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Health care sustainability and generic substitution


Steven Simoens, MSc, PhD
Research Centre for Pharmaceutical Care and Pharmaco-economics
Katholieke Universiteit Leuven,

The introduction of new, often more expensive, medicines, the need for more specialised and individualised treatments, the ageing of European populations and the rising prevalence of chronic diseases over the next decades imply that maintaining health and sustaining access to affordable medical treatment will become increasingly important in the future. Generic substitution is a pharmacist-initiated act by which a different brand or an unbranded medicine is dispensed instead of the specific originator medicine that was originally prescribed and could relieve pressure on health care budgets and enhance access to health care.

Generic substitution can apply to conventional chemical medicines or biotechnology medicines. Biotechnology medicines are reference or originator medicinal products made by, or derived from, living organisms using biotechnology processes. Biotechnology processes use biological systems (e.g. bacteria, yeast, human cells) to identify, sequence and manipulate DNA aimed at producing therapeutic and medical diagnostic products. Biotechnological medicines tend to be large, complex molecules and are manufactured from a unique line of living cells, making it impossible to ensure an identical copy. This contrasts with chemical medicines, which tend to be smaller, simpler molecules, and are manufactured using a predictable chemical process that generates identical copies.

Generic drugs and biosimilars tend to be cheaper than the originators because their development incurs lower costs. Competition from generic and biosimilar medicines may also incite manufacturers to develop innovative medicines and to reduce prices on off-patent originator medicines, thereby generating additional savings to patients. Savings on the pharmaceutical budget, in turn, enable governments to reimburse newer, more expensive medicines.

This article discusses two issues related to health care sustainability and generic substitution. First, how does pharmacist remuneration in ambulatory care influence generic substitution of chemical medicines? And second, to what extent are off-patent medicines interchangeable, and is generic substitution appropriate?

Pharmacist remuneration
Based on a survey conducted by the European Generic Medicines Association in 2007, generic substitution of chemical medicines in ambulatory care was legally permitted in 73% of European countries.1 The regulation governing which specific medicine the pharmacist needs to dispense in the case of generic substitution varies from country to country. Where generic substitution is allowed, physicians can prevent substitution in 89% of countries by ticking a box on the prescription, by writing on the prescription, or by stamping the prescription. Also, pharmacists always need to inform their patients about generic substitution.

The extent to which generic substitution takes place depends, among other things, on the system of remunerating community pharmacists. Generic substitution may aid the use of generic drugs if it is financially neutral or attractive to pharmacists to substitute generics for originator medicines.

The remuneration system of pharmacists in some countries provides a financial disincentive to dispense generic medicines. Setting pharmacists’ remuneration as a fixed percentage of the public price of medicines, such as the case in Portugal, rewards the delivery of originator medicines. Countries such as Italy and Poland have adopted sliding scales where the percentage remuneration decreases as prices rise. However, the regressive effect of such scales is not sufficient to remove the financial incentive to dispense originator medicines. Other remuneration systems have been used that make the delivery of a generic or original medicine neutral to pharmacists from a financial perspective. Pharmacists earn the same margin in absolute terms on originator and generic medicines in France. However, a system of absolute margins increases prices of generic medicines relative to originator medicines, thereby inhibiting the use of generics.

Alternatively, pharmacists can be paid by means of a fixed fee per prescription (item), as in, for example, Belgium. This provides a neutral financial incentive for pharmacists to dispense a generic or originator medicine.

Few countries have systems in place that financially reward pharmacists for substituting generic for originator medicines. In the Netherlands, pharmacists are encouraged to dispense (generic) medicines that are priced below the reference price by being able to retain a percentage of the difference for generics than for originator medicines. In Spain, higher percentage margins for generics than for originator medicines stimulate pharmacists to dispense the most expensive generic option. However, pharmacist remuneration in these countries attenuates the incentive for companies to compete with each other on price and to reduce prices of generic medicines below the level of the reference price. Instead, companies compete through offering discounts to pharmacists. Such a system might benefit pharmacists financially, but is not sustainable in the long run as health care payers and patients do not reap the potential savings from a generic medicines’ market where companies compete on price.

Interchangeabiity of off-patent drugs
Chemical medicines
Before a generic drug enters the European market, national medicine agencies and the European Medicines Agency assess its safety, quality and efficacy. In accordance with Directive 2004/27/EC, a generic medicine needs to be essentially similar to the originator, meaning that the generic has the same qualitative and quantitative composition of active substances, the same pharmaceutical form and the same bioavailability as the originator as demonstrated by appropriate studies.2 If two medicines have the same bioavailability, therapeutic equivalence can be assumed. In other words, a generic drug is an equivalent of an originator and, therefore, interchangeable with the originator medicine. This implies that generic medicines have the same efficacy but lower costs than originator medicines and, thereby, contribute to health care sustainability.

Despite the fact that medicine agencies verify and validate that generic medicines have the same safety, quality and efficacy as originator medicines, concerns about the bioequivalence and interchangeability of off-patent products belonging to specific classes of drug have come to light. Generic substitution may not be appropriate for medicines with a narrow therapeutic index (e.g. immunosuppressant, anti-epileptic, cardiovascular and mood-modifying drugs), for which small changes in concentration can produce major alterations in efficacy and side-effect profile. A literature review comparing generic with originator clozapine for the management of schizophrenia found conflicting evidence about the bioequivalence of the two forms.3 There have also been reports of a higher patient relapse rate with generic clozapine, although other studies found similar relapse rates and length of inpatient stay for generic and originator clozapine. If generic and originator medicines are not interchangeable, the costs in addition to the effectiveness of therapy may be affected: a lower effectiveness of a generic medicine may result in the need for additional therapy or hospitalisation and could require the patient to take more time off work.

