Joint Committee on Finance, Public Expenditure
and Reform
Correspondence Item No. 2012/399(b)
IMO Submission to the Department of Health and Children
on a Generic Medicines Policy
5 January 2010
IMO Submission to the Department of Health and Children
on a Generic Medicines Policy
In 2008, the cost of supplying drugs and medicines under the GMS and community
drugs schemes was over €1.6 billion, up €400m or 40% on 2005 figures.1 With Ireland’s
ageing population and current trends in chronic disease, the drugs bill is set to increase
further over the next 10 to 20 years. Ireland has a very poor record in terms of generic
prescribing. In 2008 just 18% of prescription items were dispensed generically on the
GMS scheme and 11% on the Drugs Payment and Long Term Illness schemes,
representing just 8% and 4% of total ingredient costs respectively2. Pharmaceutical
expenditure represents approximately 15% of the annual health care budget3. The IMO
believe that by introducing measures that increase the use of generic medicines,
substantial savings can be made on the State’s medicines bill.
While the IMO welcomes the Minister for Health and Children’s plans to introduce a
system of reference pricing for off-patent and generic pharmaceuticals, reference pricing
alone will not achieve the maximum potential savings and further measures are needed.
The European Generic Medicines Association (EGA) found that countries, such as
Denmark, the UK and Sweden that have a long-term, coherent generic medicines policy
have the highest generic medicines volume market share.4 In a study of generic policies
in Europe, Simoens and De Coster recommend:
“A generic medicines policy requires both supply-side measures relating to
pricing and reimbursement, and demand-side incentives for physicians,
pharmacists and patients. Different policy measures need to reinforce each other
and be part of a coherent generic medicines policy.”5
The EGA further state that regulatory frameworks that promote this combination of
measures “will generate the necessary penetration of generic medicines to ensure a
sustainable industry and a continued supply of more affordable medicines.”6
The IMO does not believe that pharmaceutical substitution is the most effective
mechanism to support reference pricing and promote generic consumption. Policies are
required that encourage all parties including patients, doctors, payers and not just
pharmacists to promote the use of generics. Doctors are also concerned about the risk
pharmaceutical substitution presents to certain patients. If patients receive a different
brand each time they present a prescription to a chemist, confusion could lead to noncompliance with essential medication.
1
DOHC. Health Estimates 2010, DOHC Press Release 09 Dec 2009 downloaded from
http://www.dohc.ie/press/releases/2009/20091209.html
2
NCPE. Generic Drug Utilisation in Ireland in 2008, National Centre for Pharmaco-economics (NCPE)
2009
3
Barry and Tilson, Recent Developments in Pricing and Reimbursement or Medicines in Ireland. Expert
Review of Pharmacoeconomics Outcomes Research 2007 : 7 : 6 : 605:611
4
EGA Health Economics Committee, How to increase Patient Access to generic Medicines in European
Healthcare Systems, European Generic Medicines Association Jun 2009 :30
5
Simoens S. De Coster S, Sustaining Generic Medicines Markets in Europe, Katholieke Universiteit
Leuven April 2006
6
EGA 2009 : 28
Earlier in 2009, the IMO put forward a plan whereby savings in the region of €300-400m
could be achieved through a range of measures including reducing the cost of generics,
establishing a system of reference pricing, and introducing mandatory generic
prescribing across the health system.
Reduce the cost of generic medicines
According to the Minister for Health and Children generic medicines in Ireland are on
average just 10% cheaper than branded medicines7, compared to 40% cheaper on
average in European countries.8 The IMO believes that unless the price of generic drugs
in Ireland is reduced substantially, predicted savings are unlikely.
Currently in Ireland the ex-manufacturer price of pharmaceuticals are set under
agreement between the HSE and the pharmaceutical representative bodies the IPHA9
and the APMI10 and since 2006 are linked to the average costs in nine EU member
states11. While pharmaceutical manufacturers agreed to lower the price of off-patent
pharmaceuticals by 35%, there is very little difference in price between branded drugs
and their generic alternatives leaving little incentive for physicians to prescribe the
generic drug or for patients to request it.
