Last year, 88% of all prescriptions dispensed in the U.S. were generics—a total of 3.8 billion prescriptions altogether, according to a landmark report, “Generic Drug Savings in the U.S: Seventh Annual Edition: 2015,” compiled by IMS Institute for Healthcare Informatics for the Generic Pharmaceutical Association (GPhA).
Despite the fact that prescribing in this category dominated, the amount spent on generic drugs last year was only 28% of the total spend on therapeutics. The net effect was $254 billion in drug savings—an all-time high. That translates into $700 million in savings every day.

From a cost perspective, the implications are indisputable. Generic drugs are an increasingly critical part of the healthcare ecosystem, and each year, Americans rely on them more and more as they attempt to stay healthy while navigating an increasingly expensive healthcare system.
More than a trend, cost-savings from use of generic drugs is a long-term reality, which has saved $1.68 trillion in drug costs over the last 10 years.
Are we headed for more expensive generic drugs?
Late last year, there was an uproar over sudden increases in generic drug prices, leading to the perception that generic drug prices were subject to the same precipitous price increases as specialty brand drugs.
During the “crisis” period, from summer 2013 to summer 2014, the price of the old-line ACE inhibitor captopril, used to treat congestive heart failure (CHF) and hypertension, increased from 1.4 cents per pill to 39.9 cents per pill. Another example was an increase in the cost of the broad-spectrum antibiotics, one of which increased in price from 6.3 cents per pill to $3.36 per pill.
However, by spring 2015, the generic drug price crisis appeared to be stabilizing. At a time when lawmakers were looking at drug prices with laser-like focus, and issuing subpoenas to Valeant and Turing Pharma for their pricing practices, it seemed that the price hike trend might be on the decline.
Despite this price-increase blip, the long-term trend for generic drug prices is downward. In fact, according to “The 2014 Express Scripts Trend Report,” since 2008 the cost of brand drugs has almost doubled, while generic drug prices have almost been cut in half. In a separate analysis, AARP reported that generic drug prices fell by 4% in 2013. According to that analysis, generic drug prices have declined steadily in the last 10 years.
Analysis of cost-savings by therapeutic area
When it comes to cost savings in individual therapeutic areas, psychiatric drugs top the list, with a total of $38 billion in savings last year, followed by savings for drugs used to treat hypertension and hypercholesterolemia, where savings totaled $27.9 billion and $26.8 billion, respectively.
Savings on pain drugs were $22.8 billion. Across the board, there were savings in virtually every therapeutic category, including antibiotics ($11.3 billion), cancer drugs ($7.5 billion), diabetes ($6.8 billion), Alzheimer’s disease ($2.1 billion), and numerous other therapeutic spaces.
Generic cost-savings are hard won and not guaranteed
The savings trajectory for generic drugs is so strong that it’s easy to assume that it will continue to be the same going forward, but these gains are hard won.
According to the GPhA, three steps are needed to continue to ensure access to affordable, safe medications and help consumers gain access to generic versions of the most expensive specialty drugs.
"Patients, taxpayers and others will find no better partner than the generic industry in efforts to reduce health expenses and promote savings and access," said Chip Davis, President and CEO of GPhA, in an interview. "The best way to accomplish this is to increase competition from generic drugs."
What about biosimilars?
Many would argue that the most dramatic long-term cost-savings will come when there are more biosimilars available in the marketplace. Biologics are not only the most expensive class of specialty drugs, but they are very powerful therapeutically, used to treat a variety of inflammatory conditions, as well as cancer and other diseases. However, they are often out of reach for consumers, who then have to rely on other treatment options.
The GPhA has been continually lobbying Congress and the FDA to implement regulations and policies to facilitate biosimilar approval and marketing. The focus has been on creating a well-defined approval pathway, as well as a workable biosimilar naming system and interchangeability policy to create real competition in the U.S. in a sector where there is virtually none.
Biosimilars are not included in the most recent generics cost-savings report. That's not much of a surprise since there is only one approved biosimilar in the U.S., Zarxio (filgrastim-sndz). It hasn’t been in the market long enough to generate cost-savings data for the report, but if the rest of the world is any example, having a strong biosimilars market can significantly drive down costs.
Another consideration: Even as non-biologic generic drugs are helping to contain prices, increasing prices for specialty drugs are outpacing those savings. Express Scripts reports that the prices of specialty drugs have increased four-fold since 2006.
The impact of biosimilars on generic cost-savings
In 2013, Express Scripts formulated a hypothetical analysis, which assumed what would happen if 11 frequently used, high-priced biologics became available as biosimilars (anticipated patent expiration dates were factored into the analysis).
The 11 top-selling biologics in the analysis include Avastin (bevacizumab); Epogen (epoetin alfa); Herceptin (trastuzumab); Humira (adalimumab); Intron A (Interferon alfa-2a); Neulasta (pegfilgrastim); Neupogen (filgrastim); PegIntron (peginterferon alfa-2b); Procrit (Epoetin alfa); Remicade (infliximab); and Rituxan (rituximab).
Assuming that each of the top-selling biologics becomes available as biosimilars, cumulative savings between 2014 and 2024 would be $250 billion, according to the benefits manager.
Based on this analysis, if these 11 drugs are approved as biosimilars, the cost-savings in 2024 from this sector alone will be $90 billion.
Future considerations
The GPhA’s cost savings report is full of good news and encouraging data, but the lack of biosimilars in the report highlights a major challenge—and a major opportunity. The question is: When will there by sufficient biosimilar presence in the U.S. drug market to justify inclusion in the cost-savings report?
While it’s hard to predict when that might be, until biosimilars become a large-scale market reality in the U.S., consumers will still be paying too much for their medications, even as generic savings continue to grow.