Generic pharmaceuticals that were launched ahead of patent expiration due to patent settlements helped the U.S. health system save $25.5 billion from 2005 to 2012, according to an analysis released Monday by the Generic Pharmaceutical Association (GPhA).
The federal government benefited from almost one-third, or $8.3 billion, of these savings through its health programs, the report and news release said. Patent settlements also brought generic medicines to market significantly sooner, on average 81 months sooner than patent expiration.
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The report is based on analysis by the IMS Institute for Healthcare Informatics, which conducted the study for GPhA. IMS examined 33 molecule products that went to market sooner as a result of patent settlements between 2005 and 2012 and the savings resulting from lower-cost generic drugs being available in advance of each molecule’s patent expiration date, as recorded by the Food and Drug Administration (FDA). The researchers used mathematical modeling to calculate the savings.
In an online briefing with reporters to discuss the results of the analysis, Murray Aitken, IMS executive director, illustrated the savings to be had as a result of generics being available before the patent expiration of brand name drugs.
Novartis’ Lotrel, an antihypertensive, entered the market in 2011 with a patent expiration of 2017. The early availability of the generic version saved $237 million through the end of 2012, Aitken said. The report noted that from now to when Lotrel’s patent expires, the generic version will have saved $864 million.
In its analysis, IMS projected that an additional $61.7 billion will be saved if the current level of savings continues through to patent expiration for each molecule product analyzed, for a total of $87 billion in savings from settlements.
Savings from a subset of settlements with consideration from the patent holder to the generic company could be between $11.8 and $13.6 billion if these settlements follow their findings. The federal health programs would see a savings of between $3.8 and $4.4 billion.
Ralph Neas, , noted in a news release that studies have shown the first major decline in drug spending in 55 years. “We believe generic medicines, including those that come to market through settlements and settlements with consideration, have contributed to this historic success,” he said in the release.
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IMS’ analysis, noted Ralph Neas, GPhA president and CEO, belies a 2010 Federal Trade Commission (FTC) study that said settlements cost consumers – to the tune of $3.5 billion annually or $35 billion over 10 years, according to IMS’ report.
“This new analysis shows that the opposite is true, that patent settlements – including those with consideration – have led to billions in savings,” he said in the briefing. He also cited the settlement involving Pfizer’s Lipitor, which alone will save $22 billion over the next four years when the patent expires.