Increased use of generic drugs would generate "hundreds of millions" of dollars in savings to Australia's Pharmaceutical Benefits Scheme (PBS) this year, eliminating the need for further cuts to the Scheme, the government has been told.

Australia should look to countries such as the US and the UK, which both "depend heavily" on "more cost-effective, high-quality generic medicines to create savings to the patient and drive savings to their countries' respective health budgets," says Dr Martin Cross, chairman of Australia's Generic Medicines Industry Association (GMiA).

In the US, 78% of all medicines dispensed are generics, and this is mainly due to patients there being highly sensitive to the cost of drugs. In contrast, Australian patients access generics only 36% of the time, he says.

"Every time a consumer chooses a follow-on generic medicine, there are substantial benefits to national savings. In Australia, the presence of generic medicines will effectively pour hundreds of millions back into the 2012-13 Federal Budget," says Dr Cross.

Supporting the uptake of generics "provides a three-way win for the patient, the taxpayer and the economy," he tells the government.

This year, a record number of drugs are coming off-patent in Australia. When the first follow-on generic lists on the PBS, an automatic statutory 16% price reduction is applied to both the generic and the originator branded product, which generates an immediate and significant saving to the PBS and the government, says the GMiA.

This windfall needs to be better absorbed back into the health budget, says Dr Cross, adding that if the uptake of generics were boosted, the government would not need to cut into the PBS in order to get the Budget into surplus.

Meantime, new export figures show that the Australia medicines industry was the nation's most valuable high-tech exporter last year.

Data from the Australian Bureau of Statistics show that exports of pharmaceutical and medical products were worth A$3.74 billion last year - compared with A$3.99 billion in 2010. Last year, Australia's car industry exports reached A$2.53 billion and those of the wine sector totaled A$2.03 billion.

The figures show that Australian medicines exports have held up well, remaining more or less flat in the face of an exceptionally tough global market, says the research-based industry body Medicines Australia.

"As a nation we already export more medicines than cars or wine, but with revamped policy settings and incentives from government we could build the Australian medicines industry into one of our key innovative export industries for the future," said Medicines Australia's chief executive, Dr Brendan Shaw.

Export earnings for the Australian medicines industry have grown 1,200% since 1990. Currently, Asian nations account for around half of all pharmaceutical exports from Australia, and its other major export markets are South Africa, Europe and New Zealand, says the industry group.