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Policies and Legislation Posted 12/08/2011

In The Netherlands generic pricing is regulated in the same way as originator medicines and has been subject to many policy and legislative changes over the past years, including the Drug Price Act (WGP), the Health Care Market Regulation Act (WMG), Claw-back (De Geus measure), Covenant Years 2004–2007 and Pharmaceutical Care Transaction Agreements.

Generic medicines prices in The Netherlands are also subject to a reference pricing system and in recent years have been influenced by the preference policy (preferentiebeleid) introduced by a number of healthcare insurers.

The Dutch government has stimulated physicians to prescribe by International Non-Proprietary Names (INN) using an electronic prescription system. Physician prescribing is regularly evaluated and medicine lists have been developed to rationalise prescribing practices.

Pharmacists are required to carry out generic substitution, without need for reference to the physician. However, since they receive a fixed margin, the highest price medicine is more profitable for the pharmacist.

Patients have no incentives to buy generic medicines.

Pricing

In The Netherlands, with respect to reimbursement, generics are subject to the same laws and regulations in as branded medicines [1].

Medicine prices in The Netherlands were at the average of EU prices in 2005.

Between 1996 and June 2008, under pressure from an active government, the prices of prescription medicines were reduced by 45% [2].

In 2009 the prices of generic medicines were 60% lower compared with prices at the end of 2007, mainly as a result of the preference policy that many healthcare insurers enforce [3].

Drug Price Act
The Drug Price Act (Wet Geneesmiddelenprijzen, WGP) was introduced in The Netherlands in 1996. This act introduced maximum prices for medicines below the level of reference pricings [4]. The WGP procedure is also used to set the prices of generics [1].

The maximum price is based on the average price of both originator and generic medicines having the same active ingredient, strength and dosage form in Belgium, France, Germany and the UK, adjusted twice yearly. This led to a 15% fall in medicine prices [4].

Under the influence of lower maximum prices, the price level of medicines has dropped an annual average of 3–4% in recent years [5].

Health Care Market Regulation Act
The Health Care Market Regulation Act (Wet Marktordening Gezondheidszorg, WMG) came into effect on 1 October 2006, replacing the Health Care Charges Act (Wet Tarieven Gezondheidszorg, WTG).

The Dutch Health Care Authority (Nederlandse Zorgautoriteit, NZa) determines, according to this act, the fixed fee per prescription that may be charged by pharmacies, and the rate that pharmacists receive for dispensing prescriptions [2].

The fixed fee per prescription was set at Euros 6.00 in 2008 and pharmacists’ reimbursement at Euros 8.90 per patient per quarter regardless of the number of prescriptions [5].

Claw-back (De Geus measure)
In 1998, claw-back was introduced, which made it compulsory for pharmacies to pass on part of the purchase benefits as a price benefit to patients and thus healthcare insurance companies. From 1999 onwards, pharmacies were obligated to grant patients and healthcare insurers an effective 3% discount [2].

Adjustment of the claw-back scheme in 1999 and 2002 increased claw-back by 6.82% to a maximum of Euros 6.80 per dispensed prescription [5].

Covenant Years 2004–2007
Covenants have been agreed between the Ministry of Health, Welfare and Sport (Volksgezondheid, Welzijn en Sport, VWS), the Royal Dutch Association for the Advancement of Pharmacy (Koninklijke Nederlandse Maatschappij ter bevordering der Pharmacie, KNMP) and the Association of Dutch Health Insurers (Zorgverzekeraars Nederland, ZN), in consultation with the Association of the Generic Medicines Industry in The Netherlands (Bond van de Generieke Geneesmiddelenindustrie Nederland, Bogin).

The covenant agreement in 2004 reduced the prices of generic medicines to 40% under the list price [1]. New generic medicines were also priced 40% below the reference product.

In 2005, the 2004 covenant was extended for an additional year, and Nefarma, the representative organisation of proprietary suppliers, also joined the medicines covenant [1].

In 2006 and 2007 covenants reduced the prices of prescription medicines for which similar generic drugs were available [5].

Pharmaceutical Care Transaction Agreement 2008–2009
On 17 September 2007, the VWS, again closed an agreement with Bogin, KNMP, Nefarma and the ZN. The parties agreed that the prices of generic medicines should be reduced by a further 10% in 2008 and that new generic medicines should be placed on the market for half the price of the original brand name medicine. Moreover, it was agreed that the claw-back of 6.82% would be temporarily increased during the months of December 2007 through June 2008 with a transitional surcharge to 11.3% [5].

