Use of generic prescription drugs saved the US $158 billion last year, or $3 billion every week, the Congressional Joint Committee on Deficit Reduction (the “Supercommittee") has been told.

Savings to the nation made from the use of generic drugs have reached a total of $931 million over the last 10 years, according to a new analysis conducted by the IMS Institute for Healthcare Informatics and IMS Health. The study also estimates that Medicaid - the US federal/state health insurance programme for people on low incomes - could save more than $1.3 billion a year by increasing its use of generics by just two percentage points.

Nationally, generics represent only about 70% of total Medicaid prescriptions, but outside of the programme, generics account for 78% of all prescriptions written in the US, notes the Generic Pharmaceutical Association (GPhA), which has drawn the IMS analysis findings to the attention of the Supercommittee’s joint chairs, Democrat Senator Patty Murray and Republican Representative Jeb Hansarling.

With Medicaid paying on average 80% less for a generic prescription compared to the brand drug, federal and state governments could save more than $600 million for each one percentage point increase in generic usage, says the industry, in a letter sent to the legislators.

The GPhA also cautions the panel against implementing the Obama Administration's plan to ban deals agreed between branded and generic drugmakers to delay the market entry of generics. Critics of these "pay for delay" deals, such as the Federal Trade Commission (FTC), claim that they are already costing consumers and taxpayers $35 billion a year in higher drug prices, but the GPhA tells the Committee that such settlements actually accelerate the introduction of competition into the market, and that banning them would be anti-consumer because they guarantee early market entry.

"Banning patent settlements would cut by more than a third the number of new generics that are launched prior to brand patent expiration," the industry group warns the legislators, urging them to "reject any policy in this arena."

Nor should the panel consider solutions such as federal rebate increases, which simply shift costs to the private sector, the GPhA continues.

“At a time when both the federal and state governments are having difficulty affording their health care commitments, is simply makes common sense that the Supercommittee should give consideration to current legislative proposals that encourage states to increase their generic drug substitution rates to become closer to the levels that the best plans serving Fortune 500 companies and the Congress achieve," said Ralph Neas, GPhA's president and chief executive

"It is significant that the savings delivered by generics are system-wide and not the result of simple cost-shifting. As such, the savings gained through the use of generic medicines benefit both the public and private sectors," he added.