Generic Medicines

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A generic medicine is a pharmaceutical product that is no longer protected by a patent and which can be copied by other companies. It may be marketed either under its own brand or as an unbranded product. European governments are increasingly relying on generics to save on healthcare costs and have worked to create a more favourable environment for generic medicines, which are considerably less expensive than brand name drugs.

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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).