With the high price of health care in the U.S., many know that at least one thing can reduce personal expenditures: generics. Whle pharmaceutical companies patent their drugs to obtain exclusivity and prevent other companies from selling them for cheaper, these restrictions last only around 20 years, with some exceptions and with usually half of that time taken up by clinical trials to assess the drug before it lands on the market. This leaves companies with ten years to milk their product for what its worth and charge what they desire.

When patents expire, however, various other pharmaceutical companies, such as Teva, start to create the same drug and sell it for far cheaper than the original, saving patients more than 70 percent from the original price. According to the IMS Institute of Healthcare Informatics, a division of the consulting company IMS Health, the U.S. spent $325.8 billion on medicine in 2012 which was one percent less than the year before.

One percent may not seem like much, but this is the first time that IMS has seen drug expenditures drop since it began tracking them in 1957. The leading cause, according to the report, was the "patent cliff," which sees large pharmaceutical companies lose exclusivity for producing specific widely used drugs. Some of these include Lipitor, whose patent expired in November 2011 and permitted a $28.9 billion decrease in spending on prescriptions because generics became available. Another widely used pharmaceutical to treat heart disease, Plavix, had its patent expire in November 2011 and generics were approved by the Food and Drug Administration in May 2007.

The free report also shows that 72 percent of all prescriptions cost patients $10 or less. Total prescriptions increased by 1.2 percent but were being written to less people, seeing a decline of 0.1 percent of patients filling them and costing less overall as well. Generics constituted 84 percent of all prescriptions filled in 2012.

Other interesting information from the report indicate that one percent of insured people account for 26.1 percent of all healthcare spending in 2012, a staggering number. Similarly, 51 percent of all spending by health insurances was limited to five percent of the population.

As old medications lose their exclusivity and are produced in cheaper forms, many people will switch over to generics, creating a large problem for pharmaceutical companies who are working to increase revenues at a time when drug pipelines are drying up and drug trials are failing. Some companies have gone so far as to pay generics producers to not produce cheaper versions of their drugs, while others are attempting to create biosimilar drugs, which are the original drugs that have been tweaked on a molecular level to create a "new drug entity" and ensure further exclusivity and marketplace presence. The Indian supreme court recently rejected such modifications as new drugs, which would prohibit companies from the benefits of such extended patent protections.

The free report, which was not funded by any pharmaceutical or government agency, can be found here.

Published by Medicaldaily.com