About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

GAO-12-371R 1 (2012-01-31)

handle is hein.gao/gaobacfrl0001 and id is 1 raw text is: Accountabiliy - Integrity - Reliability United States Government Accountability Office Washington, DC 20548 January 31, 2012 The Honorable Orrin G. Hatch Ranking Member Committee on Finance United States Senate Subject: Drug Pricing: Research on Savings from Generic Drug Use Dear Senator Hatch: Prescription drug spending in the United States reached $307 billion in 2010-an increase of $135 billion since 2001-and comprised approximately 12 percent of all health care spending in the country. Until the early 2000s, drug spending was one of the fastest growing components of health care spending. However, since that time, the rate of increase has generally declined each year, attributable in part to the greater use of generic drugs, which are copies of approved brand-name drugs.2 Generic versions of brand-name drugs become available to consumers when brand- name drugs' patents and periods of market exclusivity expire and generic manufacturers obtain approval to market their drug.3 The competition that brand- name drugs face from generic equivalents is associated with lower overall drug prices, particularly as the number of generic manufacturers grows and price competition among them increases.4 On average, the retail price of a generic drug is 75 percent lower than the retail price of a brand-name drug. 1See IMS Institute for Healthcare Informatics, The Use of Medicines in the United States: Review of 2010 (Parsippany, N.J.: April 2011). For the purposes of this report, we use the terms prescription drugs and drugs interchangeably. 2A brand-name drug is a drug marketed under a proprietary, trademark-protected name. For the purposes of this report, we use the terms generic drug and generic interchangeably. We also use the terms brand-name drug and brand interchangeably. 3Patents are issued by the U.S. Patent and Trademark Office, generally for a term of 20 years from the date of filing. A patent grants its owner the right to exclude others from making, using, selling, offering to sell, or importing the patented invention into the United States. See 35 U.S.C. § 154(a)(2). In the case of drugs, the patent protects the investment in the drug's development by giving the manufacturer the sole right to sell the drug while the patent is in effect. 4While research has shown that generic drug prices decrease relative to the number of generic manufacturers that enter the market, research is less clear regarding the overall effect of generic entry on brand prices. While some studies have found that the price of a brand-name drug increases following generic entry, others have found that generic entry exerts a downward pressure on brand prices. In the latter case, while brand-name prices typically increase over time, with generic entry they do not increase as much as they would have otherwise. 5Congressional Budget Office (CBO), Effects of Using Generic Drugs on Medicare's Prescription Drug Spending (Washington, D.C.: September 2010). GAO-12-371R Savings from Generic Drug Use

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most