Type of policy

Strengths

Weaknesses

Market entry

Pricing and reimbursement approval process

Mechanism to check justification for price and reimbursement status.

Delays market entry of generic medicines and prevents level playing field across countries.

Pricing

Free pricing of medicines

High medicine prices create attractive conditions for market entry by generic medicines. Large price differences between originator and generic medicines stimulate patient demand for generic medicines.

Strong price competition could endanger the long-term suitability of the generic medicines industry.

Pricing regulation

Mechanism to contain public pharmaceutical expenditure.

Lower medicine prices discourage market entry of generic medicines. Smaller price differences between originator and generic medicines restrict patient demand for generic medicines.

Reference pricing

Reference-pricing system (RPS)

Financial incentive for patients to demand generic medicines priced below reference price.

Does not stimulate generic medicines use if originator medicines reduce their price below level of reference price.

Low reference price

Establishes clear price differential between originator and generic medicines.

Forces companies to price generic medicines close to marginal costs and threatens economic viability.

High reference price

Facilitates market entry of generic medicines.

Small price difference between originator and generic medicines restricts patient demand for generic medicines.

Narrow reference groups

Homogenous groups of medicines

Reallocation of demand between groups or between group and patented medicines not covered by RPS

Broad reference groups

Stimulates competition among medicines that target the same illness. Reduces potential for reallocation of demand.

Heterogeneous groups of medicines with potential of prescription of less effective medicine in order to avoid co-payment.

Incentive for physicians

Budgets

Increases generic prescription rates.

Only effective in combination with sanctions for budget overruns. May encourage referral or admission to hospital.

INN prescribing

Creates potential for delivery of generic medicines by pharmacists.

Depends on attitude of physicians, dispensing regulation, and remuneration of pharmacists.

Non-financial incentives

Tools that support low-cost prescribing by physicians.

Voluntary nature of schemes with unproven effect on generic prescription rates.

Incentive for pharmacists

Absolute pharmacist margins on medicines

Pharmacists gain some margin on originator and generic medicines.

Increases price of generic medicines relative to originator medicines.

Incentive for patients

Patient co-payment

Higher co-payment on originator medicines stimulates demand for generic medicines.

Stimulus weakened if physicians are not cost-conscious or co-payment covered by additional insurance.

Information campaign

Increased patient awareness of and demand for generic medicines.

Small effect if campaign is short-lived and has limited exposure.