Generic Drugs Can Lead to Lower Prices

Published: Monday, July 24, 2006 - 22:00

Authorized generic drugs can lead to lower medicine prices and overall savings to the health care system, according to a new study commissioned by the Pharmaceutical Research and Manufacturers of America and prepared by IMS Consulting. An authorized generic is a drug that is distributed by a generics company with permission from the brand-name company. It can compete in the market during the 180-day exclusivity period awarded to generics companies that succeed in breaking a brand drug’s patent before it expires.

The investigation examined case studies with and without generics, and found that with an authorized generic on the market during the exclusivity period, discounts to brand medications were greater—on average, 15.8 percentage points greater—than instances when a generics company didn’t face competition from an authorized generic. It also found that even after the 180-day exclusivity period, authorized generics help save the health care system $212.8 million across the nine case studies examined during the six-month exclusivity period.

“Authorized generics increase competition and result in lower prices for consumers and the overall health care system,” says Lori Reilly, PhRMA’s vice president for policy and research. “That’s win-win for patients.”

For more information, visit www.phrma.org/files/IMS%20Authorized%20Generics%20Report_6-22-06.pdf.

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