Generic drugs have saved $734 billion to US health system over 10 years
The Hatch-Waxman Act passed in 1984 to hasten the introduction of generic competition into the pharmaceutical market. According to an analysis from IMS Health, $734 billion have been saved in the past 10 years through the use of generic pharmaceuticals.
$121 billion was saved in 2008 alone, based on the IMS data, published in the report, Economic Analysis of Generic Pharmaceuticals 1999-2008.
The long name of the Hatch-Waxman Act is the "Drug Price Competition and Patent Term Restoration Act of 1984." The law has indeed brought drug price competition into the prescription drug market -- which was anticipated when it passed to save "$1 billion over the next decade."
In fact, the savings have been 734 times that forecast.
Examining these data by therapeutic category is interesting. The chart on the right shows the details: clearly, generics have hit the top-line of nervous system branded drugs hard, registering $250 billion worth of savings in a decade. The nervous system category would include brand names like Ambien and Zoloft.
The second most prominent area in generic drugs savings were yielded by cardiovascular drugs which would include the blockbuster brand names like Zocor and Pravachol.
This analysis was commissioned by the Generic Pharmaceutical Association (GPhA), the lobby for the industry, to commemorate the 25th anniversary of Hatch-Waxman.
Health Populi's Hot Points: The generic substitution rate reached 69% in 2008; 2.6 billion of the 3.8 billion prescriptions were filled with generics. One of the key driving forces for generic substitution in 2008 was the expiration of blockbuster drug patents, leading to:
1. Medicare Part D demand for cheaper drugs to manage seniors' potential donut holes
2. Insured consumers' growing demand for cheaper drugs due to widening tiers of co-pays in prescription drug plans
3. Uninsured consumers' looking for cost-effective health products and services when paying 100% out of pocket.
Retail pharmacies' use of very low cost generic drug fills to lure consumers into the more profitable front-of-store aisles further drives value-searching health citizens toward generic substitution.
The GPhA estimates that 16 cents of every dollar spent on prescription drugs goes for generics. Clearly, these products have brought a lot of value to American payers for drugs, from employers and governments (that would be taxpayers) who cover prescription drug plans, to individuals who pay out of pocket for health care. More such savings will accrue in the next few years as more blockbusters go off-patent.
We are reminded here of the health economics metric that one stakeholder's revenue or cost-savings is another's loss or debit.
The generic drug supply depends on a resilient, buoyant pipeline of more brands that go off-patent. The next category under consideration is biotech derived products -- the "biogeneric" category. Datamonitor estimated that by 2010, patents will expire on brand biologics worth $15 billion in annual sales. And the savings will just keep on comin' for some...
...while biotech companies must gear up for their share of generics' bite out of revenues. According to GPhA, spending on biologics will reach $100 billion in 2010, accounting for over 25% of all drug spending. Biotechs should learn from what Big Pharma has been through and figure out how to effectively communicate the value of their products before they get commoditized -- either through market factors or Congressional fiat.
posted by Jane Sarasohn-Kahn at
12:46 PM
2 Comments:
Often when one goes to seek medical attention from a health care provider, that provider usually writes a prescription for that patient for medication to either treat the symptoms of the disease that may be present.
Or, the health care provider may actually cure the disease, as with the case regarding antibiotics.
Also, the provider may prescribe medications to delay the progression of a disease that may exist with their patient.
The actual cost of that medication the patient receives from a pharmacy can vary greatly, and here is why:
More now than in the past, generic medications have been encouraged and selected by prescribers at a much higher rate.
Health care providers are aware that generic drugs are less expensive than branded drugs that are equivalent to the generic drug prescribed as far as safety and efficacy are concerned.
Nearly two thirds of all medications prescribed to patients in the United States are now for generic medications.
Generic medications are bioequivelant copies of branded medications that previously existed, yet no longer have a patent on these medications, which allows generic drug companies to produce these formally expensive drugs and a much lower cost.
Why aren’t generic medications prescribed all the time, then?
The branded drugs have their company sales representatives who leave samples of these branded medications with the health care provider, with the intention and belief that this provider will select this branded drug as a result.
Generic medications, while much less expensive than branded medications, do not have samples of these drugs to be left with health care providers.
Around 4 billion prescriptions filled every year, so cost savings is rather important.
Generic medications are about two thirds of this total pharmaceutical market with the drugs included in this market.
However, while most prescriptions are for generic medications, this still is less than 15 percent of the total money spent on prescription drugs.
With branded medications, about 75 percent of these newly approved drugs by the FDA are similar in efficacy as drugs that already exist in this market, so there is no benefit with many of these expensive branded drugs.
