The Generic Pharmaceutical Association (GPhA) released the results of an independent study revealing huge cost saving attributed to the use of generic drugs in the US health system.

GPhA released the study results as part of its 25th anniversary of the  Hatch-Waxman Act. The study conducted by IMS Health disclosed that generic drugs usage saved the American health care system more than US$734 billion in the last decade (1999-2008), with approximately US$121 billion in savings in 2008 alone. The Hatch-Waxman Act was initially conceived to save US about US$1 billion per year in 1984; this aspiration has far exceeded the intention, with the US$1 billion savings achieved in every 3 days according to the President & CEO of GPhA - Kathleen Jaeger.

In 1994, ie the 10th anniversary of the enactment of Hatch-Waxman, an annual savings has reached approximately US$8 billion to US$10 billion. The new data released on 07-May-09 showed that by 1999, ie. 15 years after Hatch-Waxman became law - generics were generating a massive US$49 billion in annual savings.

From 1999 to 2004, generic savings increased steadily at an annual rate of between 3% and 10%, with savings growing from US$49 billion in 1999 to US$69 billion in 2004. Beginning in 2005 and continuing through 2008, the savings generated by generics grew at a double-digit annual pace, with the highest growth rate coming in 2008 when the savings topped US$121 billion, a full 20% ahead of the prior year.

What has caused the acceleration of the savings from 1-digit to 2-digit pace? The analyst attributed the phenomenon to 2 factors:

• an increase in the overall percentage of generic utilization from 61% entering 2006 to 69% by the close of 2008; and
• the expiration of a number of patented  blockbusters drugs, eg Pravachol^®, Ambien^®, Fosamax^®, Zoloft^® and Zocor^®.

The analysis also found that generics introduced prior to 1999, generated approximately US$552 billion of the US$734 billion in total savings. Savings generated by generic products introduced between 1999 and 2008 provided an additional US$182 billion in savings during the period, with nearly half of this coming from 2006 to 2008. Approximately 60% of the US$121 billion in savings achieved in 2008 came from generics approved over the past 10 years.

Therapeutic categories of metabolism, cardiovascular, anti-infectives, and CNS have experienced the highest growth in savings as a result of generic usage. More than 57% of the total savings between 1999 and 2008, totaling some US$420 billion, came from the cardiovascular and CNS categories. Generic metabolism and anti-infective drugs combined to account for an additional 19% of the savings. In total, these four therapeutic categories resulted in overall savings of US$561 billion, or 76% of total savings.
As a comparison, the cost savings of generic drugs in the US in 2008 alone is nearly the size of Singpore’s GDP! That’s the colossal scale of number we are dealing with in US……!

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