Annual Savings from FDA Generic Drug Approvals: Year-by-Year Breakdown

Every year, the U.S. Food and Drug Administration (FDA) approves hundreds of generic drugs - and each approval saves billions. But the numbers aren’t steady. Some years, savings spike. Others, they drop. Why? It’s not random. It’s tied to which brand-name drugs lose patent protection and how big their markets are.

What the Numbers Actually Mean

When people talk about savings from generic drugs, they’re usually mixing two different numbers. One comes from the FDA. The other from the Association for Accessible Medicines (AAM). They’re both right - but they measure different things.

The FDA tracks savings from new generic approvals in a single year. That means: if a drug like Lipitor or Humira loses its patent and a generic version hits the market, the FDA calculates how much money was saved in the first 12 months after that generic launched. This includes two parts: the drop in price for the generic itself, and the price cut the brand-name company had to make to stay competitive.

The AAM looks at the total savings from every generic drug being used that year. That’s the full picture: all generics, all brands, all prescriptions. It’s like comparing the cost of a single new car purchase versus the total you spent on cars over the last decade.

So if you see a headline saying ‘$7 billion saved in 2019,’ that’s the FDA’s number - just from new generics that year. But the AAM says Americans saved $408 billion in 2022 just from using generics overall. That’s the real scale.

Year-by-Year Breakdown: FDA Data (New Generic Approvals)

Here’s what the FDA recorded for savings from new generic approvals, year by year:

• 2018: $2.7 billion
• 2019: $7.1 billion - the highest in over a decade
• 2020: $1.1 billion
• 2021: $1.37 billion
• 2022: $5.2 billion

Why the wild swings? It’s all about the drugs. In 2019, several high-cost brand-name drugs lost patent protection at once - including a major cholesterol med and a diabetes drug. That’s when savings jumped. In 2020, fewer big drugs went generic. So savings dropped - even though the FDA approved the same number of generics.

2022 saw another spike. Why? Five new generics hit markets worth over $1 billion each. One of them was for a blood thinner used by millions. That single drug accounted for nearly $1.5 billion in savings in its first year. That’s more than the entire savings total for 2020.

And here’s the kicker: about half of all first-generic savings in 2021 came from just five drugs. That’s not an accident. It’s the nature of the market. Big drugs = big savings. Small drugs = small savings. But the small ones add up.

Total Generic Savings: What the AAM Reports

While the FDA tracks new entries, the AAM tracks the full impact. And that’s where the real story is.

• 2020: $338 billion saved
• 2022: $408 billion saved
• 2023: $445 billion saved

That’s $445 billion in one year - just from generics. To put that in perspective, that’s more than the entire annual budget of the U.S. Department of Education. It’s also more than the GDP of countries like Denmark or New Zealand.

Who benefits? Medicare saved $137 billion in 2023 - that’s $2,672 per beneficiary. Commercial insurers saved $206 billion. Medicaid saved the rest. For patients, it means a 30-day supply of a generic blood pressure pill costs $6.97 on average. The brand version? Often $150 or more.

Therapeutic areas show the biggest wins:

• Heart disease: $118.1 billion saved
• Mental health: $76.4 billion saved
• Cancer: $25.5 billion saved

These aren’t theoretical numbers. They’re prescriptions filled. Copays paid. Lives changed.

How the FDA Calculates Savings

The FDA doesn’t guess. They use real sales data. For every new generic approved, they track prices and volumes for 12 months. The formula is simple:

Savings = (Brand price - Generic price) × Generic volume + (Brand price drop × Brand volume)

Example: A brand-name drug sells for $200 a month. A generic hits at $40. 1 million people switch. That’s $160 × 1 million = $160 million saved. But the brand company, seeing sales drop, cuts its price to $120 to keep some customers. The remaining 200,000 people who still buy the brand now pay $80 less each. That’s another $16 million saved. Total: $176 million.

They only track 384 out of 408 unique drugs in a typical year - because not all manufacturers report data. But the sample is large enough to be accurate.

Who Gets the Savings? Not Always the Patient

Here’s the ugly truth: just because a drug gets cheaper doesn’t mean the patient pays less.

Pharmacy benefit managers (PBMs) - middlemen between insurers, pharmacies, and drugmakers - collect rebates. In 2023, a Senate investigation found only 50-70% of generic savings actually reached patients. The rest stayed with PBMs and insurers.

Patients on Medicaid or Medicare often see the full benefit. But those with private insurance? Their copays don’t always drop - even when the drug’s list price does. Why? PBMs negotiate deals with drugmakers that don’t always pass savings to consumers.

That’s why a pharmacist in Ohio might tell you: ‘I fill 92% of generic prescriptions for under $20.’ But a patient in Texas might still pay $50 for the same pill because their plan’s formulary doesn’t reflect the lower cost.

Why This Matters for the Future

Generics now make up 90% of all prescriptions in the U.S. But they cost only 13.1% of total drug spending. That’s the power of competition.

But the low-hanging fruit is gone. The easy wins - blockbuster drugs like Lipitor and Plavix - already went generic. Now, the FDA is approving more complex generics: injectables, inhalers, patches. These take longer to develop. They’re harder to copy. That means fewer big savings in the near term.

Biosimilars - generic versions of biologic drugs like Humira - are the next frontier. As of August 2024, the FDA has approved 59 biosimilars. But so far, their savings are modest. Why? High development costs and legal delays from brand companies.

Still, the trend is clear: generics are the backbone of affordable care. Without them, millions would skip doses. Hospitals would be overwhelmed. Medicare would break.

What’s Next?

The FDA’s 2023 Drug Competition Action Plan is pushing to remove barriers that delay generic entry - like REMS programs that block access to brand samples for testing, or patent thickets that stretch exclusivity beyond legal limits.

By 2030, experts project annual generic savings could hit $500 billion. But that depends on policy, competition, and whether the system actually passes savings to patients - not just corporations.

For now, the data is undeniable: every time a generic drug gets approved, it saves billions. The question isn’t whether generics work. It’s whether we’re letting them work as fast and fairly as they should.