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Statement by Chip Davis, President and CEO, GPhA, Regarding Medicare Costs

Contact: Steve Arnoff 202.249.7113


WASHINGTON, DC (July 25, 2016) — “A new report from the Office of the Actuary shows that the cost of Medicare's catastrophic prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, largely because of rising brand drug costs. These findings underscore a growing need to make sure that generic drugs are available to hold down public program spending while increasing patient access to more affordable medicines.

Generics saved the U.S. health system $254 billion in 2014, with $33 billion of these savings accrued to Medicare, according to the annual Generic Drug Savings in the U.S. report. It is worth noting that without generics, Medicare spending would nearly double.

Increasing access to generic drugs for Medicare enrollees translates to significant savings for the program, taxpayers and patients, and particularly the 12 million Medicare low-income subsidy (LIS) beneficiaries. In fact, the nonpartisan Medicare Payment Advisory Commission (MedPAC) estimates that changing LIS policies to improve generic utilization for this group, some of our nation’s most vulnerable patients, could save more than $18 billion over 10 years.

One way to realize these savings is for Congress to lower the LIS copay for generic drugs, an effort that can encourage enrollees to choose generic when the option is available. In addition to lowering LIS copays on generics, policymakers can:

• Ensure a fully-resourced Food and Drug Administration (FDA) can address the backlog of more than 3,100 generic drug applications and shorten FDA median generic drug approval timelines.

• Pass the bipartisan CREATES Act or the FAST Generics Act to curb some brand drug company abuses of FDA safety programs such as Risk Evaluation and Mitigation Strategies (REMS) used to keep generics off the market, an estimated savings of $2.4 billion - 3.2 billion over 10 years.

• Work closely with industry and regulatory partners to ensure that the framework for biosimilars, safe and effective alternatives to costly brand biologic drugs, expands and expedites patient access. Estimated biosimilars savings range from $44 billion to $250 billion.

• Repeal Sec. 602 of the Bipartisan Budget Act of 2015. The Medicaid rebate increase for generic drugs in the budget deal is bad for Medicaid and its beneficiaries, bad for taxpayers, and it should be immediately repealed.

GPhA looks forward to continuing its work with Congress, the Food and Drug Administration (FDA) and others to accelerate access to safe, effective and more affordable generic drugs.”

About GPhA
GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the generic industry. Generic pharmaceuticals fill 88 percent of the prescriptions dispensed in the U.S. but consume just 28 percent of the total drug spending. Additional information is available at gphaonline.org. Follow us on twitter: @gpha.