AAM report: Generics, biosimilars generate $445B in savings

The Association for Accessible Medicines’ annual U.S. Generic & Biosimilar Medicines Savings Report, in partnership with the IQVIA Institute, reveals that the use of Food and Drug Administration approved generic and biosimilar medicines created $445 billion in savings in 2023 for patients and the U.S. healthcare system—and over $3 trillion in savings the last 10 years. Savings from biosimilar medicines alone increased to $12.4 billion in 2023 and $36 billion since the first biosimilar entry in 2015.

However, the long-term outlook for generic and biosimilar competition hinges on addressing the barriers to development and adoption of these lower-cost medicines. Without action to strengthen generic and biosimilar markets, many lower-cost medicines may disappear and patients will suffer, AAM said.

Craig Burton, executive director of the Biosimilars Council, said, “Even as the generic drug market exhibits increasing fragility, biosimilar medicines continue to demonstrate their promise of lower costs and greater access for patients, but are nevertheless struggling to fulfill their potential in the face of brand rebate and patent schemes. Strong and swift legislative and regulatory action to encourage biosimilar competition is vital.”

“On the eve of the 40th anniversary of the Hatch-Waxman Act we stand at a critical crossroads,” said David Gaugh, interim president and CEO of AAM. “The sustainability of our industry remains fragile. Policymakers and regulators must address issues that delay generic and biosimilar competition, such as patent thickets, PBM brand drug rebates, interchangeability and inefficient regulatory processes. This report provides a comprehensive review of the current state of our industry—indicating the time for critical action is now.”

[Read more: Challenges continue, but generics companies see a bright future with biosimilars]

Key findings:

Total savings from generics and biosimilars:

• Total generic and biosimilar savings in 2023: $445 billion
•  Total generic and biosimilar savings for the past ten years: $3.1 trillion 
•  Total generic and biosimilar savings in Medicare in 2023: $137 billion ($2,672 per beneficiary) 
•  Total generic and biosimilar savings in the commercial market in 2023: $206 billion 
•  Share of total U.S. prescriptions filled: 90%
•  Share of total U.S. prescription drug spending: 13.1%
•  Share of total U.S. healthcare spending: 1.2%

Total Savings from Biosimilars: 

• Savings in 2023: $12.4 billion 
•  Total savings since first biosimilar entry in 2015: $36 billion 
•  Total days of patient therapy since 2015: 2.7 billion 
•  Incremental days of patient therapy that would not have occurred without biosimilar competition: 495 million

Drug Shortages:

• Percentage of shortages affecting generics: 84 
•  Percentage of shortages related to sterile injectables: 67 
•  Percentage of shortages for drugs priced at $1/unit or less: 56

Savings from generics and biosimilars totaled $445 billion in 2023; generic and biosimilar savings increased by $37 billion:

•  The biosimilar market is rapidly growing, with 57 approved biosimilars for 17 reference biologics. 
• Forty-one biosimilars are now available to patients. 
•  Biosimilars have been used in 2.7 billion days of patient therapy with no clinically meaningful differences in safety or efficacy. 
•  Patients have received 495 million more days of therapy than if no biosimilar was available. Put simply, biosimilars are making it possible for more patients to receive care.
•  Robust biosimilar price competition results in lower prices – today more than 40% lower than the brand biologic price at the time of biosimilar launch.
• Biosimilar competition also lower prices on brand biologics — by more than one-third lower since biosimilar market entry. 
•  But more remains to be done. Biosimilar adoption has been slower than anticipated due to brand biologic rebate barriers, and the majority of brand biologics do not have a biosimilar in development. 

[Read more: Challenges continue, but generics companies see a bright future with biosimilars]

•  Policymakers must reduce the cost of development and ensure more rapid adoption of lower-price biosimilars.
• In 2023, generics and biosimilars continued to demonstrate their value proposition— representing 90% of all prescriptions but only 13.1% of prescription drug spending.
•  Generic and biosimilar medicines are the only segment of health care that consistently deliver lower costs. 
•  In 2023, the average out-of-pocket cost for a generic was $7.05, while the average out-of pocket cost for a brand drug was nearly four times higher—at $27.10
•  In fact, generic prices continue to experience severe deflation; the overall value of all generic sales in the United States has declined by $6.4 billion since 2019 despite increased volume and new generic launches.
•  Although patients receive a generic or biosimilar 90% of the time, these lower cost medications are less than two of every 100 dollars spent on medicines in the United States.
•  The U.S. healthcare system has saved nearly $3.1 trillion in the last 10 years due to the availability of affordable generic and biosimilar medicines. In 2023, competition from generics and biosimilars resulted in more than $445 billion in savings to the healthcare system, including more than $137 billion in savings for Medicare.

[Read more: AAM report: Generic, biosimilar drugs generate $408B in savings]

• This continues a years-long trend of generic price deflation. In fact, the share of spending attributable to brand drugs continues to increase even as the total number of prescriptions filled by brand drugs has declined by half in the past 10 years.