Sustaining Generic Medicines Markets in Europe

Sustaining generic medicines markets 407.2.4 Incentives for pharmacistsGeneric substitution by pharmacists is not permitted by law. In practice, the pharmacist cansubstitute a branded originator medicine that is out of patent or a branded generic medicine byany generic medicine with reference to the physician.Austria has in place a system of regressive pharmacist margins, with pharmacy margins formedicines purchased by insured patients ranging from 27% for pharmacy purchase prices lessthan 10 € to 3.8% for prices above 357.08 € from 2004 onwards. However, pharmacists still earna lower margin on generic medicines in absolute terms than on originator medicines.7.2.5 Incentives for patientsPatients usually have to pay a fixed fee per prescription (4.6 €) for each prescribed medicineincluded in the reimbursement list. In some cases, two packs can be prescribed for a single fee.For medicines not included in the reimbursement list, patients have to pay the full price, unlessthe prescription is permitted by a senior consultant of the social insurance fund. Exemption fromco-payment is also granted to patients in need of social protection and patients whose incomedoes not surpass a specific level.7.3 Policy analysisIn the 1990s, pricing regulation has restricted demand for generic medicines by reducing prices oforiginator medicines, leading to a small price differential between generic and originatormedicines. Added to that, low price levels of medicines in Austria limited market entry for genericmedicines.The 2004 pharmaceutical pricing policy is designed to contain public pharmaceutical expenditureby reducing prices of originator and generic medicines. Incentives embodied by the pricing policyfor generic medicines are mixed. On the one hand, this policy stimulates market entry of genericmedicines by enforcing a substantial price difference between the originator medicine and the firstthree generic medicines for a limited period of time. On the other hand, the policy imposes pricereductions on successive generic medicines entering the market, thereby reducing theirprofitability. Furthermore, price differences between originator and generic medicines are nonexistentor limited in established markets with three or more generic medicines, respectively. Thisis likely to inhibit patient demand for generic medicines.