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International trends in generics: the EU

Few studies have conducted an international price comparison of generic medicines as it is hard to access comparable data. A 2007 study by Prof. Dr. Steven Simoens examined national pricing policies in some EU countries and related them to generics prices (see Table 1).

Medicines pricing policies in Europe: a review

The OECD countries spent 4.6% more per capita per year on pharmaceuticals from 1995 to 2005 although the annual average economic growth was only 2.2% during the same period [1].

The generic drug wars: deeply discounted medication

Fierce competition among major pharmacy chains in the US, such as CVS, Walgreens and Walmart, has led to a generic prescription pricing war with unclear public health implications.

Brand loyalty, generic entry and price competition in the US

In a new working paper from the US National Bureau of Economic Research researchers investigated brand loyalty, generic entry and price competition in the 25 years since the 1984 Waxman-Hatch legislation came into force.

Canadians pay almost twice as much as Americans for generics

A new study released on 13 October 2010 by the Canadian Fraser Institute finds that Canadians pay far higher prices, in fact almost double, for generic drugs than patients in the US.

Comparison of biosimilar and branded vancomycin

Despite demonstrating pharmacological equivalence, researchers have found biosimilar vancomycin exhibited inferior antimicrobial activity compared with the branded product.

Incentives to use generic medicines

A variety of financial and non-financial incentives are intended to encourage generic prescribing. Physician budgets are used by Germany and UK and seem to encourage generic prescribing. Assistance in terms of electronic prescribing, medicines databases, audit and feedback on prescribing data, guidelines and formularies tend to be voluntary and have a limited impact. Denmark and the UK teach medical students to prescribe by INN rather than brand name. Portugal requires prescription by INN if a generic product exists. Physicians see this as a restriction on their prescribing freedom in Belgium and France and resist such moves.

An industry view of generic manufacturing

Research and development of innovative medicines are becoming more challenging, with only 29 medicines with new chemical entities launched in 2006. The dwindling pipeline of new innovative medicines reduces the number of new chemical entities that can be developed when patents on innovative medicines expire in the future. Manufacturers of innovative medicines attempt to extend the period of patent protection by either launching a new dosage, a sustained-release version, a new indication, a single isomer version or a combination medicine. These strategies delay the market entry of generic medicines. As generic competition primarily takes place in the market for prescription medicines, some manufacturers of originator medicines have switched their medicines from prescription to over-the-counter status, e.g. simvastatin 10 mg in UK.

Pricing strategies in generic medicines

Eighty two per cent of countries impose pricing regulation while 18% opt for free market competition to control prices. Of the countries that regulate prices, 36% set the price of generic medicines at a predetermined percentage below the originator price. For instance, the minimum price difference between originator and generic medicines was 20% in Italy in 2004. In 21% of countries, the generic medicine price is based on the average price of medicines in a selection of countries. Other mechanisms used to set generic medicine prices are a maximum price (19% of countries) and a negotiable price (12% of countries).

Can we have our cake and eat it?

Managing the cost of pharmaceutical expenditure is entirely the competence of individual EU Member States. As a result, Europe has developed into a patchwork of different systems of pharmaceutical pricing and reimbursement.