Celebrating the Past Defining the Future

Economic Analysis of Generic Medicines 1999-2008

$734 Billion in Health Care SavingsGPhA Commissioned Analysis by IMS

May 2009

Study Highlights

• $734 billion in savings to the U.S. health care system over the past decade (1999-2008)

• $121 billion in savings in 2008 alone

• More than 57% of the total savings between (1999-2008), $420 billion, came from cardiovascular and CNS categories

• IMS analysis represents overall savings to the U.S. health care system resulting from generic competition

• Analysis commissioned as part of a yearlong celebration of the 25th Anniversary of Hatch-Waxman Act

Savings to U.S. Health Care System1999-2008$ in Billions

$49 $51 $55$60

$65 $69$78

$86

$101

$121

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

$734 Billion in Savings 1999-2008By Therapeutic Category

$ in Billions – Rounded to Nearest Billion

$73

$5

$171

$11

$34$44

$68

$10

$41

$250

$0.1

$20

$6 $0.2$0

$50

$100

$150

$200

$250

Cost Savings by Therapeutic AreaGeneric products for nervous system and cardiovascular treatments account for 57% of cost savings

Blood Disorders1%

Sensory Organs1%

Parasitology0%

Metabolism10%

Nervous System34%

Cardiovascular23%

Anti-I nfectives9%

Systemic Hormones

6%

Musculo-Skeletal6%

GU system5%

Respiratory3%

Dermatological2%

Cancer1%

Other0%

Generics Cost Savings by TA (over all ten years)

Generic versions of nervous system and cardiovascular drugs account for about $420 billion in cost savings for the U.S. over the past decade

Source: IMS Midas DataNote: Yearly data is MAT Sep. Ex-mfg

Opportunities to Increase Savings From Generics

• Congress/Administration working to reform health care

and reduce costs

• Three Proposals:– Increase investment in FDA’s Office of Generic Drugs (OGD) to ensure

the timely review and approval of new generic pharmaceuticals;

– Establish a science-based biogeneric approval pathway that promotes innovation while providing patients access to more affordable versions of lifesaving biologic medicines; and

– Encourage greater use of FDA-approved generic medicines in publicly-funded prescription drug benefit plans, such as Medicaid, Medicare and other federal/state programs.

Increase Funding for OGD

Biogenerics Offer New Savings Opportunities

Increase Generic Utilization in Medicaid

Opportunities in 25+ States to Bring Substitution to National Level

Methodology: Price EstimateAverage brand price was calculated for products that had both generic and brand sales during the 10 year study period

Type Price Estimate Savings Calc.

3. Generic launched on or before 1999

Total brand sales (1999)

Total brand standard units (1999)

Cost savings were calculated for all ten years

(1999-2008)=

2. Generic launched after 1999

Total brand sales (one year before generic entry)

Total brand standard units (one year before generic entry)

Cost savings were calculated starting from

year of generic entry=

GPhA Analysis Summary

• $734 billion in savings to the U.S. health care system over the past decade

• $121 billion in 2008 alone

• Increasing generic utilization by 3% adds approximately $10 billion in additional savings

• Increasing Medicaid utilization by 3% adds $1.4 billion in additional annual savings

• Conservatively – cumulative generic savings by end of 2010 could exceed $1 trillion

Celebrating the Past Defining the Future

Economic Analysis of Generic Medicines 1999-2008

$734 Billion in Health Care SavingsGPhA Commissioned Analysis by IMS

May 2009