Sustaining Generic Medicines Markets in Europe

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Sustaining generic medicines markets 32Key factors aiding the development of the generic medicines market:• The economic viability of the generic medicines market originates from low prices and highvolume of consumption• Setting the RP at the level of the cheapest generic medicine has led to low prices of genericmedicines• The high volume of consumption derives from the positive experience of physicians withgeneric medicines and the high level of patient co-paymentsKey factors hindering the development of the generic medicines market:• Physicians have no incentives to prescribe generic medicines• Pharmacists are financially penalised for dispensing generic medicines
Sustaining generic medicines markets 336 United Kingdom6.1 Generic medicines marketThe market share of generic medicines has more than doubled over a decade in the UnitedKingdom. Public expenditure on generic medicines rose from 655 million € in 1994 (market shareby value of 8.6%) to 3,625 million € in 2004 (market share of 20.1%).Figure 7. Market share of generic medicines by value in the United Kingdom, 1994-2004Market share of generic medicines100%80%60%40%20%0%20,1%17,0%11,8% 13,8% 11,1%13,3%8,6%8,9% 10,3% 10,4%8,3%1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004YearData on generic medicines market share by volume are not reported due to incompatibility of IMSHealth and EGA definitions of generic medicines.6.2 Generic medicines policy6.2.1 PricingRegulation of originator medicine prices is governed by the Pharmaceutical Price RegulationScheme. This voluntary scheme between the British Pharmaceutical Industry and the Departmentof Health does not control prices directly. Instead, pharmaceutical companies strike an agreementenabling them to gain a specific return on capital which is set equal to profits from sales to theNHS minus allowable costs. Companies are free to set launch prices of new medicines as long asthey do not systematically exceed the target rate of return on capital. This system has led tomedicine prices in the United Kingdom being higher than in other EU countries (Burstall, 1997).The Pharmaceutical Price Regulation Scheme does not apply to generic medicines andcompanies are free to set prices of generic medicines. This system led to price competitionbetween generic medicines and falling prices for those medicines supplied by multiple companies
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Generic medicines create major savi
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Sustaining Generic Medicines Markets in Europe

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