Economic Analysis of Generic Medicines 1999-2008 $734 Billion in Health Care Savings

1. Economic Analysis of Generic Medicines 1999-2008 $734 Billion in Health Care Savings GPhA Commissioned Analysis by IMS May 2009

2. Study Highlights • $734 billion in savings to the U.S. health care system over the past decade (1999-2008) • $121 billion in savings in 2008 alone • More than 57% of the total savings between (1999-2008), $420 billion, came from cardiovascular and CNS categories • IMS analysis represents overall savings to the U.S. health care system resulting from generic competition • Analysis commissioned as part of a yearlong celebration of the 25th Anniversary of Hatch-Waxman Act

3. Savings to U.S. Health Care System1999-2008$ in Billions

4. $734 Billion in Savings 1999-2008By Therapeutic Category$ in Billions – Rounded to Nearest Billion

5. 187 Cost Savings by Therapeutic AreaGeneric products for nervous system and cardiovascular treatments account for 57% of cost savings Generics Cost Savings by TA (over all ten years) Generic versions of nervous system and cardiovascular drugs account for about $420 billion in cost savings for the U.S. over the past decade Source: IMS Midas Data Note: Yearly data is MAT Sep. Ex-mfg

6. Opportunities to Increase Savings From Generics • Congress/Administration working to reform health care and reduce costs • Three Proposals: • Increase investment in FDA’s Office of Generic Drugs (OGD) to ensure the timely review and approval of new generic pharmaceuticals; • Establish a science-based biogeneric approval pathway that promotes innovation while providing patients access to more affordable versions of lifesaving biologic medicines; and • Encourage greater use of FDA-approved generic medicines in publicly-funded prescription drug benefit plans, such as Medicaid, Medicare and other federal/state programs.

7. Increase Funding for OGD

8. Biogenerics Offer New Savings Opportunities

9. Increase Generic Utilization in Medicaid Opportunities in 25+ States to Bring Substitution to National Level

10. 3. Generic launched on or before 1999 Total brand sales (1999) Total brand standard units (1999) Cost savings were calculated for all ten years (1999-2008) = Total brand sales (one year before generic entry) Total brand standard units (one year before generic entry) 2. Generic launched after 1999 Cost savings were calculated starting from year of generic entry = Methodology: Price EstimateAverage brand price was calculated for products that had both generic and brand sales during the 10 year study period Type Price Estimate Savings Calc.

11. GPhA Analysis Summary • $734 billion in savings to the U.S. health care system over the past decade • $121 billion in 2008 alone • Increasing generic utilization by 3% adds approximately $10 billion in additional savings • Increasing Medicaid utilization by 3% adds $1.4 billion in additional annual savings • Conservatively – cumulative generic savings by end of 2010 could exceed $1 trillion

12. Economic Analysis of Generic Medicines 1999-2008 $734 Billion in Health Care Savings GPhA Commissioned Analysis by IMS May 2009