Potential Savings from Increased Substitution of Generic for Originator Medicines in Europe

Abstract

This study aims to estimate annual savings from increased generic substitution in the retail market of 11 European countries in 2004. Savings from generic substitution were calculated for the top ten active substances by public expenditure on originator medicines in each country. For each active substance, average price levels weighted by volume of sales of medicines belonging to the group of originator medicines and to the group of generic medicines were calculated. The price difference between originator and generic medicines was multiplied by the volume of originator medicines to be substituted. The analysis considered that, following generic substitution, 5 per cent of market volume for each active substance would be made up by originator medicines and 95 per cent by generic medicines. Increased generic substitution for the top ten active substances generated total potential savings of around €3 bn, with country savings ranging from €1 lm in Poland to €1 bn in Germany. Increased generic substitution would be expected to reduce public expenditure on originator medicines containing these active substances by at least 20 per cent in each country. Countries that pursue the development of their domestic generic medicines market, therefore, can expect to gain substantial savings from increased generic substitution.

Keywords

generic substitution expenditure medicines international comparison

References

IMS Health (2004). Midas database. IMS Health, London, accessed February 2006.

Simoens

De Coster

(2006). Sustaining generic medicines markets in Europe. J. Generic Med. 3, 257–268.

Haas

J.S.

Phillips

K.A.

Gerstenberger

E.P.

Seger

A.C.

(2005). Potential savings from substituting generic drugs for brand-name drugs: Medical expenditure panel survey, 1997–2000. Ann. Int. Med. 142, 891–897.

Cox

Behm

Mager

Miller

(2004). Generic drug usage report, Express Scripts, St. Louis. www.express-scripts.com, accessed 16th Jan 2006.

Tilson

Bennett

Barry

(2005). The potential impact of implementing a system of generic substitution on the community drug schemes in Ireland. Eur. J. Health Econ. 6, 267–273.

Fischer

M.A.

Avorn

(2003). Economic consequences of underuse of generic drugs: Evidence from Medicaid and implications for prescription drug benefit plans. Health Service Res. 38, 1051–1063.

Karim

S.S.

Pillai

Ziqubu-Page

T.T.

Cassimjee

M.H.

Morar

M.S.

(1996). Potential savings from generic prescribing and generic substitution in South Africa. Health Policy Plan. 11, 198–205.

King

D.R.

Kanavos

(2002). Encouraging the use of generic medicines: Implications for transition economies. Croatian Med. J. 43, 462–469.

G10 High Level Group on Innovation and Provision of Medicines in the European Union (2002). Recommendations for action, European Commission, London. http://europa.eu.int, accessed 14th March 2006.