The 'unprecedented' plunge in prescription drug prices

Dozens of patents for name-brand drugs are due to expire within the next 14 months, and generic drugs will replace some of the most popular and widely advertised drugs used today. For millions of people worldwide, this means switching from familiar brands like Lipitor to generic equivalents. How will this affect drug companies, and what will be the impact on people who depend on expensive prescription medication? Here, a brief guide:

Which drugs are scheduled to go generic?

Some real blockbusters. "In the next two years, six of the 10 top-selling drugs will lose their patents," says Chris Woolston in the Los Angeles Times. Lipitor, the world's best-selling drug, which is used to lower cholesterol, will be available as a generic in November of this year. Another best-seller, the blood thinner Plavix, will lose its patent in May 2012. Other well-known drugs with expiring patents include the arthritis treatment Enbrel, the anti-psychotic Zyprexa, as well as drugs for bipolar disorder, HIV, high cholesterol, and other conditions.

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Why is this happening all at once?

In the 1990s, pharmaceutical researchers were "wildly successful at creating pills that millions of people take every day for long-term conditions," says the Associated Press. The patents, which were filed while the drugs were still being developed, generally last for about 20 years before expiring, so many drugs that were created in the 1990s will probably be available as generics in the next few years.

Will this result in significantly lower drug prices?

Yes. Generics typically cost 20 to 80 percent less than brand-name drugs. That's a "godsend" for people with chronic conditions like arthritis, high cholesterol, diabetes, and other illnesses — especially if these people have no prescription coverage. Hospitals, nursing homes, and long-term-care facilities will also benefit, since "using lower-priced generics will save them some money." Overall, the use of generics "saved the U.S. health-care system more than $824 billion from 2000 through 2009," says National Journal.

What about the impact on Big Pharma?

"The profit dollars that companies used to reinvest in innovation are no longer going to be coming," says pharma consultant Terry Hisey, as quoted by the Associated Press. That raises "long-term concerns about the industry's ability to bring new medicines to market." Drug companies have already started laying off employees, and more belt-tightening is expected to occur.

Sources: Associated Press (2), LA Times, National Journal