European generics – steaming ahead or grinding to a halt?
The Catholic University of Leuven in Belgium has recently published a report entitled “Sustaining Generic Medicines Markets in Europe” which makes a number of interesting points.
The aim of the report was to contrast the treatment of generics and the measures taken to encourage their use in various European countries. It effectively splits Europe into two zones – the mature generic markets and the developing markets. Denmark, Germany, the Netherlands, Poland and the UK are classifies as mature; Austria, Belgium, France , Italy, Portugal and Spain are considered as developing markets – a diagnosis that I can readily agree with.
Not surprisingly, the authors point out that the generic industries in the more mature markets are healthier than those in the developing markets and draws a connection with the relatively free pricing policies that prevail, or at least used to prevail, in these countries.
A number of other factors are identified that have helped the more mature countries’ markets to grow including a long history (10-15 years) or promoting generics not only to doctors but also to pharmacists and patients. Interestingly the report suggests that a popular measure with governments trying to promote generics use, reference pricing, has had mixed results. It highlights in particular the case of France where the scheme has had more the aim of restraining medicine costs rather than stimulating the use of generics.
This conclusion is consistent with the complaints made by generic companies in other countries where reference price schemes exist and where the industry feels that it is being squeezed by the health authorities. As in so many cases, governments want something for nothing (i.e. cheap generics with little profit to the manufacturers) with somebody else, in this case the generic pharmaceutical industry, being asked to pick up the bill.
The authors correctly identify the need for incentives for pharmacists but again singles out the French government as having going about this in the wrong way. In their opinion the French government’s incentives offer the pharmacists little in the way of benefits from generic dispensing or substitution. Not surprisingly, the market share by volume of generics grew from 1.8% in 1994 to only 10.4% in 2004 with the value market share remaining at only 6.6%.
Another area where incentives are identified as a necessary factor in promoting generic use is in encouraging physicians to prescribe generically including emphasising INN generic names rather than brand names to medical students. There is certainly evidence in the UK, where this is the way that medical students are taught, that this is very effective as 78% of prescriptions are written generically in the UK according to the latest Department of Health statistics. This means that even when no generic is available and only the originator’s brand is available on the market, the physician will often write a prescription using the INN name.
The authors made a number of recommendations about steps that governments can take to sustain generic markets. One that particularly intrigued me was the call for governments to “Introduce a coherent generic medicines policy”. While I can certainly support the idea, I must also question the probability of it actually happening given the inability of most governments to produce a coherent policy in any area, let alone in respect of generic medicines.
Nevertheless, the report does point out that implementation of such an approach could save some of the countries where generic penetration is still low anything between 27% to 48% on its pharmaceutical expenditure. Such an attractive bonus will most likely encourage certain governments to try to do such joined up thinking. However, if policies in those countries are not thought through and coordinated, the result is likely to resemble that which has occurred in France and to some degree Portugal and Spain as well. In these countries there appears to be a risk that the authorities may end up strangling the generic baby at birth.
Should you be interested in reading the report in full, you can download it from http://www.egagenerics.com/doc/simoens-report_2006-04.pdf. 
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