U.S. Consumers Could Save $8.8 Billion Annually With Increased Use of Generics

Expanding generic substitution among U.S. adults could save consumers nearly $9 billion a year, or roughly 11 percent of total annual drug expenditures, according to a recently published study.

The study, published in the Annals of Internal Medicine, found that only 61 percent of prescription drugs with at least one generic substitute were dispensed as generics. Approximately 56 percent of all prescription medications have a generic substitute, and those drugs accounted for 41 percent of total outpatient drug expenditures, according to the study, which was based on data collected by the Agency for Healthcare Research and Quality (AHRQ).

The researchers drew their sample using data from the Medical Expenditure Panel Survey Household Component, which was conducted by the AHRQ from 1997 to 2000. The researchers included brand drugs in their study only if a generic drug was available in an identical strength and form.

Using data from 2000, researchers found that if a generic product had been substituted for all brand products for which a generic was available, national savings for adults younger than 65 would have been $5.9 billion, and national savings for those 65 or over would have been $2.9 billion. Although increased generic substitution would have a significant impact on national savings, per person savings were relatively small, the study found.

The researchers, which were from Brigham and Women's Hospital in Boston and the University of California, San Francisco, concluded that "although broad substitution of generic drugs would affect only a modest percentage of drug expenditures, it could result in substantial absolute savings."