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

Every year, the U.S. health system saves tens of billions of dollars simply because generic drugs hit the market. These aren’t hypothetical numbers. They’re real dollars taken out of patients’ pockets, insurance bills, and government programs-thanks to FDA approvals of generic versions of brand-name drugs. But how much do those savings actually add up to? And why do some years jump while others dip? The answer isn’t just about how many generics get approved-it’s about which drugs they replace.

What the FDA Actually Measures

The FDA doesn’t track all generic drug savings. It tracks something more specific: the savings generated in the first 12 months after a new generic drug is approved. This is called the "first-year savings from new generic approvals." It’s not the total savings from all generics in use. It’s the immediate drop in price when a brand-name drug loses its monopoly.

For example, when a blockbuster drug like Humira or Lipitor loses patent protection, the first generic version can slash the price by 70% or more. The FDA calculates savings by comparing what patients and insurers paid for the brand before the generic arrived, versus what they paid after. They factor in how much the brand price dropped even before the generic fully took over (because manufacturers often lower prices to compete), and how many units of the generic were sold.

Here’s what that looked like in recent years:

• 2018: $2.7 billion in savings from new generic approvals
• 2019: $7.1 billion - the highest year on record
• 2020: $1.1 billion
• 2021: $1.37 billion
• 2022: $5.2 billion

That 2019 spike? It came from a few high-cost drugs hitting generic status at once. One of them was the cholesterol drug Repatha, which saved $1.8 billion in its first year. Another was the blood thinner Eliquis, which saved $1.6 billion. Those two alone made up nearly half of the entire year’s savings.

In 2020, the number dropped because no major blockbuster drugs lost exclusivity. That’s the reality: generic savings aren’t steady. They’re lumpy. They depend on which patents expire. One year, you get a $10 billion drug going generic. The next, you get a $50 million drug. The total swings.

Total Generic Savings: The Bigger Picture

If you want to see the full impact of generics on the U.S. health system, you need to look beyond the FDA’s first-year numbers. That’s where the Association for Accessible Medicines (AAM) comes in. They track total savings from all generic drugs sold in a calendar year - no matter when they were approved.

In 2023, generics saved the U.S. health system $445 billion. That’s not a typo. $445 billion. For context, that’s more than the entire annual budget of the Department of Defense. And it’s up from $408 billion in 2022 and $338 billion in 2020.

These savings are spread across every part of the system:

• Medicare: $137 billion saved - that’s an average of $2,672 per beneficiary
• Commercial insurers: $206 billion saved - nearly half of all generic savings
• Medicaid: $102 billion saved

The biggest savings come from treating common, chronic conditions:

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

These aren’t abstract figures. They’re real people choosing between paying rent or buying their blood pressure pills. Generics turned a $300 monthly cost into a $15 copay. For millions, that’s the difference between managing a condition and giving up on treatment.

Why the Numbers Don’t Always Match

You might notice something strange: the FDA’s $5.2 billion in 2022 savings doesn’t come close to the AAM’s $408 billion total for the same year. That’s because they’re measuring different things.

The FDA looks at the impact of new approvals - the moment a drug goes generic for the first time. The AAM looks at the total savings from every generic drug sold that year, even if it’s been on the market for 10 years.

Think of it like this: the FDA is counting the opening of a new grocery store that lowers prices on milk. The AAM is counting how much money everyone saved on milk, bread, eggs, and cereal all year long - because of all the stores, old and new.

The FDA’s data tells you when the biggest price drops happen. The AAM’s data tells you how much those drops add up over time. Both matter.

Who Benefits the Most?

Patients pay less. But do they get to keep all the savings? Not always.

Pharmacists report that 92% of generic prescriptions are filled for under $20. The average copay is just $6.97. That’s a massive drop from the $300+ some brand-name drugs cost before generics.

But here’s the catch: a 2023 Senate Finance Committee investigation found that only 50% to 70% of the savings from generics actually reach the patient. The rest gets absorbed by pharmacy benefit managers (PBMs), insurers, and middlemen through rebate systems.

State Medicaid programs see the clearest benefits. California’s Medi-Cal program saved $23.4 billion in a single year from generics. Alaska saved $354 million. The savings scale with population size, but even small states see millions in relief.

The biggest winners? People with chronic conditions who need drugs every day. A patient on a generic statin for cholesterol might save $2,000 a year. That’s not just a copay cut - it’s money for groceries, rent, or a child’s school trip.

What’s Driving the Growth?

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

The FDA approved 742 generic drug applications in 2022 alone. That’s up from 633 in 2021. Why? Two big reasons:

First, more big drugs are losing patents. Drugs like Humira, Enbrel, and others are hitting their expiration dates, opening the door for generics. Second, the FDA’s Generic Drug User Fee Amendments (GDUFA) have cut approval times. In 2022, 95% of standard applications were reviewed within 10 months - down from years in the early 2000s.

The pipeline is full. By 2033, U.S. generic drug revenue is projected to hit $131.8 billion. That means more savings on the horizon.

The Challenges Ahead

Not everything is smooth sailing.

Some brand-name companies use legal tricks to delay generics - like filing endless patents, or using risk evaluation and mitigation strategies (REMS) to block generic manufacturers from getting samples of the drug. These tactics have slowed down generic entry for drugs like insulin and biologics.

Biosimilars - the generic version of complex biologic drugs - are growing, but slowly. As of August 2024, the FDA had approved 59 biosimilars. They’re promising, but they’re still expensive to make and hard to approve. Their savings so far are small compared to traditional generics.

And while generics are cheaper, they’re not always cheaper for the patient. If your insurance plan doesn’t cover generics at a low copay, or if your PBM negotiates rebates that don’t get passed on, you might still pay too much.

The Bottom Line

The FDA’s annual savings numbers are volatile. Some years, they’re in the billions. Others, they’re barely over a billion. But the AAM’s total savings tell a clearer story: generics are the single biggest driver of cost control in U.S. health care.

In 2023, they saved $445 billion. That’s $445 billion that didn’t go to drug companies, PBMs, or insurers - it went back to families, to hospitals, to state budgets. That’s not just policy. That’s people living healthier lives because they could afford their meds.

The next time you hear about a new drug being approved, ask: Is it a brand-name drug? Or is it a generic? Because the answer could save someone thousands of dollars - and maybe even their life.