Fierce Competition + Invisible Hand = $1B Savings
BLOOMBERG -- American consumers and health insurers saved about $1 billion on generic drugs this year as “fierce” competition among drugmakers and pressure from insurers lowered prices.
Total spending on generic drugs fell 2.7% to $33 billion in the 12 months ended in September, the biggest decline in at least a decade, the health research firm IMS Health reported. The average price manufacturers charged wholesalers for the copycat pills fell 8% while demand increased 5.4%, IMS said.
The surge in use was driven by a flood of new generic drugs that entered the market this year after patents expired on $16 billion worth of medicines. At the same time, insurers and retail pharmacies are pressuring generics makers to cut prices as they compete against each other. The trends are likely to accelerate through 2012 as half the current 20 top-selling pills get competition from generic copies, which can cost 70% less than their brand-name counterparts.
HT: Ben Cunningham