Generic Prescription Drugs Led To Savings of $1B for Consumers, Health Insurers in 2008

U.S. consumers and health insurers saved about $1 billion on generic medications for the 12 months that ended in September, according to a report released on Wednesday by IMS Health, Bloomberg reports. The report found that total spending on generic medications decreased by 2.7% to $33 billion, the largest decline in at least a decade.

In addition, the average price that pharmaceutical companies charged wholesalers for generic medications decreased by 8%, and consumer demand for such treatments increased by 5.4%, the report found. According to the report, the trends likely will increase through 2012. The report said the large number of generic medications entering the market this year drove the increase in their use (Pettypiece, Bloomberg, 12/10). It also cited the low prices for generic medications offered by retailers and pharmacy chains and increased competition among companies that manufacture the treatments as reasons for the savings (Johnson, AP/Houston Chronicle, 12/10). In addition, health insurers have encouraged members to use more generic medications, according to the report (Bloomberg, 12/10).

Murray Aitken, senior vice president for health care insight at IMS Health, said, "We're seeing the combination of pressure from large retailers to make generics available at ever-lower prices for their customers" (AP/Houston Chronicle, 12/10). "We are seeing a very significant intensification of price competition among the generic competitors that has resulted in this significant decline in the market. We haven't seen this in the recent past," Aitken added (Bloomberg, 12/10).