to buy prescription medications decreases for both the insurer and the patient. generic drugs have been shown to reduce healthcare costs in multiple ways, among them increasing competition which, in most cases, helps drive prices down. companies that want to manufacture generic drugs must show in their applications to the fda that they guarantee quality and bioequivalence. in july 2016, the fda generic drug application backlog comprised 4,036 generics. on the other hand, the european medicine agency (ema), europe's equivalent to the fda, had only 24 generics drug applications awaiting approval. this count includes biologically based biosimilars awaiting approval. the fda's generic count does not include biosimilars, which are more complicated medicines to review. according to generic pharmaceutical association, the median time it takes for the fda to approve a generic is 47 months. on july 9, 2012, generic drug user fee amendments of 2012 (gdufa) was signed into law. the gdufa was designed to build upon the 20-year-old prescription drug fee act and improve the generic drug review and approval process. according to the fda website, the gdufa enables the fda to levy user fees "to fund critical and measurable enhancements to the performance of fda's generic drugs program, bringing greater predictability and timeliness to the review of generic drug applications". the hiring of over 1,000 employees and the upgrade of the office's information technology were among the improvements generated by these funds. the ema along with the european commission, which handles approval of marketing materials, are approving generics and brand-name drugs in about a year on average, according to the ema. in fiscal year 2014, the fda had not approved any of about 1500 such applications by the end of 2014. the slow pace of the fda review (6–12 months even for a priority review) has not allowed the market to correct itself in a timely manner, i.e. not allowed manufacturers to begin to produce and offer a product, when a price is too high. the following suggestions have been made: prioritize review of applications for essential drugs, i.e. move them up in the queue. if the fda felt unable to make this largely economic evaluation about priority, the department of health and human services (dhhs) office of the assistant secretary for planning and evaluation could do this. second, the fda could temporarily permit compounding. and third, the fda could "temporarily permit the importation of drug products reviewed/approved by competent regulatory authorities outside the united states". in a january 2016 senate hearing, the director of the fda's center for drug evaluation and research said that increasing numbers of generic drug applications had "overwhelmed the fda staff and created unpredictability and delay for industry",: 2 but that the fda is ahead of schedule in reducing the backlog since then.: 11 research and development pharmaceutical companies argue that the prices they set for a drug are necessary to fund research. 11% of drug candidates that enter clinical trials are successful and receive approval for sale. although the cost of manufacturing is relatively low, the cost of developing a new drug is relatively high.: 422 in 2011, "a single clinical trial can cost $100 million at the high end, and the combined cost of manufacturing and clinical testing for some drugs has added up to $1 billion." it has been stated that the u.s. pharmaceutical industry is able to invent drugs that would not be profitable in countries with lower prices, because of the high drug prices in the united states. critics of pharmaceutical companies point out that only a small portion of the drug companies' expenditures are used for research and development, with the majority of their money being spent in the areas of marketing and administration. european pharmaceutical companies are potentially as innovative as their u.s. counterparts, despite price controls. in addition, some countries, such as the united kingdom and germany, encourage comparative effectiveness reviews, whereby cost-benefit analyses of rival drugs determine which perform best. charles l. hooper and david r. henderson wrote in a 2016 publication of the cato institute that drug company's pricing correlates with the per capita income of foreign countries and they opined, that in some cases foreign governments drive such hard bargains to the point that they do not contribute to the cost of r&d, leaving "americans to subsidize the r&d costs". jeanne whalen wrote in the wall street journal in 2015, "the upshot is americans fund much of the global drug industry's earnings, and its efforts to find new medicines." and that the u.s. market was "responsible for the majority of profits for most large pharmaceutical companies." intermediaries intermediaries are estimated to absorb about 41% of the revenue in pharmaceutical industry transactions. pharmacy benefit managers pharmacy benefit managers (pbms) may increase drug prices they charge to their clients, in order to increase their profits. for example, they may classify generic drugs as brand name drugs, because their contract does not contain a definition, or only an ambiguous, or a variable definition. this allows pbm's to classify drugs "for one purpose in one way, and for another purpose in another way", and to change the classification at different points during the life of a contract. this, as of 2010 un-litigated freedom, affects "drug coverage, making contract terms, and the reporting about the satisfaction of contract terms". pbm's can make confidential business agreements with pharmaceutical companies, which pbm's have called collective buying power, then set a (lower) reimbursement maximum amounts to drugstores for generic drugs and set (higher) charges to insurers. this practice is also known as "spread pricing". there are examples where pbms can double drug costs. drug rebates drug manufacturers may offer to pay an insurance company a rebate after they have sold them a drug for full price. this is largely invisible to the consumer, because a drug company does not report how much money it returns to the payer. in 2012, the aggregate in the us has been estimated at $40 billion per year. many people are concerned that pharmaceutical rebates increase out-of-posts and overall insurance costs. other critics also argue that drug manufactures may use rebates to incentivize insurance