/publications/issue/2009/2009-02/2009-02-10005

Generic—and Biogeneric—Medicines Set to Play Important Role in Health Care

Author: Kathleen Jaeger, GPhA President and Chief Executive Officer

As the new administration and new Congress begin to address the challenges facing our nation, Americans will be awaiting action on both our national economy and on health care reform. Although some think that health care may take a backseat to putting our economy back on track, the truth is that the economic health of our nation is strongly tied to the health of the American worker.

Escalating health care costs have reached crisis proportions as the economy spirals downward. All across America, patients are struggling to obtain the care they need. Some are delaying doctor's appointments. Others are skipping vital medicines. For almost a quarter of a century, generic medicines have proven to save patients and the government billions of dollars annually. In 2009, increasing access to generic—and biogeneric—medicines will ensure that Americans are receiving quality health care at affordable costs.

The new administration and Congress have the extraordinary opportunity to create history in 2009 by reforming health care and passing biogenerics legislation to bring affordable lifesaving medicines to patients in need.

25 Years of Savings

2009 will mark the 25th anniversary of the landmark Hatch-Waxman Act that brought safe, effective, and affordable generic medicines to patients. The generic pharmaceutical industry has chosen as its slogan for this anniversary: "Celebrating the Past, Defining the Future." The value of the contribution of generic medicines to affordable health care is clear from the purchasing decisions consumers make every day.

Generic medicines are used to fill >65% of all prescriptions, yet the cost to patients, insurers, and the government is just 16% of the total amount spent for prescription medicines. With an average $85 difference between the price of a brand prescription and the price of the generic, the savings are clear.

Opportunity to Increase Savings

Although a rate of 65% substitution is impressive, the generic pharmaceutical industry believes that increasing the use of generic medicines offers the new administration additional opportunities for savings. For example, a 1% increase in the use of generic medicines in Medicaid programs could generate an additional savings annually of approximately $400 million, with nearly half of that savings captured by embattled state governments whose budgets are reeling under the current economic crisis.

The generic pharmaceutical industry strongly supports the increased use of generic medicines to help lower costs. We also are committed to working closely with the Obama administration and Congress to increase timely patient access to generics, including the approval of a pathway for safe and affordable biogenerics. In addition, we support initiatives that would increase funding for the FDA Office of Generic Drugs to get approved generic medicines to patients in a more timely fashion.

Biogenerics: Defining the Future

Looking ahead, the introduction of biogenerics could result in even more substantial savings for patients, with estimates ranging from $14 billion to as much as $67 billion within the first decade of competition. Given these estimates, it is clear that competition from biogenerics will create savings that dwarf those generated by traditional generic pharmaceuticals for both patients and government since 1984.

The generic pharmaceutical industry is committed to working with Congress to commemorate the 25th anniversary of Hatch-Waxman with the approval of a workable pathway that will create generic competition in biologics. The Obama administration and Congress have the extraordinary opportunity to create history again.