Report: Generic drugs offer savings for Medicaid

A new report suggests that expanding use of generic drugs could offer significant savings for Medicaid.

"Every 2% uptick in the substitution of generic drugs for brand-name products saves Medicaid $1 billion a year, according to a report released by the Generic Pharmaceutical Association (GPhA)," The Wall Street Journal's Health Blog reports. "And, the group says, the generic utilization rate is about 64% across Medicaid, more than 10 percentage points lower than for the general population — suggesting a potential for significant savings." Generating Medicaid savings is particularly important as states prepare to expand the program by 16 million people under the new health law. "A working paper released last week by the conservative American Enterprise Institute pegs an additional $271 million of what it calls 'wasteful spending' on brand-name drugs last year by Medicaid, identifying 20 brand-name drugs for which a generic was available but underused" (Hobson, 7/26).

The New York Times' Prescriptions: The study found that generic drugs "saved the nation's health care system more than $824 billion from 2000 to 2009." the analysis was done "by IMS Health, a health information company that tracks drug sales. In 2009 alone, generic drugs saved the health system nearly $140 billion — or about $383 million a day — up from $121 billion in 2008, according to the analysis" (Singer, 7/26).

---

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.