Generics Yield Increased Savings for Patients

Author: Kathleen Jaeger, GPhA President and Chief Executive Officer

It has only been a couple of months since the generic pharmaceutical industry kicked off its yearlong celebration of the 25th Anniversary of the enactment of the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act), which created the modern US generic pharmaceutical industry.

In January, the Harris Poll published the results of a survey that found that 81% of respondents indicated that they would choose a generic over a brand name drug. This compares with just 68% in 2002. The poll also found that 40% of respondents said they would “always choose to buy generic drugs over brand name,” a 17% increase since 2006. Conversely, only 4% of respondents said they “would always choose to buy brand name prescription drugs over generics.”

Also during January, the results of the “National Health Spending in 2007” report was published that demonstrated growth in US health care spending in 2007 was at its slowest rate since 1998. The 4.9% increase in retail prescription drug spending, the slowest growth rate since 1963, was in part the result of “a further increase in the generic dispensing rate.” In addition, the report found that prescription drug prices grew at only 1.4% in 2007, “driven in part by increased use of generics and the introduction of generic drug discount programs by large retail chain stores.”

As America ended 2008, generics were being dispensed for approximately 69% of all prescriptions but accounted for only 16 cents of every dollar spent on prescription medicines. For 25 years, generic medicines have been saving patients and the government billions of dollars a year.

2009—The Year of Biogenerics?

With the contribution of generic pharmaceuticals to affordable health care so evident, it is possible that the 25th Anniversary of Hatch-Waxman could see the floodgates open to even more significant patient savings, namely through the approval of a sciencebased pathway for biogenerics.

During the GPhA Annual Meeting, held in February, Rep Henry Waxman (D, CA) noted in a special message to our industry that, “Biologics are one of the fastest growing and most expensive categories of drugs, frequently costing tens of thousands, even hundreds of thousands of dollars per year. These drugs are often life-saving but when we originally enacted our law 25 plus years ago, biologics were essentially nonexistent, so we didn’t explicitly cover them under the law. A workable scientific regulatory and legal pathway for biogenerics will ensure more affordable medications for Americans, and we believe it will spur the innovation in the biotech markets. I intend to use my position as chairman (of the Energy and Commerce Committee) to improve the health and well-being of this nation. I know that a critical piece of achieving that goal is to bring generic competition to the biotech drug market. The ballooning costs of these drugs are unsustainable, and I want to work with the president, my committee, all my colleagues in Congress, and the full array of stakeholders to get this job done.”

On March 11, Rep Waxman made good on that promise, introducing HR 1427, the Bipartisan Biogenerics Consensus Bill: “Promoting Innovation and Access to Life-Saving Medicine Act,” with Reps Nathan Deal (R, GA), Frank Pallone (D, NJ), and Jo Ann Emerson (R, MO). This bipartisan, consensus bill achieves the balance of fostering pharmaceutical innovation while also making affordable medicines available to patients.

Consumer, business, and labor organizations, and many of our nation’s governors support legislation that brings biogeneric medicines to patients sooner rather than later. Over the past 2 years, members of Congress have learned a great deal about biogenerics and heard from the FDA that the science exists to approve safe, effective, and affordable biogenerics. They have heard that the FDA scientists want the authority and flexibility to determine how to best ensure safety and efficacy. In addition, they have heard that significant cost savings will result from bringing biogenerics to patients.

Studies continue to show that creating a workable biogenerics approval pathway will not only bring life-saving medicines to patients in need, it also will save our health care system billions of dollars.

Hatch-Waxman has clearly demonstrated that we can achieve the much needed balance between pharmaceutical competition and innovation for the benefit of patients, payers, and state and federal governments. We have done it before with generics, and we can do it again with biogenerics. Although there will be much debate as legislation moves forward, we are hopeful that biogeneric legislation will provide the capstone to our celebration of 25 years of more affordable medicines for consumers.