NCPA - National Center for Policy Analysis


August 9, 2007

A quiet coup is taking place in American medicine cabinets.  Prescription bottles bearing catchy brand names like Zoloft and Flonase are being pushed aside by tongue-twisting generics like sertraline and fluticasone propionate, says the New York Times.

While the trend is already pinching the profits of big pharmaceutical companies, it is rare good medical news for American pocketbooks:

  • The nation currently spends $275 billion a year on prescription medicines.
  • But over the next five years, patents will begin to expire on brand-name medications with more than $60 billion in combined annual sales.
  • That will open the door to copycats that may be 30 percent to 80 percent cheaper.

There are a number of reasons for the rise in generics, says the Times:

  • Some health insurance companies are promoting the use of generics by setting lower co-payments for them, reducing the amount patients must pay out of pocket.
  • There has also been an increased trend in the success of generic manufacturers in challenging patents held by brand-name companies.
  • Additionally, many patents are simply expiring on drugs that were introduced during the late 1980s and early 1990s, an unusually productive era of research and development for the pharmaceutical industry.

Overall, generics already account for 60 percent of prescriptions in this country.  And that portion will continue to rise, saving billions, despite the fact that an aging population is consuming more drugs and even as new medicines enter the market, says the Times.

Source: Stephanie Saul, "More Generics Slow Rise in Drug Prices," New York Times, August 8, 2007.

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