August 2, 2012
External Affairs Branch
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Bill Madison, Information Officer
CalPERS Supports Generic Drug Study Findings
SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) today said it supports a report issued by the Generic Pharmaceutical Association (GPhA) that found the use of generic drugs has saved the U.S. health care system $1.07 trillion over the last decade. The report called for increased congressional support for the federal Food and Drug Administration (FDA) office tasked with approving new generic drugs.
The GPhA drug study report, Savings: $1 Trillion Over 10 Years – Generic Drug Savings in the U.S. (PDF, 607 KB), is an analysis of the impact of generic drug use on the U.S. health care marketplace. Using 10 years (2002 – 2011) of government data from the IMS Institute for Healthcare Informatics – a leading provider of health care industry market intelligence for more than 50 years – the report showed conclusively that the use of generic drugs saved the U.S. nearly $193 billion in 2011. Prescription drugs are a major part of rising cost of national health care, 29 percent of which was covered by the federal government in 2011, while state and local governments picked up 16 percent.
CalPERS officials agree with the report’s conclusion that continued introduction and use of approved generic versions of established name brand drugs is key to the financial survival of the American health care system.
“The use of safe, approved generic drugs is an essential part of CalPERS effort to decrease health care costs for our members and employers and keep our Health Benefits Program financially sustainable,” said Ann Boynton, CalPERS Deputy Executive Officer for Benefit Programs Policy and Planning. “It just makes sense for us encourage our members to save money by using less expensive generic drugs when they’re available instead of more costly name brands.”
CalPERS has successfully encouraged members enrolled in its health benefit plans to save money by using generic drugs over name brand pharmaceuticals whenever possible. As part of that effort, in 2011 the pension fund implemented a prescription drug benefit entitled “member pays the difference” that provides savings incentives to health plan members who use available generics over name brand drugs.
The GPhA study showed nearly 80 percent of the 4 billion prescriptions written in 2011 were filled using generic drugs. CalPERS use of generics (including brand name products available generically) was close to the national rate at 74 percent for the same period.
The study also concluded that proposals to ban patent litigation settlements between generic and brand name drug producers are misguided and contrary to repeated U.S. court rulings that found them to be pro-consumer and pro-competitive. In addition, the study concluded that it is essential that Congress increase appropriations for the FDA’s Office Generic Drugs to ensure more safe generics are approved and the U.S. health care system can realize their full savings potential.
CalPERS is the largest public pension fund in the U.S. with assets totaling $233 billion. It administers retirement benefits for more than 1.6 million California State, local government, and public school employees, retirees, and their families on behalf of more than 3,000 public employers, and health benefits for more than 1.3 million enrollees. The average CalPERS pension benefit is $2,332 per month. The average benefit for those who retired in the fiscal year that ended June 30, 2011, is $3,065 per month. CalPERS average annual investment return over the last 30 years is more than 9 percent.