Savings from generics hit all-time high

Generic medications saved the U.S. healthcare system more money in 2015 than ever before, according to the eighth-annual “2016 Generic Drug Savings & Access in the United States Report,” compiled by Quintiles IMS Institute on behalf of the Generic Pharmaceutical Association.

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This year’s report found $227 billion saved by using generics in 2015 — about $20 billion more than was saved in 2014 — which brings the 10-year savings from generics between 2006 and 2015 to $1.46 trillion. Over the course of those 10 years, the report noted that savings from generics increased 328%, as generics saved about $53 billion in 2006.

“Generic drugs are the foundation of any successful effort to lower health spending and increase patient access to affordable medicine,” GPhA president and CEO Chip Davis said when the report was released. “A diverse group of experts — the federal government, pharmacy benefit managers, consumer groups and others — agree that generic drugs drive system savings, not costs.”

Generics made up 27% of prescription drug spending, despite making up 89% of the total dispensed prescriptions in 2015 — which means that the 11% of total prescriptions made up of branded drugs drew 73% of American drug spending. And the generics that brought the most savings have been on the market for a while.

Quintiles IMS’s report noted that those launched before 2006 made up a larger share of cost savings — $829 billion — when compared to the $626 billion that generics launched between 2006 and 2015 saw, although the drug that saw the most savings when compared to its pre-expiry prices, Lipitor (atorvastatin) was launched in 2011. That drug brought 2015 savings of $12.3 billion with 93 million dispensed prescriptions. And though the top-saving drug from last year was a statin — and another statin, Zocor (simvastatin) was on the list of 10 drugs that brought the most 2015 savings — cholesterol drugs were not the class that saw the most savings last year.

Unique to this year’s savings report is its list of savings by therapy area, and the area that saw the most money saved — about $34.4 billion — is mental health. Savings in the mental health space were most notable in two drugs on the Top 10 list, Seroquel (quetiapine) and Zoloft (sertraline), which saw $4.2 billion and $4.1 billion in savings, respectively. Hypertension drugs benefited the second-most from generics, realizing $25.8 billion in savings, followed by cholesterol drugs ($24.5 billion in savings), anti-ulcerants ($19 billion) and nervous system disorder treatments ($16 billion).

And a majority of these savings — and the savings across all therapy areas — largely help public programs and those who pay cash for their prescriptions. Though 49% of the savings from generics went to commercial insurance, the remaining 51% of savings went to Medicare (30%), Medicaid (15%) and out-of-pocket payers (6%). Medicare saved $67.6 billion from generics in 2015, which is about $450 saved per enrollee, and Medicaid saved, on average, $4.4 billion per state. The report noted that, based on these numbers and a report by the Government Accountability Office from earlier this year that found a 59% overall reduction in generic costs between first quarter 2010 and second quarter 2015, Medicare and Medicaid costs would nearly double.

When broken down by age group rather than by payer, savings have a big impact on patients aged between 40 and 64 years old, making up 45% of all cost savings from generics, totaling $100 billion. Thirty-four percent of savings went to seniors older than 65 years, totaling $75 billion. Young adults 20 to 29 years old saved $30.4 billion (14% of all savings), and children between the ages of zero and 19 years old saved $16 billion (7%).

Looking forward, GPhA said that its focus for generics would be on ensuring access for patients, while fostering competition in the industry.

“It is a near universally acknowledged fact that the generic drug industry is responsible for making medicines more affordable and accessible for millions of Americans,” the report said. “GPhA will continue working with Congress, regulators, industry and patient groups to create a framework to bring greater savings and affordable medicines to our country. The foundation of that framework is greater competition.”