Preference policy
In July 2005 the preference policy (preferentiebeleid) was introduced by a number of healthcare insurers. This means that healthcare insurers will only reimburse, in most cases, one of a few variants within a certain medicine cluster. In most cases this means that only the most inexpensive variants are reimbursed [2].

Under the influence of the preference policy, generic medicines prices decreased by an average of 85%. In a few cases, the price was even reduced by more than 90% [5].

Reference pricing (RP)

In 1991, a reference pricing system (RPS) by therapeutic class was introduced irrespective of patent status. Medicines with a comparable therapeutic effect were grouped if they had the same mechanism of action and a similar route of administration for treating the same indication in the same age group. For each active substance in a homogenous group, the average price per daily dose of originator medicines and one (the cheapest) generic medicine is calculated [1].

The RP is then set as the median of the distribution across all active substances in the group. In 1999, RPs were recalculated taking into account actual prices [2].

Incentives for physicians

Since 1995, the Dutch government has stimulated physicians to prescribe by International Non-Proprietary Names (INN) using an electronic prescription system [2].

The Netherlands has a tradition of developing and implementing prescribing guidelines and treatment protocols that promote the efficient use of medicines.

Local pharmaco-therapeutic discussions take place periodically between physicians and community pharmacists to evaluate medicine prescribing and dispensing.

Medicine lists have been developed to rationalise prescribing practices.

Incentives for pharmacists

The Netherlands government actively encourages generic medicine substitution by pharmacists.

If the physician prescribes a branded originator medicine that is out of patent, generic substitution is required, without need for reference to the physician.

In the past, pharmacists were encouraged to dispense generics instead of the more expensive branded medicines because they were allowed to keep one third of the difference between the price of the brand and that of the generic dispensed. This incentive was removed in the covenant of February 2004, which has lead to a voluntary reduction in the price of generics. There is now little financial incentive for pharmacists to dispense generics. Nevertheless, pharmacists have agreed under the covenants of 2004, 2005 and 2006–2007 to continue to make optimum use of generics [1].

Health insurance funds have introduced the preference policy which means that only certain (cheaper) medicines within a medicine cluster will be reimbursed.

Pharmacists receive a fixed dispensing fee per prescription = non-biased dispensing, the pharmacists tends to dispense the medicine with the highest profit margin.

Incentives for patients

Patients do not have a financial incentive to buy generic medicines in The Netherlands as there is no patient co-payment system.

In 2007, Dutch patients paid an average of 5.6% of the cost of medicines out of their own pocket [2].

Policy analysis

Key factors aiding the development of the generic medicines market

  • The financial attractiveness of generic substitution by pharmacists sustains generic medicines use.
  • The generic medicines market is driven by the lower prices of generic medicines.
  • A range of financial and non-financial incentives for physicians support generic prescribing.

Key factors hindering the development of the generic medicines market

  • Market entry requires pricing and reimbursement approval. This provides a mechanism to check justification for price and reimbursement status. However, this process delays market entry of generic medicines and prevents level playing field across countries.
  • Healthcare insurance companies have introduced the preference policy driving down prices and forcing out generic suppliers whose products have not been selected for reimbursement, thereby reducing generic competition.
  • The RPS provides a financial incentive for patients to demand cheaper generic medicines. However, it does not stimulate generic medicines use if originator medicines reduce their price below level of reference price.
  • INN prescribing is encouraged, however, there are no budget sanctions for doctors who do not comply [6].
  • Medical students are not taught to prescribe by international non-proprietary name (INN).
  • There is little financial incentive for pharmacists to dispense generics [1].
  • Patients have no incentives to buy generic medicines.

References

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

2. 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 2011 May 13]. Available from: www.egagenerics.com/doc/simoens-report_2006-04.pdf

3. Stichting Farmaceutische Kengetallen (SFK). Grote verschuivingen in generiek. Pharmaceutisch Weekblad 2010;145:10.

4. Danzon PM, Ketcham JD. Reference pricing of pharmaceuticals for Medicare: evidence from Germany, The Netherlands and New Zealand. NBER Working Paper no. 10007. National Bureau of Economic Research: Cambridge, 2003.

5. Griens AMGF, Janssen-Hoge JM, van der Vaart RJ, editors. Data en feiten 2009 [Dutch] [monograph on the Internet]. The Hague, The Netherlands, Stichting Farmaceutische Kengetallen (SFK) [cited 2011 May 13]. Available from: www.sfk.nl/publicaties/2009denf.pdf

6. Österreichisches Bundesinstitut für Gesundheitswesen (ÖBIG). Rational use of medicines in Europe. February 2010.

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