It should also be noted that generic substitution driven by pharmaceutical policies – such as reference-pricing, reimbursement, physician incentives, pharmacist incentives, and patient incentives – may reduce patient compliance and undermine the continuity of care. This might be the case if a generic medicine with a different shape or a different colour is dispensed each time to the patient. For instance, patients with schizophrenia may be suspicious about therapy and unwilling to take unfamiliar medication, thereby decreasing compliance and increasing the risk of relapse. These examples suggest that, although the effect is not caused by the operation of the generic medicine itself, the activity of generic substitution in response to pharmaceutical policies may affect the effectiveness and costs of therapy.

Biotechnology medicines and biosimilars
Biotechnology medicines represent a fast-growing segment of the hospital pharmaceutical market, comprising 32% of products in the development pipeline and 7.5% of marketed medicines, and accounting for around 10% of pharmaceutical expenditure.4 In the European Union, the first patents on originator biotechnology medicines expired in 2001 and the first biosimilar medicines or follow-on biologics were approved by the European Medicines Agency in April 2006. To date, biosimilars of recombinant human erythropoietins (epoetin alfa and epoetin zeta), granulocyte colonystimulating factors (filgrastim) and human growth hormones (somatropin) have entered the European market. In the near future, patents will expire on some major biopharmaceuticals, such as interferons and insulins; this is likely to lead to the market entry of a number of biosimilar drugs.

Biosimilars are agents that are similar, but not identical, to the originator biotechnology medicine. This is in contrast to generic medicines, which have the same active substance as the originator compound. Therefore, regulatory frameworks are in place to assess the application for marketing authorisation of biosimilars.5 In general, a biosimilar is registered if it is similar to the originator biotechnology medicine in terms of safety, quality and efficacy. Dossiers of biosimilars tend to include data from clinical trials with a view to demonstrating similar safety and efficacy with the reference product. Unlike generics, which need to establish therapeutic equivalence with the originator chemical, a biosimilar needs to demonstrate therapeutic similarity with the originator biotechnology medicine. In light of the variation between biotechnology drugs, the marketing authorisation process is specific to each product. For instance, the European Medicines Agency has published additional guidelines that relate specifically to biosimilars containing monoclonal antibodies and biosimilars containing recombinant interferon beta.

European Medicines Agency guidelines recognise that biosimilar medicines, by definition, are not like generic medicines owing to possible differences between drugs from different manufacturers or when compared with the originator biotechnology medicine. Therefore, the question arises of whether inherent differences between biotechnology and biosimilar medicines produce differences in safety, efficacy and costs. To date, this question is unresolved.

If clinical studies demonstrate an equal efficacy profile of a biosimilar and the originator biotechnology medicine, then generic substitution is appropriate and can contribute to health care sustainability. For instance, the National Institute for Health and Clinical Excellence (NICE) recommended the use of a somatropin biosimilar to treat child growth deficiencies in England and Wales in May 2010.6 Head-to-head trials demonstrated comparable efficacy of the biosimilar and the originator biotechnology medicine. In this case, where the two products are suitable, NICE argued that the less expensive biosimilar should be chosen.

If there are differences in the efficacy of a biosimilar and the originator biotechnology product, the savings arising from the lower price of biosimilars need to be weighed against the impact on efficacy and costs of therapy. To date, some submissions to gain reimbursement for biosimilars have included two scenarios: one scenario where the biosimilar has the same efficacy but lower cost than the originator biotechnology medicine; and the other where differences in efficacy between the biosimilar and the originator are taken into account.7 In addition, such exercises have carried out sensitivity analyses, exploring the impact of changes in relative effectiveness on the value for money of a biosimilar. In this case, generic substitution does not necessarily provide value for money.

The extent to which generic substitution can contribute to health care sustainability depends, among other things, on pharmacist remuneration. Generic substitution is appropriate for chemical medicines, but may not be indicated for medicines with a narrow therapeutic index. The question of interchangeability of off-patent medicines is unresolved in the case of biotechnology medicines.

1. European Generic Medicines Association. 2007 Market Review. Brussels: European Generic Medicines Association; 2008
2. European Commission. OJEU 2004; 30 April: 34–57
3. Tse G et al. Pharmacoeconomics 2003; 21(1): 1–11
4. Zuniga L & Calvo B. Hospital Pharmacy Europe 2010;50:33–4
5. European Medicines Agency. Guideline on similar biological medicinal products. European Medicines Agency 2006. www.ema.europa. eu/docs/en_GB/document_library/Scientific_ guideline/2009/09/WC500003517.pdf (accessed 8/3/11)
6. National Institute for Health and Clinical Excellence. Human growth hormone (somatropin) for the treatment of growth failure in children (review of NICE technology appraisal guidance 42). 2010. (accessed 8/3/11)
7. Stewart A et al. Curr Med Res Opin 2010;26(9):2119–26

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