Price cuts, legislation and reforms

Home/Policies & Legislation | Posted 24/09/2010 post-comment0 Post your comment

In an effort to reduce budgets governments across the globe are lining up price cuts in prescription medicines, new legislation to control medicine prices and reforms in the healthcare systems. The question is how will all these changes affect the generic medicines industry and is it just a short-term fix?


Greece has announced that the price of certain drugs are to be reduced by more than 10% and that it is drawing up a second list of medicines which will no longer be eligible for reimbursement. This will not only impact Greece, but will be felt across Europe, as many other European countries include Greece in their reference pricing systems.

Germany and the UK are moving towards removing their free-pricing policies and introducing value-based pricing for new drugs. Germany also intends to extend reference pricing to generic drugs.

Pharmaceutical companies in most countries are opposing the changes citing that reduced prices will reduce the attractiveness of the market to new products and generics.

However, in the UK the Association of the British Pharmaceutical Industry warmly welcomed the National Health Service white paper, which it believes will increase patient access to many medicines (especially cancer drugs) that were previously refused based solely on cost.

Medicines Australia has also written to the senate community affairs committee urging that the Australian Parliament should pass, before 1 October 2010, a medicines pricing bill that aims to save taxpayers Aus$1.9 billion (US$1.7 billion) over a 5-year period.

Medicines Australia, who represents the research-based pharmaceutical industry in Australia, states that if the Bill is not passed before 1 October 2010, savings to the government from price cuts expected from the introduction of mandatory price disclosure will be delayed. Generics producers, however, are unhappy with the deal as they argue that they will face the brunt of the cuts.

All that remains to be seen is – when the dust settles – will all the price-cuts and reforms work in the long term and will there still be a competitive generics industry at the end of it?

Related articles

US healthcare reform

Italian austerity measures include generic price cuts

Austerity measures introduced in Portugal affect generics


FDA News. International Pharmaceutical Regulatory Monitor. Germany’s Drug Pricing Reforms Legislation Moves to Parliament. August 2010.

FDA News. International Pharmaceutical Regulatory Monitor. UK Government’s NHS Reform Plan Includes Shift to Value-Based Pricing. August 2010.

ABPI Press Releases. The NHS White Paper: ABPI response. 12 July 2010.

Medicines Australia. News and Events. Medicines agreement will reduce script prices. 20 August 2010.

Medicines Australia. Submissions. Submission to the Australia Senate Community Affairs Legislation Committee Inquiry into National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2010. 20 August 2010.

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