He said that the government was responding to criticism of the tender system, which was to be introduced in the beginning of 2011. Both the branded pharma industry and the generics manufacturers had criticised the plan, saying it would drive away companies to low-cost countries.

The new tender process was part of Italy's austerity budget measures announced at the beginning of June.

It was to be implemented by the Italian medicines agency AIFA which was to choose four equivalent drugs with the same active ingredient through a tender process.

Only those four drugs were to be fully reimbursed and patients or doctors choosing other drugs would have to pay the price difference between their preferred choice and the products selected in the tender process.

Mr Fazio said the government had realised that increasing the volumes of generic medicines was a bigger priority than keeping the reimbursement costs low.

Instead of the tendering approach the government plans a series of price cuts to gradually reduce the costs of generic medicines.

Generic volumes in Italy have risen significantly to 8–10% of the total drugs market. However, they are still well below the European average of 40%