Countries with relatively liberal pricing regime for generic medicines, such as the UK,
have a higher average difference between branded and generic prices and have a
higher rate of market penetration of generic medicines.12 In the UK the price difference
branded and generic drugs can be as high as 80% and generic penetration rates up to
55% of market share. 13
The Irish Independent reported that manufacturers in the UK charge the equivalent of
€1.11 for the generic ulcer drug Omeprazole while the cost charged in Ireland is €20,
Lansoprazole, is sold by manufacturers in the UK for €2.44, but costs €21 for the same
quantity here and the Generic angina drug Amlodipine costs 49 cents, but is €8 here.14
By ending pricing agreements on off-patent and generic pharmaceuticals and promoting
competition, more generic manufacturers will be encouraged to enter the market which
in turn should lead to price reductions. The Irish Medicines Board must also ensure that
regulation does not unduly discourage the entry of safe generic medicines to the Irish
Market. Initiatives that encourage the manufacturing of generics in Ireland should also
be explored.
However, unless simultaneous measures are introduced to address the demand for
generics, the price of originator products could actually increase in a more liberal offpatent market. This phenomenon is called the “generics paradox” and is attributed to
Wall M, Switch to Generic Drugs saves €15m not €200m, The Irish Times 14 April 2009
Simoens S. De Coster S,
9
Irish Pharmaceutical Healthcare Association
10
Association of Pharmaceutical Manufacturers in Ireland
11
Austria, Belgium, Denmark, Finland, France Germany, the Netherlands, Spain and the UK
12
Kanavos P, Generic Policies: Rhetoric vs. Reality, Euro Observer 2008: 10:2 : 5
13
Kanavos P, 2008 : 5
14
Phelan S, HSE Blows Millions On Overpriced Medicines, The Irish Independent 13 July 2009
7
8
patient brand loyalty and physician prescribing habits. 15 Demand side measures
including reference pricing and mandatory generic prescribing are therefore needed to
increase patient awareness and maximise generic prescribing by physicians. The growth
of the generics market is actively encouraged at EU level. Back in 2002 the High level
Group (G10) on Innovation and Provision of Medicines recommended that member
states should work towards improving the diffusion of generic medicines by increasing
generic prescribing. 16
Introduce a system of reference pricing
The next step would be to introduce a system of Reference Pricing under which a price
would be set for common medicines beyond which the patient would have to themselves
subsidise additional costs. The intention is to put the onus on the patient, rather than the
State, to pay for the more expensive branded product rather than a generic drug and
Pharmacists would be obliged to inform patients of price differences and to stock generic
products. A similar system of reference pricing exists in Denmark where the generic
volume market share is one of the highest in Europe at almost 70%.17
While reference prices can discourage generic price competition because prices rarely
drop below the reference price, this can be counteracted by imposing transparency in
the distribution chain and regulating margins and discounts, then regularly reviewing
market prices and unilaterally adjusting reference pricing at frequent intervals. 18
A public awareness campaign such as the “Go Generic” campaign in Northern Ireland” is
also needed to inform the public of the advantages of generic medicines and alleviate
any concerns.
