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Member Research & Reports

Member Research & Reports

Johns Hopkins: Drug Standards Linked to Billions of Dollars in Savings

A new study by researchers at Johns Hopkins Bloomberg School of Public Health found that drug standards available to drug makers to bring new drugs, including lower-priced generics, to market were associated with $11.3 billion in savings in 2015 and 2016. The study, published online November 12 in PLOS ONE, found that drugs with a public quality standard developed by the U.S. Pharmacopie (USP), a nonprofit that sets formulary standards for drugs, dietary supplements, and food ingredients, had on average 50 percent more generic manufacturers than those that did not have the USP standard. Generics are almost always lower-priced than brand prescription drugs.

Public quality standards for medicines — also known as monographs — developed by USP set specifications for purity, potency, and other quality attributes. These monographs can assist generic manufacturers in more efficiently gaining regulatory approval for drug products, thereby promoting market entry and generic competition. Prior studies have demonstrated a link between the number of generic manufacturers and price reductions.

For the study, the researchers examined 982 prescription drugs approved by U.S. Food and Drug Administration since 1982 to assess possible association between USP standards, generic entry, and prescription costs. The researchers estimated the cost savings associated with USP drug product monograph issuance to be $5.09 billion and $6.22 billion annually in 2015 and 2016, respectively. These cost savings were driven by an estimated 386 and 417 additional generic manufacturers on the market due to USP monographs. These additional manufacturers represented 28 percent of the total number of generic manufacturers in the study sample.

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