Use of generic drugs saved the US health care system more than $734 billion from 1999 to 2008 and around $121 billion last year alone, says new research from IMS Health.

At the time the 1984 Price Competition and Patent Term Restoration (Hatch-Waxman) Act was introduced (to promote generic drugs while also retaining financial incentives for R&D) it was predicted that the new law would save the nation around $1 billion in its first decade. In fact, generics now save more than that every three days, according to Kathleen Jaeger, chief executive of the Generic Pharmaceutical Association (GPhA), which commissioned the study from IMS. Moreover, the $734 billion saved by the US through the use of generics in the last 10 years “is nearly the cost of the American Recovery and Reinvestment Act approved in February,” she added.

By 1994, annual savings made from generics as a result of Hatch-Waxman were running at $8-$10 billion a year, and by 1999 they had risen to an average of $49 billion. From 1999 to 2004, they increased steadily at an annual rate of 3%-10%, growing from $49 billion in 1999 to $69 billion in 2004, and then from 2005 to 2008 they grew at a double-digit annual pace, rising the highest in 2008 when they topped $121 billion, a full 20% ahead of the previous year, the IMS research shows.

The higher growth rates seen during the more recent years of the study were driven by an increase in the overall percentage of generic use – rising from 61% at the beginning of 2006 to 69% by the end of 2008 – and the loss of patent protection by several brand-name blockbuster drugs.

The study also reveals that generic drugs introduced before 1999 generated some $552 billion-worth of the $734 billion in total savings achieved during 1999-2008, while those launched during the 10-year period saved an additional $182 billion in the time, and nearly half of this total appeared during 2006-8. Approximately 60% of last year’s $121 billion savings came from generics approved over the past 10 years, it adds.

In terms of therapeutic category, the highest levels of growth in savings resulting from US generic usage have been in metabolism, cardiovascular, anti-infective and central nervous system (CNS) treatments, the research also shows. Over 57% of total savings during 1999-2008, totaling some $420 billion, were made in the cardiovascular and CNS categories, while generic metabolism and anti-infective drugs combined to account for an additional 19% of the savings. In total, these four therapeutic categories resulted in overall savings of $561 billion, or 76% of the total, reports IMS.

Commenting on the findings, the GPhA says that savings to the nation could be increased still further by encouraging the use of Food and Drug Administration (FDA)-approved generic medicines in publicly-funded prescription drug benefit plans such as Medicaid and Medicare. For example, a 1% increase in the Medicaid programme’s generic utilisation rate could yield around $490 million in added annual savings, it says.