All OECD countries view generic and biosimilar markets as an opportunity to increase efficiency in pharmaceutical spending, but many do not fully exploit their potential. In 2017, generics accounted for more than three-quarters of the volume of pharmaceuticals sold in the United Kingdom, Chile, Germany and New Zealand, but less than one-quarter in Luxembourg and Switzerland (Figure 10.10). Differences in market structures (notably the number of off-patent medicines) and prescribing practices explain some cross-country differences, but generic uptake also depends on policies (OECD, 2018[1]; Socha-Dietrich, James and Couffinhal, 2017[2]). In Austria, for example, generic substitution by pharmacists is still not allowed. In Luxembourg, generic substitution by pharmacists is set by law but is limited to selected medicines.
Many countries have implemented incentives for physicians, pharmacists and patients to boost generic markets. Over the last decade, France and Hungary, for example, have introduced incentives for GPs to prescribe generics through pay-for-performance schemes. In Switzerland, pharmacists receive a fee for generic substitution; in France, pharmacies receive bonuses if their substitution rates are high. In many countries, third-party payers fund a fixed reimbursement amount for a given medicine, allowing the patient a choice between the originator and a generic, but with responsibility for any difference in price. In Greece, patients choosing originator over generic drugs are also required to directly pay the difference.
Biological medicines contain active substances from a biological source, such as living cells or organisms. When such medicines no longer have monopoly protection, ‘copies’ (“biosimilars”) of these products can be approved. Biosimilars have increased price competition and improved affordability. In 2017, biosimilars accounted for more than 70% of the volume of the ‘accessible market’ for erythropoietin (used to treat anaemia) in Finland, Germany, the Slovak Republic and Greece (Figure 10.11). In most European countries, prices of erythropoietin fell between 30% and 80% after biosimilar entry. In Norway and Denmark, known for their effective procurement policies, data show zero or small biosimilar uptake and no price reduction in 2017. In Denmark, the tender process had already triggered competition between originator products, leading to price reductions with which biosimilars could not compete. In Norway, the originator product won the nationwide tender in 2017, with confidential rebates that affected the list price. These examples highlight the inherent problems of lack of price transparency.
For tumour necrosis factor (TNF) inhibitors (used to treat autoimmune and immune-mediated disorders), biosimilars have over 90% of the accessible market in Denmark and Norway, but less than 10% in Switzerland, Ireland and Greece (Figure 10.11). Price reductions since biosimilar entry are more modest than for erythropoietin, ranging from 4% in Switzerland to 45% in Poland. For both biosimilars, actual price reductions may be higher than what appears in figures, which only report list prices.