companies to get preferred tiered placement on drug formularies. the actual rebate amount can be influenced by many factors such as size of insurance clientele or the amount of insurance coverage provided for that drug. as solution to high medication costs as a result of drug rebates, the trump administration have proposed allocating a portion of the drug rebate directly to medicare patients at the time of purchase in order to offset growing out-of-pocket costs. solutions discounts and drug coupons with the rising cost of prescriptions, affordability becomes one of the biggest reasons people in the united states don't take prescriptions the correct way (i.e. cutting pills in half to extend the life of the prescription or opting for an over-the-counter alternative instead). however, there are programs and strategies available to cut prescription drug costs. programs like goodrx and rxsaver help the consumer navigate prescription drug costs in order to obtain affordable drugs. patients can obtain coupons online or at their doctor's office and use them to reduce their co-pays for a given prescription medication. for certain specialty drugs (most injectables and biologic agents), drug coupons have been found to save patients as much as $6 of every $10 they are asked to pay out-of-pocket. according to a 2017 study, for statin drugs, coupon users had higher drug utilization rates and lower rates of discontinuation than for non coupon users. prices vary from one pharmacy to another as listed prices determine what the insurance companies will have to pay for the drug. while this approach has been praised for lowering out-of-pocket costs and consequently reducing cost-related nonadherence, some argue that coupons simply incentivize patients to initiate expensive brand-name drugs, ultimately leading to more expensive premiums that cancel out any previous cost-saving effects of the coupons. according to the 2017 consumer reports, it is important to compare prices of various retail pharmacies to get the best deal. other tips include seeking 90-day prescription when possible, asking for the lowest price when deciding to pay for a medication, asking for generics (refer to "generics versus brand-name products" for more details regarding generic drugs vs. brand-name drugs), comparing insurance plans and talking to your doctor about costs in order to find cheaper alternative(s). generics versus brand-name products although branded drugs represent a small minority of the total volume of drugs prescribed in the us, they are responsible for the majority of drug spending. a generic drug is a chemically equivalent, cheaper version of a brand-name drug. a generic drug form is required to have the same dose, strength and active ingredient(s) as the brand name drug; thus, they carry the same risks and benefits. to ensure compliance, the fda generic drugs program conducts stringent reviews (3,500 inspections of manufacturing plants per year). generic medicines can only be sold after the patents of the brand name versions end. due to this mandatory period of exclusivity for many brand-name drugs (a period in which generic medicines cannot be sold), delay of generic drugs reaching the market is expected. the high cost of upfront research that brand-name products have to go through to ensure safety and efficacy largely account for the high discrepancy in pricing between the two groups. branded drugs may have marketing budgets that meet or exceed the cost of research and development. generic drug manufacturers determine price based on what the name-brand equivalent is sold for. if multiple generic drug companies manufacture the same drug, price is often driven down towards production costs. if only a few generic drug manufacturers make the product, the price remains close to that of the branded drug. in some cases, price fixing occurs among the generic drug companies—instead of trying to beat competitors by lowering prices, the companies agree to maintain similar prices. value-based prices an effort is being made to determine if the value of a drug justifies its price. such measures include cost-minimization, cost-benefit, cost-effectiveness, and cost-utility analysis. they take into account the total costs, including hospital stays, repeated dosages, etc. and, comparing it to a similar treatment, determines whether a drug will actually minimize costs and whether it is more effective in curing the patient. these cost analyses can all be calculated from the point of view of the hospital, the healthcare system, the government, and the patient, so what is best for one party may not be best for another in terms of cost, making the value of a drug in terms of its price, sometimes a difficult thing to measure. quality-adjusted life years (qaly) is a cost-effective measure that determines the value of a drug in terms of the quality of life achieved after taking a prescription drug, rather than the number of years the medication extends a patient's life. however, qaly is subjective to each patient and brings up moral dilemmas such as whether or not it is cost-effective to do a life-saving operation for someone who is elderly or has other complications. the subjectiveness of qaly is apparent on a case-by-case basis as it takes into account both the quality and quantity of life lived by an individual, with quality of life being the primary subjective factor. qaly does not completely reflect an individual's personal preferences in a particular clinical situation as their value based perspective of life is completely subjective. in oncology, the american society of clinical oncology and the european society for medical oncology both developed specific tools in 2015 to grade the value of new drugs. to discuss the price/value ratio of anti-cancer drugs between physicians and patients and on a societal level. a 2017 review of anti-cancer drugs approved by the fda between 2000 and 2015 found no relationship between their price and their value as measured by the scales of the asco and the esmo. policy makers the fda has a "priority review process" for drugs which compete with another drug whose price exceeds its value-based price. congress could also grant the fda the ability to change the exclusivity period for new drugs. the fda could also temporarily allow the import of drugs approved for sale outside the united states. in december 2015, the dhhs held a public meeting and both houses of congress