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Policies and Legislation Posted 24/04/2012

First posted: 24 April 2012 

Austria does not have a coherent generic medicines policy and there is no generic medicines competition within the existing regulatory frameworks [1].

There are no incentives for physicians to prescribe generic medicines [1]. There are no physician budgets or targets and physicians in Austria are not allowed to prescribe by international non-proprietary name (INN) but have to use the brand name or the generic drug name [2].

There are no incentives for pharmacists to dispense generic medicines [1]. Generics substitution by pharmacists is not permitted by law and pharmacists still earn a lower margin on generic medicines in absolute terms than on originator medicines [3].

Since patients have a co-payment in the form of a fixed fee, there are no incentives for patients to opt for cheaper generic medicines [2].

Pricing
The Austrian medicine market is characterised by low prices [3]. By using generic drugs made in Austria prices are well below other countries, being 18.6% below the EU average [4].

In the 1990s, generic medicines were included in the social insurance fund’s approved list of reimbursed medicines if they were priced at least 30% lower than the originator medicine. This was followed by a demand to reduce the price of the originator medicine by 23%. This means that generic medicines tended to be around 7–10% cheaper than originator medicines [3].

In 2004, a new pharmaceutical pricing policy came into force, with medicine prices based on average prices of some EU countries. Furthermore, prices of generic medicines and originator medicines that are off-patent were regulated as follows: the first generic medicine must be priced 44% in 2004, 46% in 2005, and 48% from 2006 onwards below the price level of the originator medicine. The price of the originator medicine has to decrease by 30% three months after entry of the first generic medicine. The price of the second generic medicine must be 15% below the price level of the first generic and the third generic medicine is priced 10% below the level of the second generic medicine. Additionally, the prices of the originator, first and second generic medicines need to go down to the price level of the third generic medicine not later than three months following the market entry of the third generic medicine. The fourth and any subsequent generic medicines need to be at least Euros 0.10 cheaper than the least expensive generic medicine [3].

Reference pricing
Austria does not have a reference pricing system [3].

International price comparison
The Main Association of Austrian Social Security Institutions (Hauptverband der österreichischen Sozialversicherunsträger, HVB) has been comparing prices of medicines in Austria with those in other European countries in the course of the reimbursement decision for more than 10 years on an irregular basis [2].

Since 2004, medicine prices in Austria have been set according to average EU prices for identical or comparable products [2, 5].

Incentives for physicians
In Austria no pharmaceutical budgets are applied for physicians [2].

Physicians who have a contract with a social insurance fund need, however, to observe guidelines on the cost-effective prescribing of medicines. Adherence to guidelines is monitored by social insurance funds by comparing prescription rates among peers. Failure to comply with guidelines may result in a reprimand, obligation to refund the social insurance fund or loss of contract with the fund [3].

Physician generics prescribing targets have been successfully implemented in Vienna, Austria, but have not been extended to other provinces.

Physicians in Austria are not allowed to prescribe by INN but have to use the brand name or the generic drug name [2]. However, the hospital discharge letter points out that physicians can prescribe a generic medicine. Physicians are assisted in their prescribing by computerised prescribing and a medicine database [3].

Incentives for pharmacists
Generics substitution by pharmacists is not permitted by law. In practice, the pharmacist can substitute a branded originator medicine that is out of patent or a branded generic medicine by any generic medicine only after asking the physician [3].

Austria has a system of regressive pharmacist margins in place, with pharmacy margins for medicines purchased by insured patients ranging from 27% for pharmacy purchase prices less than Euros 10 to 3.8% for prices above Euros 357.08 from 2004 onwards. However, pharmacists still earn a lower margin on generic medicines in absolute terms than on originator medicines [3].

Incentives for patients
Patients are usually not informed about products and their prices and have to pay a fixed fee per prescription dispensed on expense of the sickness funds, independent of the type of product or its pack size (Euros 4.7 in 2007, Pharmig) [2]. In some cases, two packs can be prescribed for a single fee [3].

According to the guideline on economic prescribing of pharmaceuticals and medicinal products (Richtlinie über die ökonomische Verschreibweise von Heilmitteln und Heilbehelfen, RöV), only the medicine prescribed by the physician may be dispensed at the expense of the sickness funds. Thus, the patient may request a generic drug from the physician or the pharmacy, but he/she has no incentive to do so [2].

For medicines not included in the reimbursement list, patients have to pay the full price unless the prescription is permitted by a senior consultant of the social insurance fund. Exemption from co-payment is also granted to patients in need of social protection and patients whose income does not exceed a specific level [3].

Since 1 January 2008, an annual ceiling on prescription charges of 2% of the annual net income has been introduced [6].

The government launched an information campaign in 2008, distributing leaflets in pharmacies to try and raise awareness and reduce confusion concerning generic drugs [7].

Policy analysis
Key factors aiding the development of the generic medicines market

  • Since 2004, substantial price differences between originator and generic medicines in developing markets have stimulated market entry [3].
  • Cost-effective guidelines encourage physicians to prescribe generic medicines [2].
  • The government has run information campaigns for patients [7].

Key factors hindering the development of the generic medicines market

  • In the 1990s, the Austrian generic medicines market suffered from the low level of medicine prices, reductions in the price level of originator medicines, and limited price differences between originator and generic medicines [3].
  • Medical students are not taught to prescribe by INN at medical school.

Physicians in Austria are not allowed to prescribe by INN, but have to use the brand name or the generic drug name [2].

  • Generics substitution by pharmacists is not permitted [3].
  • Pharmacists are financially penalised for dispensing generic medicines [3].
  • With a co-payment in the form of a fixed fee there are no incentives for patients to opt for cheaper generic medicines [2].

References

1.  Bongers F, Carradinha H. European Generic medicines Association (EGA) Health Economics Committee. How to Increase Patient Access to Generic Medicines in European Healthcare Systems. June 2009.

2.  Österreichisches Bundesinstitut für Gesundheitswesen (ÖBIG). Surveying, Assessing and Analysing the Pharmaceutical Sector in the 25 EU Member States. July 2006.

3.  Simoens S, De Coster S. Sustaining Generic Medicines Markets in Europe. April 2006. [monograph on the Internet]. Brussels, Belgium, European Generic Medicines Association (EGA) [cited 2012 Apr 13]. Available from: www.egagenerics.com/doc/simoens-report_2006-04.pdf

4.  Österreichische Generikaverband (OEGV) [Austrian Generics Association]. Erstattungskodex [Reimbursement code] [monograph on the Internet] Vienna, Austria, OEGV [cited 2012 Apr 13]. German. Available from: www.generikaverband.at/generika/erstattungskodex

5.  Mrazek M. Comparative Approaches to Pharmaceutical Price Regulation in the European Union. CMJ. 2002;43(4):453-61.

6.  Association of the Austrian Pharmaceutical Industry (Pharmig). Medicinal products and health care in Austria: Facts 2008/Edition 2010.

7.  Österreichisches Sozialversicherling (Austrian Social Security). Kdolsky präsentiert Informationsoffensive zu Generika: [Kdolsky presents information campaign on generics] [monograph on the Internet] Vienna, Austria, OEGV [cited 2012 Apr 13]. German. Available from: www.sozialversicherung.at/portal27/portal/esvportal/channel_content/cmsWindow?action=2&p_menuid=67600&p_tabid=2&p_pubid=139698

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