Increased Generic Drug Utilization Can Reduce Health Care Costs, GPhA

Main Category: Pharma Industry / Biotech Industry
Article Date: 20 May 2005 - 3:00 PDT

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In testimony today before a House of Representatives Committee, the Generic Pharmaceutical Association (GPhA) encouraged Congress to take several basic steps to make health care and prescription drugs more affordable for all consumers.

"While current generic utilization saves America tens of billions of dollars each year on the cost of medicines, increasing utilization will create even more dramatic savings," Kathleen Jaeger, GPhA President and CEO testified before the House Energy and Commerce Subcommittee on Health. "With costs that are up to 80 percent less than the brands, the use of generic pharmaceuticals could help arrest the escalation of drug spending at both the federal and state levels, and for individual consumers as well."

Jaeger said GPhA's recommendations for achieving substantial health care savings can be accomplished by adopting initiatives in two broad categories:

-- Adopting or encouraging the use of practices that immediately increase the substitution of Food and Drug Administration-approved generic pharmaceuticals for more expensive brand name drugs. A one percent increase in generic utilization would result in nearly $4 billion in savings for consumers.

-- Ensuring that federal and international legislation as well as trade agreements do not disrupt the level playing field necessary for the continued, timely introduction of affordable life-saving generic drugs.

Generic medicines are required to have the same active ingredients, efficacy, safety requirements, manufacturing standards, and dosage levels as their brand name counterparts in order to receive Food and Drug Administration approval. The only real difference between the medicines is in the price: generic medicines cost 30 percent to 80 percent less than brands. According to the National Association of Chain Drug Stores, in 2004, for example, the average price of a prescription dispensed with a generic medicine was $28.74, while the average price of a brand name drug was $96.01. That's a difference of $67.27 per prescription when the generic is substituted.

GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk active pharmaceutical chemicals, and suppliers of other goods and services to the generic drug industry. Generics represent 53% of the total prescriptions dispensed in the United States, but only 12% of all dollars spent on prescription drugs. For further information, please contact GPhA at 703-647-2480, or visit our web site at http://www.gphaonline.org.

Jaeger's testimony is available online at
http://gphaonline.org/policy/testimony.html.

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