Sustaining Generic Medicines Markets in Europe

Sustaining generic medicines markets 59price reductions are likely to contribute to containing public pharmaceutical expenditure, butadversely affect the profitability of generic medicines and hinder the development of the genericmedicines market.Regulation establishing a minimum price difference between generic and originator medicinesand setting the RP at the level of the most expensive generic medicine stimulates genericmedicines companies to concentrate prices around the maximum level that is allowed. It does notincite companies to compete on price and reduce prices below the level of the RP.The Portuguese generic medicines market has been sustained by inciting physicians to prescribeby INN, by permitting generic substitution by pharmacists, and by a temporary increase inreimbursement of generic medicines. However, physicians face few incentives that influence theirdecision to permit or forbid generic substitution. Furthermore, generic substitution is not in thefinancial interests of pharmacists.Key factors hindering the development of the generic medicines market:• Regulation requiring that generic medicines are at least 35% cheaper than originatormedicines and setting the RP at the level of the most expensive generic medicine stimulatescompanies to launch generic medicines for expensive active substances and limits pricecompetition between generic medicines companies• Physicians face few incentives that influence their decision to permit or forbid genericsubstitution• Pharmacists are financially penalised for dispensing generic medicinesKey factors aiding the development of the generic medicines market:• Portugal developed a successful generic medicines policy by increasing reimbursement ofgeneric medicines (until October 2005), by encouraging physicians to prescribe by INN, andby allowing generic substitution by pharmacists