Societal value of generic medicines beyond cost-saving through reduced prices

Abstract

Objective: This paper aims to provide an overview of the added societal value of generic medicines beyond their cost-saving potential through reduced prices. In addition, an observational case study will document the impact of generic entry on access to pharmacotherapy in The Netherlands and an illustrative exercise was carried out to highlight the budget impact of generic entry. Methods: A narrative literature review was carried out to explore the impact of generic medicines on access to pharmacotherapy, innovation and medication adherence. Data from the Medicines and Medical Devices Information Project database in The Netherlands were used for the case study in which the impact of generic medicine entrance on the budget and the number of users was calculated as an illustrative exercise. Results: Generic medicines have an additional societal value beyond their cost-saving potential through reduced prices. Generic medicines increase access to pharmacotherapy, provide a stimulus for innovation by both originator companies and generic companies and, under the right circumstances, have a positive impact on medication adherence. Conclusion: Generic medicines offer more to society than just their cost-saving potential through reduced prices. As such, governments must not focus only on the prices of generic medicines as this will threaten their long-term sustainability. Governments must therefore act appropriately and implement a coherent set of policies to increase the use of generic medicines.

Keywords:

• access
• adherence
• generic medicines
• innovation
• value

Acknowledgements

The authors would like to thank Hans Piepenbrink and MisjaSpeur from the Dutch National Healthcare Institute for their assistance in providing the dataset on medicine use in The Netherlands. The authors would like to thank ElinePicavet for critically reviewing the manuscript and providing feedback.

Financial & competing interests disclosure

S Simoens holds the European Generic Medicines Association (EGA) Chair “European policy towards generic medicines”. P Dylst was an employee of the KU Leuven while preparing this manuscript and is now an employee of EGA. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

Key issues

• Generic medicines have contributed considerably to contain escalating health care budgets in the past but contribute more to society than only their cost-savings potential through reduced prices.

• The reduced prices of generic medicines improve the cost–effectiveness of existing pharmacotherapy, make it cost-effective to manage previously untreated patients or lead to a more optimal treatment of some diseases.

• Generic medicines can have a positive impact on medication adherence but only under the right circumstances.

• The entrance of generic medicines provides a stimulus for originator companies to invest in innovation.

• Generic medicines companies are stimulated to innovate in order to differentiate themselves in the highly competitive market.

• To maximize the benefits of generic medicines in the long-term, governments must act judiciously to implement a coherent set of policies to increase the use of generic medicines instead of continuously putting pressure on the prices.