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New Government Brief Shows Dramatic Growth in Generic Drug Use Has Generated ‘Substantial Savings’ for Consumers

Regrettably Draws Erroneous Conclusion about Value of Patent Settlements

WASHINGTON, D.C., DECEMBER 17, 2010 – The Generic Pharmaceutical Association (GPhA) issued the following statement regarding today’s release by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) within the Department of Health and Human Services (HHS) of the Issue Brief: “Expanding the Use of Generic Drugs.”

“The ASPE Issue Brief is yet another testament to the valuable role generic prescription pharmaceuticals play in reducing the cost of health care for American consumers, the federal government and state-sponsored drug benefit programs. As the brief points out, because generic drugs cost significantly less than their branded counterpart, ‘the high rate of generic prescribing [has] resulted in billions of dollars of savings for the U.S. health care system.’

“The ASPE brief also notes that with more than $209 billion in annual branded drug sales projected to go off patent between 2010 to 2014, ‘Maintaining or improving the generic prescribing rate is an important tool in efforts to control health care costs.’ The report also cited the potential cost savings that will come from implementing an abbreviated pathway for approving biosimilar drugs. It noted that the U.S. had $59 billion in sales in biologics in 2008 and that the federal government, primarily Medicare, could save several billion dollars by creating an approval pathway for biosimilar products.

“Unfortunately, and very regrettably, the report erroneously concluded that savings could be achieved by banning patent litigation settlements between brand and generic companies. ASPE failed to do any independent analysis or evaluation of the FTC’s claim which has been criticized by several economists as seriously flawed. It based its conclusion on data that, although routinely repeated by opponents of patent settlements, is simply wrong.

“Banning settlements, which have been repeatedly found by courts to be pro-competitive and pro-consumer, would, in fact, result in significant lost savings to consumers. Settling patent litigation has proven to be the one sure way of getting affordable generics to consumers before patents expire on the counterpart brand drug. Settlements have never resulted in delaying generic market entry past patent expiration.

“While it is unfortunate that misinformation has been included in this way, we applaud Senator Debbie Stabenow for asking for the analysis and HHS Secretary Sebelius for her leadership in directing ASPE to undertake this study and issue this important brief.”

The full Issue Brief is available at http://aspe.hhs.gov/sp/reports/2010/GenericDrugs/ib.shtml.

GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the generic industry. Generic pharmaceuticals fill 75 percent of the prescriptions dispensed in the U.S. but consume just 22 percent of the total drug spending. Additional information is available at gphaonline.org.

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