Generic Medicines

Summary

Generics are considerably less expensive than the original medicine, because their manufacturers do not incur the risks and costs associated with the research and development of innovative medicines. Since generics contain well-known, safe and effective substances, pre-clinical tests and clinical trials can be replaced by simple bioequivalence studies.

The EU's generic market today is worth around 7 billion euros, compared to around 70 billion euros for the total European pharmaceutical market value. It is estimated that the value of the world generic market will reach about 38 billion euros in 2003.

The size of the generic market differs widely in the various EU member states. Generics make up a relatively large part of the pharma market in Germany (41%), Sweden (39%), Denmark (22-40%), the UK (22%) and the Netherlands (12%). In Italy, Spain and Portugal, generics barely count for 1% of the pharma market, compared to 3-4% in France. By contrast, generic medicines in the United States account for 40% of all prescribed medicines.

These differences are mainly a consequence of the different policies followed by the member states. Among the main factors affecting the size of the generic market are:

• market conditions for new medicines;
• pricing/reimbursement structures;
• prescribing/dispensing traditions;
• requirements;
• the existence of specific incentives to encourage generic use.

In some member states (such as the UK, Germany, the Netherlands and Denmark), generics are promoted and are seen as a tool to contain rising pharmaceutical costs. In others (such as Spain, Greece, Italy and France), where prices are low, generic products are not actively promoted by health insurance organisations. 

There is, nevertheless, a shift in national policies in some of these countries to promote generic prescribing as part of overall healthcare reforms, whereby physicians who sign up to an agreement with social insurance are required to prescribe cheaper medicines, a proportion of which must be generics (e.g. in France).

Issues

• Regulatory Framework and Intellectual Property Protection

  The European Union has recently finished its review of EU pharmaceutical legislation (Directive 2001/83/EC and Regulation 2309/93). After a protracted co-decision procedure beginning in July 2001, the European Commission, European Parliament and European Council agreed a position which was adopted by the Parliament in December 2003 and formally agreed by Council in March 2004.

  The final outcome has been hailed as reaching a fair compromise between the various interests, as attested to by the fact that no one group seems fully satisfied with the results. The revised law contains a number of important advances towards making lower-priced generic medicines more readily available to European patients and healthcare systems. It also increased the market protection granted to the originator pharmaceutical companies to help them recover their investment in researching and developing new treatments.

• Bolar provisions

  The "Bolar exemption" is a policy that allows generic manufacturers to prepare production and regulatory procedures before patents expire, so that products can be ready for sale as soon as the patent ends, rather than having to go through the lengthy preparatory process only after the patent period is over. Bolar has, for years, been a common feature of patent law in many countries (such as Canada and the USA). Bolar exemptions are in line with WTO rules on trade-related aspects of intellectual property rights (TRIPS). 

  In the EU, a Community-wide Bolar exemption was introduced by the pharmaceutical review. Before, the development and testing work required to make an application could only take place after the patent expiry, resulting in delays of around 2 years.

• Generic Substitution

  "The pharmacists' right to generic substitution" is a policy under which pharmacists are free to override the decisions of doctors and dispense generics, even where doctors have specifically written a prescription for a branded product, without consulting the patient or the doctor. Opponents of this policy argue that doctors should be able to prescribe branded medicines if they think that a change of medication could influence the patient's compliance with the treatment. It is also argued that it gives generics an unfair competitive advantage. Substitution policy is applied in some EU member states (such as France), but forbidden in others (such as the UK).

Positions

According to the European Generic Medicines Association (EGA): "In an era when increasing demands are being made on Europe’s healthcare services, generic medicines provide a major benefit to society by ensuring patient access to quality, safe and effective medicines while reducing the cost of pharmaceutical care. The estimated 13 billion euro in savings each year help provide national healthcare systems with the budget headroom needed to deliver more expensive medical treatments and services that patients often need." 

EGA says that the lack of Bolar provisions in Europe resulted in a loss of around 1 billion euros a year in economic activity for the EU - putting the EU generic industry at a competitive disadvantage in the world generic market. Now that the Bolar provision has been introduced to the EU pharmaceutical legislation, the Director General of EGA, Greg Perry, sees as a major threat the pharmaceutical companies' efforts to try to limit the Bolar provision by creating patent linkages. 

The European Federation of Pharmaceutical Industries and Associations (EFPIA) believes that a strong European pharma industry as a whole - including its generic component - is needed. "In this global picture, generics development should not jeopardise the sustainability of future pharmaceutical research. Otherwise, as the centre of gravity for pharmaceutical innovation is already shifting from Europe to the US, the ability of the European Union to generate its own innovative products will be further eroded," EFPIA Director Brian Ager stated. 