Roughly half of all newly approved prescription drugs have had serious side effects soon after they have been approved, so newer is clearly not always better, of course, as it relates to safety for the patient taking the drug.
Most recently, certain managed health and prescription providers have been actually paying doctors to initiate if not switch their patients from branded medications they may be taking to generic medications, if possible.
This may be due to a reaction caused by branded pharmaceutical companies offering similar inducements to health care providers to select their promoted medications.
Both financial inducements that occur are remarkably legal, overall. Yet I find financial inducements in health care inappropriate and unethical when a health care provider treats a patient with prescribing medications for them.
Not long ago, generic drugs were not prescribed that often, or produced to a great degree, because of the cost of bringing such a med to the market, which at the time required the same clinical trial protocols as branded meds.
Fast forward to 1984, as this is when the Hatch-Waxman Act was introduced.
This Act only required generic meds to demonstrate bioequivalence to the branded med that they desire to reverse engineer.
So nothing else was now required in the approval process that is mandated by branded medications to be completely developed and approved by the FDA.
This reduced cost of generic manufacturing and approval allowed for more of these meds to saturate the pharmaceutical market, and doctors started prescribing more generic meds as a result.
Branded pharmaceutical companies were not pleased in large part with this new act.
So some drug companies devised schemes to extent the patents of their branded meds through such tactics as altering their existing branded medication by combining it with another generic drug from another class of medications.
This tactic is referred to as evergreening, and the tactic extends the patent life of their branded drug of concern.
Additional branded drug company tactics include frivolous patent infringement lawsuits, which delays generic availability for a longer period because of these lawsuits.
Also, branded pharmaceutical companies have been known to actually pay generic manufacturers to not release the equivalent of a branded medication they wish to continue to promote.
The pharmacies that fill the prescriptions for the patients written by the health care providers support generic use, as pharmacies make more money off of generic prescriptions they fill for others compared with branded drugs.
Generics seem to remain a concern to branded companies in spite of their efforts of avoiding their access into a market they believe to own.
Recently, branded pharmaceutical companies have either purchased smaller generic drug companies, or have started to produce generic medications on their own.
This is due to the progressive impact generic drugs are having on the business of branded drug companies.
Also, other reasons for increased generic prescribing may be due to the awareness and clinical experience of the previous branded med that has now been replicated by the generic medication.
Again, newer drugs at times are not a desirable choice of treatment for patients because of understandable concerns by the prescriber.
One particular concern is safety that has not fully established with a new medication.
The familiarity of the generic drug accessible to them after the patent expiration of a branded medication the prescriber has utilized often in the past with treatment success for their patients allows the prescriber to utilize the generic equivalent not that it is available often.
Many clinical studies have proven that generics are as effective compared with branded medications for particular disease states.
The cardiovascular disease trial called the ALLHAT trial showed this. In this trial, with surprise to many, the old class of drugs called diuretics showed equivalence if not superiority over the branded medication utilized in this trial.
This comparative effectiveness trial lasted over four years, and was funded mostly by the NIH.
Most encouraging for even greater use of generic meds is that at least one company has created vending devices for doctor’s offices for dispensing both generic and over the counter drugs.
This may discourage the use of branded equivalent drugs at a greater amount with generic samples available with this method.
In addition, and in some cases, doctors can order generic samples from the manufacturers directly.
Both mechanisms for obtaining samples of generic drugs by a health care provider remain quite rare, however.
Then there are some health care providers who insist that you get what you pay for, so they are convinced that branded drugs are always more efficacious and tolerable than generic medications.
This misconception is largely a fallacy, as both are determined to be bioequivalent, since the generic drug has to show this in order for the drug to be authorized for use by prescribers.
Efficacy differences may exist, but are thought to be minimal.
I’m sure it’s possible others have encouraged such doctors to take such a stance that is absent of evidence.
In the U.S. Health Care System, cost is a rather large concern for members of the public health, and those who attempt to restore their health as it needs to be at times.
Generic medications provide financial relief for patients in need of drugs to improve their health.
And both the health care provider as well as the patient can be assured that a generic drug prescribed to, and taken by, a patient will provide the efficacy needed to address the medical problems of the patient.
More importantly, the patient saves money, without compromising their safety,
Dan Abshear
By
Quiact, At
May 13, 2009 10:36 PM
Although generic drugs are more beneficial in many ways, gov should take more safety measures for generic drugs coming from china.
By
Generic drugs, At
June 11, 2009 6:03 AM
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