Sustaining Generic Medicines Markets in Europe

Sustaining generic medicines markets 141 IntroductionOver the past decades, medicines have made a major contribution to improving the health statusof patients. At the same time, pharmaceutical expenditure has increased rapidly, with spendingon medicines outpacing economic growth in many European countries (OECD, 2005). As aresult, Governments seek to implement effective pharmaceutical policies that support furtherhealth improvements by accommodating the introduction of new and more effective medicines,whilst containing pharmaceutical expenditure.In the face of these pressures, a growing number of European countries pursue the developmentof their domestic generic medicines market. A generic medicine is a medicinal product which hasthe same qualitative and quantitative composition in active substances and the samepharmaceutical form as the reference medicinal product, and whose bio-equivalence with thereference medicinal product has been demonstrated by appropriate bio-availability studies(Directive 2004/27/EC).A favourable environment for generic medicines is likely to aid Governments in sustaining healthcare provision and controlling pharmaceutical expenditure because generic medicines have thesame quality, safety and therapeutic efficacy as the originator medicine, but are less expensivethan originator medicines. Their lower cost derives from the fact that companies of genericmedicines do not incur the development costs of innovative medicines. Competition from genericmedicines also incites originator companies to develop innovative medicines and to reduce priceson off-patent originator medicines, thus generating additional savings to patients (EuropeanCommission, 2004). Savings on the pharmaceutical budget, in turn, enable Governments toreimburse newer, more expensive medicines.The size of generic medicines retail markets varies widely between European countries. Twogroups of countries can be distinguished in terms of the market share of generic medicines byvolume in 2004 (IMS Health, 2004). Countries with a mature generic medicines market exhibiteda generic market share exceeding 40% (e.g. Denmark, Germany, Netherlands, Poland, UnitedKingdom). In countries with developing generic medicines markets, market share of genericmedicines did not surpass 20% (e.g. Austria, Belgium, France, Italy, Portugal, Spain). Variation inthe development of national generic medicines retail markets owes, amongst other things, todifferences in the policy and regulatory environment surrounding generic medicines.This study aims to analyse the policy environment surrounding the generic medicines retailmarket in selected European countries since 1990. A sample of countries with mature generic