Generics save consumers billions; but billions more left on the table

Generic drugs saved the U.S. health care system more than $254 billion in 2014.1 But according to a new study, Americans spent an extra $73 billion between 2010 and 2012 on brand-name drugs because doctors did not prescribe available generic therapeutic alternatives.2

Generic what?

After a brand-name drug goes off patent, other manufacturers begin producing its generic equivalent. Consumers move from the brand-name drug to its generic equivalent and we all save money.

But we could save more. How? By substituting that generic for other brand-name drugs.

“We’re spending so much money, but could save so much if prescribing was more efficient,” said Dr. Michael Johansen, a professor of medicine at Ohio State University and one of the coauthors of the study.2

Drugs get grouped by class. A drug class can include several different drugs that all treat the same condition. Most common medical conditions have several effective drug treatment options.

When a brand-name drug goes off patent, its generic equivalent joins its drug class. It becomes another available treatment for the condition that drug class treats. A drug class can include brand-name drugs and generic drugs. Not all brand-name drugs have a generic equivalent. So generic drugs can be prescribed two different ways.

  1. A generic equivalent has the same active ingredients as its brand‑name counterpart. Most states have laws that let pharmacists automatically replace a brand‑name drug with its generic equivalent.
  2. A generic therapeutic alternative is similar in clinical effect to a brand‑name drug. Both drugs treat the same condition, but are not exactly the same. Members need to consult with their doctor about a prescription for a generic therapeutic alternative.

A generic can be prescribed as a generic therapeutic alternative to someone who is on a brand-name drug in the same drug class.

To fully realize the savings potential of generics, doctors and consumers need to work harder at maximizing the use of generic therapeutic alternatives.

The Ohio study suggests that doctors are reluctant to prescribe generic therapeutic alternatives. Consumers paid nearly one-third of the additional $73 billion through out-of-pocket payments. The doctors prescribed brand-name drugs when they could have prescribed lower cost generic drugs in the same drug class.2

“We’re spending so much money, but could save so much if prescribing was more efficient,” said Dr. Michael Johansen, a professor of medicine at Ohio State University and one of the coauthors of the study.2

Generics help control rising health care costs and increasing insurance premiums

Today in the United States, generic drugs account for nearly 88 percent of all prescriptions dispensed. These generic prescriptions account for 28 percent of total drug spend.1

Generic drugs saved consumers and the health care system more than $254 billion in 2014.1 Choosing generic drugs can be an effective cost-saving measure and an easy way to reduce out-of-pocket health care expenses.

Sometimes, doctors and/or members are reticent if a drug change involves a change from a brand-name drug to a generic therapeutic alternative. This kind of change might introduce new side effects. It might delay or reduce treatment progress. In those cases the doctor and member determine the appropriate course.

To help encourage generic choices, most health plans set lower copays for generic drugs than for brand-name drugs. With this kind of benefit, when members take a generic drug, it’s more money in their pocket.

Same quality + lower cost = better value

Many benefit plans have “dispense-as-written” benefits in their pharmacy plans. This lets doctors write in the brand-name drug when a generic therapeutic alternative is available, but the doctor has determined the original brand-name drug to be more appropriate.

Talk to your representative about:

  • Benefit designs that encourage generic use
  • Education programs for employees about how generics compare to brand name drugs

1. Generic Drug Savings in the U.S. Seventh Annual Edition: 2015. Generic Pharmaceutical Association. Accessed at:

2. “Study: Physicians’ Failure to Recommend Generic Drugs Dost Americans $73 Billion.” May 11 2016. Smart Aging. Aging and Antiaging Information and Support. Accessed at: Original Study here:




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