The use of generic prescription drugs in place of their brand name counterparts saved the US healthcare system more than $931 billion during 2001 to 2010.  According to a study prepared by IMS Institute for Healthcare Informatics and IMS Health for Generic Pharmaceutical Association (GphA), the use of generics in 2010 generated savings of $157 billion. As government leaders in Washington and across the country look for ways to cut healthcare costs, this new analysis details the remarkable savings achieved through the use of generic medications.

Over the past 12 years prescription drugs have saved the US healthcare system an astounding $1.031 trillion and at the current generic utilization rate, more than $3 billion is being saved every week as American consumers and patients rely on generic medicines to provide the quality care they need.

Data from the Centers for Medicare and Medicaid Services (CMS) show that increasing generic use in Medicaid by just two percentage points would save the programme more than $1.3 billion annually. These savings are critical to sustaining the viability of Medicaid, as studies have concluded that the program needlessly spends billions of dollars each year by reimbursing pharmacies for costly brand products when generics with identical active ingredients, strengths, dosage forms and therapeutic benefits are available at lower costs.

Generic products for nervous system and cardiovascular treatments alone account for 62 per cent of the cost savings. Over the past 10 years, patent settlements have resulted in billions of dollars in savings as dozens of first-time generics have come to market prior to patents expiring on the counterpart brand drugs. In fact, of the 22 new, first-time generics launched this year, 16 will be launched prior to expiration of the brand drugs thanks to a patent settlements.

Increasing funding to the FDA's Office of Generic Drugs (OGD) is also an essential component in ensuring the savings potential from generic medications is fully realized. Currently, more than 2,000 generic drug applications are awaiting OGD action, with as many as 365 of those for first-time generic drugs, according to the FDA. With generic manufacturers on the verge of a historic agreement to provide the FDA with hundreds of millions of dollars in new user fee funding, it is critical that members of Congress follow suit to ensure that the savings generated by the use of generic medications will continue to grow.

The forthcoming introduction of an approval pathway for biosimilars offers an additional opportunity to provide consumers and the government with enormous savings. In order for these benefits to be realized, however, it is critical that the FDA maintains its commitment to funding the biosimilars program, and ensures that a workable approval pathway is created that is free from obstacles that would serve only to delay the availability of these FDA-approved, safe, effective and lower-cost medications.

The IMS analysis also found that the savings generated by newer generics is expected to continue increasing over the next several years as many of the world's largest selling brand drugs lose patent protection and face generic competition for the first time. That includes the two biggest-selling drugs of Pfizer's Lipitor, cholesterol fighter, and Bristol-Myers Squibb's Plavix, the blood clot preventer. Among the other name-brand blockbusters that will lose patent protection between now and 2014 are Zyprexa, Singulair and Aricept. Meanwhile, new reports continue to highlight the impact of generic medications for those suffering from chronic disease. These factors make it crystal clear that generic drugs are an integral part of the solution in reigning in US health care costs.

An additional IMS analysis has shown that generics are also bringing savings directly to patients at the pharmacy counter. In 2010 the average co-payment for a generic drug was $6.06 per prescription, compared to $23.65 and $37.77 for preferred and non-preferred brand drugs, respectively. Against this background, it is critical that new FDA-approved generics be introduced into the market sooner rather than later. American consumers and payers, including the federal government and the states, lose billions of dollars each week that generic access is delayed.