The savings opportunity from generic drugs has never been greater, with over $50 billion worth of branded drugs due to lose patent exclusivity over the next five years.
In the next year alone, $11 billion in drug sales are expected to lose patent, with generic alternatives becoming available for at least 15 branded drugs.
A generic drug is an exact chemical copy of a brand-name drug, identical in dosage, safety, strength, administration, quality, performance, and intended use.
On average, a generic drug costs approximately $60 less than a brand name drug. Consumers also pay a lower co-payment for generic medications, saving an average of $10 or more per prescription.
"We have only scratched the surface in taking advantage of the money-saving potential of clinically sound generic drugs," said Steve Miller, Express Scripts vice president, research, and a study author.
"As additional generics come to market and the use of prescription drugs grows, the opportunity to lower healthcare costs becomes even more significant. Best of all, using more generics simply requires better education and awareness of alternatives, not a big-dollar up-front investment," he said.
The Express Scripts study was based on a random sample of approximately 3 million commercially insured individuals in the US.
The ensuing "Generic Drug Usage Report" ranked generic drug use and savings opportunities by state, revealing significant variation across six major drug categories used to treat common conditions like stomach ulcers, inflammation, depression, high blood pressure and cholesterol.
Possible explanations for the variations in generic fill rates include divergence in prescribing patterns, state regulations, differences in disease prevalence and varying use of drug-benefit programs that encourage greater use of generics.
Miller reinforced that the key to instigating the widespread implementation of generic drugs is to increase both healthcare professional and consumer awareness of generic alternatives to brand drugs and the added value they offer.
Additionally he suggested that policy makers should adopt pharmacy benefit plan designs and enact state laws and regulations that encourage greater use of generic drugs.
The most dramatic savings potential exists for generic gastrointestinal drugs, of which only 31 per cent are dispensed nationwide, but could feasibly reach as much as 95 per cent adoption.
The report estimates that greater use of generic gastrointestinals alone could drive down national pharmaceutical costs by $5.4 billion.
In the anti-cholesterol drug category, generics are only dispensed 7 per cent of the time nationally.
However, a $5.1 billion annual saving is predicted if generic fill rates reached the 70 per cent goal projected in the report.
The generic fill rate goals utilised in the study were based on an evaluation of clinical efficacy and market dynamics of branded and generic medications.
The report found that generics usage in the US varies according to state: Massachusetts, Oregon and New Mexico have the highest usage while New Jersey and New York have the lowest.
The states with the greatest savings opportunity from generics are California and Texas, at $1.5 billion each, and New York, Florida, Ohio and Pennsylvania, at $1 billion each.
Express Scripts is one of the largest pharmacy benefit management (PBM) companies in North America, providing services to over 55 million patients through facilities in 13 states and Canada.
A copy of the Express Scripts study, with complete rankings for 48 states, is available on their website.