OBJECTIVES: Generic drugs are bioequivalent to brand-name drugs but cost substantially less. Several retailers offer generic drugs at $4/30-day-supply. Little is known on how $4 programs are used or potential savings from broad use of these generics. Our study fills this gap. METHODS: The 2007 Medical Expenditure Panel Survey (MEPS) includes all prescribed medications used by a nationally-representative sample of 30,964 individuals. We identified a list of generic formulations commonly available at $4 generic-drug programs and identified MEPS respondents who used these drugs. We compared characteristics between those who paid $4 in 2007 for their generics vs those who could potentially have saved by switching to $4 programs. For the latter, we calculated potential total annual savings.   RESULTS: Among 7133 adults who used generics available in $4 programs, 5.9% paid $4 and 66.5% could potentially have saved by switching to a $4 generic program, corresponding to 50,292,349 US individuals. Compared to those who appeared to use $4 programs in 2007, those who could save were more likely to be male (42.7% vs. 32.5%, p<0.05), middle/high- income (75% vs 70%, p<0.05), and have zero chronic condition (51.4% vs. 44.3%, p<0.05). If patients had used $4 programs, annual savings per-person would be $66.22 (s.e.=$2.43) in 2007, of which $38.50 (s.e.=1.57) would be savings by patients, $16.46 (s.e.=1.33) by private health plans, and $10.22 (s.e.=1.07) by Medicare. This translates into $3 billion in total annual savings in the US: $1.9 billion by patients, $0.8 billion by private insurance, and $0.5 billion by Medicare. CONCLUSIONS: Total annual savings of $3 billion was possible in the US in 2007 if patients had used $4 programs. This is the lower bound of potential savings because it does not capture savings if patients switch from brand-name drugs to equivalent $4 generics.