EFPIA's Generics working group's objectives are to promote: the use of generic medicines in Europe in a balanced manner, without discouraging research and development of innovative medicines, as this provides the pipeline for future generic products; a high level of quality for generic products in all EU member states; a better general equilibrium of the entire pharmaceutical market. As to the generic substitution, EFPIA is not in favour of it for three reasons: 

• The respective liabilities of manufacturers, doctors, pharmacists and the authorities are ambiguous in cases where a patient experiences adverse side effects; 
• It may induce pharmacists to give priority to purely economic considerations over patient needs. This leads to market distortion and gives generic products an unjustified competitive advantage. 
• Normal market conditions should prevail in the European market. Price control measures undermine free competition.

The Association of the British Pharmaceutical Industry (ABPI) says the main problem with generic substitution is that it would mean that doctors’ judgements about individual patients would not prevail.

Timeline

• 2006 marked the first year of full application of the new EU pharmaceutical legislation which came into force in November 2005. 

External Links

Think tanks & Academia

• International association for access to generic HIV drugs (Generics Now):Website

Non-assigned links

• Commission:Pharmaceutical Legislative Texts
• G10 Group:Website
• G10 Group:Workshop on Generic Medicines(7 December 2001)
• European Medicines Agency (EMEA):Website
• European Medicines Agency (EMEA):Implementation of the New EU Pharmaceutical Legislation
• Belgian Medicines Agency:Generic Medicines
• Portuguese Medicines Agency (INFARMED):Generic Medicines
• UK Department of Health:Generic medicines
• US Food and Drug Administration (FDA) - Centre for Drug Evaluation and Research:Office of Generic Drugs
• World Health Organisation:The Worldwide Role of Generic Pharmaceuticals(June 1999)
• World Health Organisation Europe:Conference - The Importance of Generic Medicine to Ensuring Access to Healthcare and Headroom for Innovation(5 October 2000)
• World Medical Association :Statement on Generic Drug Substitution [FR]
• World Medical Association :Resolution on Generic Drugs [FR]
• International Federation of Pharmaceutical Manufacturers Associations (IFPMA):Website
• International Federation of Pharmaceutical Manufacturers Associations (IFPMA):The Role of Generics
• European Generic Medicines Association (EGA):Website
• European Generic Medicines Association (EGA):Encouraging greater use of generic medicines in the European healthcare market
• European Generic Medicines Association (EGA):About Generics
• European Generic Medicines Association (EGA):Video - “Making Medicines Affordable”
• European Generic Medicines Association (EGA):Data Exclusivity vs Bolar Provision: a false "trade-off"(January 2002)
• European Generic Medicines Association (EGA):Promoting Innovation via Generic Competition(20-21 November 2001)
• European Generic Medicines Association (EGA):Data Exclusivity - A Major Obstacle to Innovation and Competition in the EU Pharmaceutical Sector(December 2000)
• European Generic Medicines Association (EGA):Generic competition as a stimulant to innovation: What the EU can learn from the US
• European Generic Medicines Association (EGA):A Bitter Pill to Swallow - Myths and Realities of the Pharmaceutical Industry(25 November 2003)
• Association of the British Pharmaceutical Industry (ABPI):Website
• Association of the British Pharmaceutical Industry (ABPI):Generic Medicines
• Association of the British Pharmaceutical Industry (ABPI):Generic Substitution
• European Federation of Pharmaceutical Industries and Associations (EFPIA):Website
• European Federation of Pharmaceutical Industries and Associations (EFPIA):EFPIA's new generics working group will promote generic medicines in a balanced way(June 2000)
• European Federation of Pharmaceutical Industries and Associations (EFPIA):Position Paper on Generic Substitution and Regulatory Data Protection
• IMS Health:The Generics Market: Current and Future Status (Presentation by Graham Lewis)(21 November 2001)
• Merck-Lipha France:Médicaments génériques
• Association Canadienne des Fabricants de Produits Pharmaceutiques (CDMA-ACF PP):Website
• Association Canadienne des Fabricants de Produits Pharmaceutiques (CDMA-ACF PP):Les médicaments génériques expliqués
• Medisite:Médicaments génériques
• Food and Drug Law Institute:Registration of Generic Drugs in the European Union: Challenge and Opportunity(May/June 2001)
• Université Libre de Bruxelles (Belgium) - Groupe de recherche et d'action pour la santé:Medicaments génériques - Le générique sans film(15 December 1998)