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CQ – Generic-Drug Study Touted in Effort to Reduce Health Care Costs

CQ – Generic-Drug Study Touted in Effort to Reduce Health Care Costs


Generic drugs saved consumers more than $1 trillion over 10 years and offer a prime area in which to find savings in health care, the generic drug industry and Democrats said Thursday.

A study by the IMS Institute for Healthcare Informatics, a market research company, showed that savings from generic drugs amounted to $1.07 trillion between 2002 and 2011, including $193 billion in 2011 alone.

Generic drugs now account for nearly 80 percent of all prescriptions written, and increased use in Medicaid and Medicare could lead to more savings, said Ralph G. Neas, president of the Generic Pharmaceutical Association, which requested the study.

“We’re part of the solution of making sure of the sustainability of the health care system, and, with respect to the national economy, I’m optimistic that we are going to be a part of this solution,” Neas said.

Democratic Reps. Peter Welch of Vermont and Henry A. Waxman of California agreed.

“This is literally money on the table where we can get good health outcomes and taxpayer and consumer savings,” Welch said. He noted that a 5 percent increase in generic drug use in Medicaid would result in $3.4 billion in savings.

In addition, Neas cited the new marketplace for generic biologic drugs, also known as biosimilars, as a “game changer.”

The 2010 health care law (PL 111-148, PL 111-152) gave the Food and Drug Administration authority to approve biosimilar drugs, and a recent measure (PL 112-144) allowed the agency to collect user fees for its review of biosimilar drug applications.

Waxman, one of the co-authors of the 1984 law (PL 98-417) that is credited with streamlining the generic drug approval process, also praised the increased use of generic drugs. He said he would continue to conduct oversight over the next few months to ensure generics are getting to market in a timely way.

He also noted he would like to shorten the period of data exclusivity that biologic drugs have, currently set at 12 years under the health care law. President Obama and other Democrats have also advocated for reducing that time period.

Another potential place for savings, Neas said, is a proposal that was included in a Senate version of the FDA user fee bill but left out of the final conference version. The provision would have prohibited brand-name companies with a Risk Evaluation and Mitigation Strategy — required by FDA to manage a known or potential serious risk with a drug — from denying samples of drugs to generic companies.

Neas said the provision would have earned $750 million in savings, and savings could add up to more than $1 billion by the time Congress looks at reauthorizing the user fee program five years from now.

“I think that there will be a lot of bipartisan support for this,” he said.

In addition, Neas said his group wants to continue to work on increasing safety throughout the drug supply chain.

The IMS study found that savings from generic drugs increased by 22 percent from 2010 to 2011, the largest year-over-year increase since 1998. In addition, savings from generic drugs that have entered the market since 2002 totaled $481 billion over 10 years.