Consider the Introduction of mandatory generic prescribing
The IMO recommends that mandatory generic prescribing be considered across the
whole of the health system with allowances for physicians to prescribe branded products
only when concerned about individual patient safety. The maximum possible level of
generic prescribing is estimated to be approximately 90%.19 In the UK, in 2007, it is
estimated that 83% of prescriptions were issued generically with 64% dispensed
generically in 2007.20 In the UK a range of incentives and support is provided to
promote generic prescribing: The generic names of medicines are used during
physician training; Formularies and a prescription support system PRODIGY list
products by their generic name; The collection of prescription data and face-to-face
Vandoros S, Generics Policies and the ‘Generics Paradox’ Euro Observer 2008: 10:2 : 7
European Commission, High level Group on Innovation and Provision of Medicines in the European
Union: recommendations for Action G10 Medicines Report 2002 ; 14
17
EGA 2009 :30
18
LSE Generic Medicines: Savings for Health Care Systems? Generics from a Societal Perspective PPT
Presentation downloaded from
http://www2.lse.ac.uk/LSEHealthAndSocialCare/LSEHealth/pdf/Genericmedicines/GENERICSPOLICYS
OCIETALPERSPECTIVEFINAL29JUNE2007.pdf
19
BPS, Automatic Generic Substitution Fact Sheet, British Pharmaceutical Society downloaded from
http://www.bps.ac.uk/uploadedfiles/clinicalsection/AutomaticGenericSubstitutionFactsheet.pdf
20
Barry J. Economies in Drug Usage in the Irish Healthcare Setting, National Centre for Pharmacoeconomics (NCPE) 2009
15
16
consultations with prescription advisors that are integral to prescription budget schemes
also indirectly promote generic prescribing. 21
In order to evaluate mandatory generic prescribing the IMO recommends the
establishment a multi party working group involving GPs, Hospital Doctors, Pharmacists
and the HSE should be set up to co-ordinate the achievement of economies through
generic prescribing and other measures. This working group should address the
following priorities:
 Examine initiatives at the prescriber level to promote rational cost-effective
prescribing;
 Develop prescribing protocols, criteria and defined prescribing periods in respect of
high cost drugs;
 Develop prescribing formularies at hospital and primary care level;
 Develop protocols for patients being discharged from the hospital setting;
 Review all reimbursable medicines to ensure that wasteful or inefficient medicines
with little proven clinical benefit are excluded from reimbursement;
 Carry out cost-benefit analysis comparing newer (and frequently more costly)
medicines with existing less costly alternatives;
 Promote the use of generic names during physician training.
Doctors will also need to be supported in terms of analysing their existing prescription
patterns and identifying potential roles for generic substitutions. The HSE can support
this effort by encouraging the provision of prescription software systems, prescription
data analysis and professional prescribing advice and support, however, certain drugs
do not have generic alternatives and strict guidelines should be introduced for patient
safety.
Summary of recommendations for a coherent generics policy
 Reduce the cost of generic medicines by ending pricing agreements for offpatent and generic pharmaceuticals and promoting managed competition;
 The Irish Medicines Board must ensure that regulation does not unduly
discourage the entry of safe generic medicines to the Irish Market.
 Initiatives that encourage the manufacturing of generics in Ireland should also be
explored.
 establish a system of pharmaceutical reference pricing for off-patent and generic
medicines;
 impose transparency in the distribution chain and regulate margins;
 Introduce a public awareness campaign to inform the public of the advantages of
generic medicines and alleviate any concerns;
 regularly review market prices and unilaterally adjust reference pricing at
frequent intervals;
 consider the introduction of mandatory generic prescribing across the whole of
the health system, with allowances for physicians to prescribe branded products
only when concerned about individual patient safety;
21
Mrazek M, Frank R. The Off Patent Pharmaceutical Market, in Figueras J, McKee M, Mossialos E, and
Saltman RB, Eds. Regulating Pharmaceuticals in Europe: Striving For Efficiency, Equity And Quality,
European Observatory on Health Systems and Policies Series. Open University Press 2004: 248
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establish a multi party working group to co-ordinate the achievement of
economies through generic prescribing and other measures as follows:
o Examine initiatives at the prescriber level to promote rational costeffective prescribing;
o Develop prescribing protocols, criteria and defined prescribing periods in
respect of high cost drugs;
o Develop prescribing formularies at hospital and primary care level;
o Develop protocols for patients being discharged from the hospital setting;
o Review all reimbursable medicines to ensure that wasteful or inefficient
medicines with little proven clinical benefit are excluded from
reimbursement;
o Carry out cost-benefit analysis comparing newer (and frequently more
costly) medicines with existing less costly alternatives;
o Promote the use of generic names during physician training.
Support optimum levels of generic prescribing through the provision of
prescription software systems, prescription data analysis and professional
prescribing advice and support.