reforms;

  5. Reduce the exclusivity period for biologics from 12 years to seven; and

  6. Increase Medicaid payments to states that increase the use of the least costly drugs available.

These recommendations come at a time when generic cost savings, compared to brand medicines, has never been greater. While brand drugs become pricier, generics are only becoming more affordable. In fact, a recent Express Scripts study found that while the cost of an unchanged market basket of brand drugs rose from $100.00 to $165.44 between January 2008 and December 2012, the cost of an unchanged market basket of generic drugs decreased from $100.00 to $57.38. As trends move in this direction, policies that encourage generic utilization and competition stand to save the government even more than they have in past years -- representing billions of dollars to reduce the debt and help address today’s dire budget straits.

GPhA Six Solutions for Congress Letter: House

GPhA Six Solutions for Congress Letter: Senate

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