Generic drugs helped the US government save almost $1 trillion since 1999, according to an estimate of an IMS Health study commissioned by Generic Pharma Association, which counts among its members major Indian drugmakers such as Ranbaxy, Sun Pharma, Glenmark and Dr Reddy?s. The value of saving on account of generic drug usage in 2010 alone is pegged at $158 billion. This translates to a saving of over $3 billion every week for the US healthcare system, at the current rate of generic drug utilisation, according to ?Savings: an economic analysis of generic drug usage in US?.
Of the total, one third of the saving in the last decade is attributed to newly genericised drugs introduced since 2001. Decadal savings from such recent generic medications (that have entered the market since 2001) have continued to grow at an exponential rate, touching a value of over $360 billion by the end of 2010 accounting for 40% of overall savings in the decade which itself stood at $931 billion.
?In 2010 alone, the US health care system saved nearly $100 billion from these recently genericised products (generic drugs introduced since 2001), or 63 % of the savings for the entire year. Older generic medications, those approved prior to 2000, continued to provide a steady foundation of cost reduction as well, producing nearly $60 billion in savings in 2010,? the report calculates. These findings come at a time when Congressional Budget Office (CBO) has underlined that rising cost of healthcare is the greatest threat to US’s fiscal future, Ralph G Neas , CEO of Generic Pharma Association points out.
These claims are significantly higher than other comparable historical estimates. When the generic drug industry was established (the Hatch-Waxman Act enforced) Congress in 1984, it was projected that generic drugs would save $1 billion a year over the first decade. Fourteen years hence, the CBO reported (in 1998) that savings realised from the substitution of generic for brand-name drugs saved consumers between $8 to 10 billion in a single year 1994.
A therapeutic break-up in the report shows that generic products for nervous system and cardiovascular treatments alone account for 62% of the cost savings. The report predicts that success of generics in achieving savings using traditional drugs can be replicated in the biological drug market as well.
Estimates from various economic impact studies pin the projected savings from $42 billion on the low-end to as high as $108 billion over the first 10 years of biogeneric market formation, the report says about potential savings from biogenerics. CBO estimates that biogenerics will initially have prices about 25 % below their brand-name counterparts and, after several years competition, would have prices about 40 % below those counterparts. In case of chemical drugs, launch of generic version erodes prices by 40% to 90% on branded oral-solid medications. The generic industry achieves these cost savings by avoiding the expense of clinical trials, as well as the initial drug research and development costs that were incurred by the brand-name manufacturer.
Savings generated on account of newer generics is expected to shoot up further the next several years as many global blockbusters brand drugs would be going off patent and face generic competition for the first time in the largest drug market, US.