KOHL SAYS GENERICS CAN SAVE BILLIONS IN HEALTH CARE COSTS
Washington, DC -- U.S. Senator Herb Kohl (D-WI), Ranking Member of the Special Committee on Aging, today held a hearing to assess current efforts by the Centers for Medicare and Medicaid Services (CMS) to encourage use of generic drugs in the Medicare Part D prescription drug program to lower health care costs for seniors and the federal government. "Generics, which cost a fraction of their brand-name counterparts, are a big part of the solution to health care costs that are spiraling out of control," Kohl said. "And every year, more blockbuster drugs are coming off patent, setting up the potential for billions of dollars in savings."
Prescription drugs are one of the largest and fastest growing health care expenditures. The U.S. spent over $250 billion dollars on prescription drugs in 2005 -- over six times more than 1990. Generics accounted for more than half of the 3.6 billion prescriptions dispensed, but accounted for less than 13% of prescription drug costs. Increasing generic drug use could save even more; in fact, one study estimates that every 1% increase in generic utilization could save $4 billion dollars.
At the hearing, Kohl urged CMS Administrator Dr. Mark McClellan to "steer seniors toward generic drugs to help them survive the donut hole." This month, millions of Medicare beneficiaries will have exceeded the initial $2,250 drug benefit and have fallen into the "donut hole," where they must pay the full price of their prescription drugs. Currently, 13% of Medicare drug plans cover generic drugs in the donut hole, and only two percent cover both generic and brand name drugs. Seniors will be able to change plans during the program's "open season" scheduled to begin November 15, 2006.
Kohl also noted that generics often face legal challenges that delay their distribution to consumers.
"The first battle in this fight is to break through the roadblocks that stop generics from reaching patients," Kohl said. "But once generics are on the market, it's just as important to win the next battle -- making sure that every senior, every family, every business, and every government program knows the value of generics and uses them to bring costs down."
Last June, Kohl introduced legislation, the Preserve Access to Affordable Generics Act (S. 3582), to prohibit anti-competitive "payoff settlements" that keep generics off pharmacy shelves. Payoff settlements occur when a brand name drug company pays a generic drug maker to delay the sale of their competing generic drug.
Earlier this year, Kohl successfully added $10 million to FDA's budget to expedite generic drug review in the Senate's FY 2007 Agriculture Appropriations bill. Kohl is also the senior Democrat on the Agriculture Appropriations Subcommittee, which has jurisdiction over the FDA's budget.