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Missed Opportunities for Big Savings from Generic Drugs in Europe

Shifting patients from branded to less expensive generic medicines is an important way to contain health care costs. Yet the prices and prescription rates of generics vary widely across Europe, resulting in missed opportunities for cash-strapped health systems and patients.

These are the findings of a study by researchers from the London School of Economics and Political Science and the London School of Hygiene & Tropical Medicine published today (12 September) in The Milbank Quarterly.

The study analysed 2013 data on the list prices* and market shares of more than 3,000 generic drugs in 13 European countries and found the prices charged by manufacturers in Switzerland are, on average, more than two and a half times those in Germany and more than six times those in the United Kingdom, based on one commonly used price index**.

The proportion of prescriptions filled with generics ranges from 17 per cent in Switzerland to 83 per cent in the United Kingdom, among the countries included in the study. By contrast, roughly 9 out of 10 prescriptions are filled generically in the U.S.

Generic medicines are bioequivalent replicas of brand name drugs, containing the same active ingredients and with identical quality, safety, and efficacy profiles. A generic can be sold for a fraction of the price of the brand name drug as it is relatively inexpensive to bring to market.

However, there are numerous barriers to the use generic drugs, including misperceptions among patients about the quality of generic medicines and the lobbying powers of special interest groups.

The article analysed how regulators and policymakers in both Europe and the U.S. can (1) make it easier for generic drugs to reach the market, (2) stimulate price competition among generic drug makers, and (3) increase generic drug use.

These proposals come at a time when health systems worldwide are under financial pressure. Notably, the U.S. has in recent years experienced a series of widely-criticized price hikes for generic drugs. For example, the price of pyrimethamine (Daraprim), an off-patent anti-infective medication used by HIV/AIDS patients, rose from $13.50 a tablet to $750 overnight in 2015, despite having been around for decades at low cost in the U.S.

Olivier J. Wouters, a researcher at the London School of Economics and Political Science and lead author of the study, said: “Having patients consume generic drugs instead of their more expensive brand name counterparts is among the most cost-effective interventions in health care, with potentially hundreds of millions of Euros currently being wasted. Policymakers in Europe and the U.S. should do more to break down the barriers preventing timely access to affordable generic drugs for patients.”

Professor Martin McKee, from the London School of Hygiene & Tropical Medicine, said:  “These findings stress the importance of co-operation among European countries to get the best possible deals for their health systems and, ultimately, their populations.”

For a copy of the article, please visit: http://onlinelibrary.wiley.com/doi/10.1111/1468-0009.12279/full