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AAM charts generics' ability to contain costs.

WASHINGTON -- Generic medicines were responsible for $252 billion in reduced spending on health care in 2016, and $1.6 trillion in savings over the past decade, according to an annual report from the Association of Accessible Medicines (AAM), which calculated the savings against what Americans would have spent if only patent-protected branded drugs had been available.

Generic medications used by seniors account for one-third of the savings over the decade, states the report. Generic drugs to treat mental health, hypertension, cholesterol and ulcers accounted for half of the savings.

Nearly 3.9 billion generic prescriptions were dispensed last year, states the report, titled "2017 Generic Drug Access and Savings in the United States."

AAM, formerly the Generic Pharmaceutical Association, has issued the report in each of the past nine years to examine the place generics hold in the pharmaceutical ecosystem.

"Generics make up 89% of prescriptions dispensed but only 26% of total medicine spending," says the report, which asserts that generic and biosimilar medicines are the key to containing "runaway" increases in prescription drug costs.

"Put another way, brand drugs are only 11% of prescriptions but are responsible for 74% of drug spending," the report notes. "Vital generic products help millions of patients. Today's generic drug savings provide the health system with the ability to make investments in tomorrow's new medicines."

The report also finds that patients who are prescribed generics are three times less likely to abandon their prescription. "For the first time, the third-party researchers who conducted the study analyzed the differences between brand and generic abandonment behaviors," AAM states. "That is, once patients request a prescription at the pharmacy, do they pick it up, or do they abandon a medication that could improve their lives? The report concludes that new patient abandonment rates for brand-name drugs are 266% higher than for generic drugs. Co-pays play a significant role in abandonment; 90% of generic co-pays are under $20, compared to 39% of branded co-pays."

Generic drug makers are able to pass along savings because they aren't bearing the costs associated with bringing new drugs to market. A 2014 report published by the Tufts Center for the Study of Drug Development put the cost of developing a prescription drug that gains market approval at $2.6 billion.

The AAM report comes as the Food and Drug Administration considers options for containing health care costs. The agency is taking action to increase competition in the market for prescription drugs, and to facilitate entry of lower-cost alternatives. The FDA has implemented, for the first time, a new policy to expedite the review of generic drug applications where competition is limited. The FDA's actions are among the first taken under the agency's Drug Competition Action Plan, announced in late May by FDA Commissioner Scott Gottlieb. Prior to Gottlieb's arrival, the agency had sought to avoid the politics of pricing and stick to matters concerning drug efficacy and safety.

AAM's report refers to the Express Scripts Prescription Price Index to illustrate the divergence in prices of brand-name drugs and generics, with branded drug prices increasing more than 200% between 2008 and 2016, a rise that exceed the rate of overall inflation. Generic drug prices declined during the nine-year period.

The AAM report also cites a 2016 study from the Department of Health and Human Services to explain the price differential. That report attributes "robust competition among multiple interchangeable products that drive prices for generic drugs to be a fraction of that of the corresponding brandname drug."

AAM is urging federal policy makers to adopt policies that enhance competition in the prescription drug market, and to discourage the practice by some branded drug companies of using FDA rules to deliberately forestall the entry of expected generic drug competition.
Top 10 Generic Drugs Ranked by Savings

Brand Products                Generic     Brand       Price of
(Generic Equivalent)           Entry    Pre-expiry    Generic
                               Year       price      Equivalent
                                        (per unit)      2016
                                                     (per unit)

Lipitor[R] (atorvastatin)      2011       $3.29        $0.11
Prilosec[R] (omeprazole)       2002       $3.31        $0.08
Zofran[R] (ondansetron)        2006       $21.67       $0.20
Cymbalta[R] (duloxetine)       2013       $4.61        $0.45
Zocor[R] (simvastatin)         2005       $2.62        $0.03
Neurontin[R] (gabapentin)      2004       $1.02        $0.09
Norvasc[R] (amlodipine)        2007       $1.54        $0.02
Singulair[R] (montelukast)     2012       $3.74        $0.17
Abilify[R] (aripiprazole)      2015       $21.68       $3.62
Seroquel[R] (quetiapine)       2012       $6.00        $0.29

Brand Products                 2016      Percent        2016
(Generic Equivalent)          Savings    Savings     Dispensed
                               ($B)                   Rxs (Mn)

Lipitor[R] (atorvastatin)      $14.4       97%         106.3
Prilosec[R] (omeprazole)       $11.1       98%          76.3
Zofran[R] (ondansetron)        $10.0       99%          23.2
Cymbalta[R] (duloxetine)       $8.2        90%          49.0
Zocor[R] (simvastatin)         $6.9        99%          60.4
Neurontin[R] (gabapentin)      $5.8        92%          64.2
Norvasc[R] (amlodipine)        $5.6        99%          87.4
Singulair[R] (montelukast)     $4.7        95%          39.0
Abilify[R] (aripiprazole)      $4.6        83%          9.8
Seroquel[R] (quetiapine)       $4.5        95%          20.6

Source: Association of Accessible Medicines/QuintileslMS

Generic Mental Health, Hypertension, Cholesterol
and Ulcer Medications Account for Half of the
Savings in Last 10 Years

Generics saved the U.S. health care system $1.6 trillion since 2007

2016 Savings from Generics in Billions

Mental Health      $44 Billion
Hypertension       $29 Billion
Cholesterol        $28 Billion
Anti-Ulcerants     $22 Billion
Nervous System
  Disorders        $16 Billion
Pain               $13 Billion
Cancer Anti-
  Nauseants        $11.8 Billion
Oncology           $10 Billion
Anticoagulants     $9.1 Billion
Antibacterials     $8.8 Billion
Respiratory        $7.4 Billion
Diabetes           $9.5 Billion

Source: Association of Accessible Medicines/QuintilesIMS

Note: Table made from bar graph.
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Title Annotation:Generic Drugs Report: State of the Market
Publication:Chain Drug Review
Date:Sep 25, 2017
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