Each year nearly three quarters of prescriptions in England and Wales are met by generic products, saving the NHS more than £13.5billion.
Generics medicines are authorised to the same standards of safety, quality and efficacy as original branded drugs, and have to demonstrate that they are bioequivalent to the original product.
The UK has a competitive, multi-source generic market which keeps medicine prices at the some of the lowest in Europe. Generic competition - which occurs when a branded product loses its patent protection – reduces prices by as much as 90%.
The UK’s multi-source interchangeable market helps make the supply chain resilient. If one manufacturer encounters a production or supply problem, it is usually the case than another one can step in to ensure that patients receive their prescribed medicines.
The interaction between branded and generic medicines is a virtuous circle. Today's new drug is tomorrow's generic medicine, which provides the headroom for investment in yet further new drugs as well as the commercial incentive to develop them.
As well as providing value through everyday cost-savings, the generic medicines industry is also adding value through services such as focused patient packages and homecare. We are also developing more complex and innovative products which are more economically challenging such as biosimilars.
A generic medicine contains the same active ingredient as the equivalent original branded drug, and is marketed once the originator's patent protection has expired. Generics are authorised to the same standards of safety, quality and efficacy as original branded drugs, and have to demonstrate in clinical studies that they are bioequivalent to the original product: i.e., they deliver equal medical benefits to the patient.
Generic medicines are therefore normally interchangeable with the equivalent branded drug. On the rare occasions where this is not the case, the MHRA (Medicines and Healthcare products Regulatory Agency) requires generic medicines to have a brand name so that patients may be maintained on a single manufacturer's product.
Generic medicines make the drugs bill affordable and promote innovation. When an original branded drug loses its patent protection, generic equivalents are launched, typically by many manufacturers. The competition between these manufacturers drives down prices, often leading to a reduction of 90% or more within a few weeks.
The onset of generic competition also drives innovation. Because the originators know that their products will eventually face generic competition leading to a significant fall in sales and income, they need to research new medicines.
This interaction between branded and generic medicines is a virtuous circle: today's new drug is tomorrow's generic, and that generic provides the headroom for investment in yet further new drugs as well as the commercial incentive to develop them.
Many countries in Europe determine the cost of their generic medicines by a range of mechanisms, including basing them on the price of the equivalent branded drug, tendering, or other forms of reference pricing. This stifles competition and reduces the number of companies in the market, leading to increased risk of shortages of medicines. It also delays generic entry to the market, costing health services money due to the later onset of generic competition.
In the UK, market prices are set by competition with no barriers to entry other than gaining the product's marketing authorisation based on its safety, quality and efficacy. This leads to a vibrant multi-source market in generics, minimising the scope for shortages and delivering on average the lowest market prices in Europe - and beyond.
Unlike most of the rest of Europe, the vast majority of generic medicines in the UK are marketed by the generic name or International Non-proprietary Name (INN). GPs are trained at medical school to write prescriptions by INN except where there is a clinical reason for doing otherwise. Hospital Trusts also encourage their GPs to prescribe generically to benefit from the savings due to the lower costs of generics.
The reimbursement price - i.e., the price paid by the NHS to the community pharmacist' of the majority of generics changes quarterly. It is set by the Department of Health (DH) and is based on quarterly returns to the Department by all generic manufacturers showing the volumes sold of each product and the net revenues gained. DH sets the reimbursement price according to a formula that manages the profit made by pharmacists due to dispensing generic medicines.
In this way, GPs have incentives to prescribe generics and pharmacists have incentives to dispense them, whilst prices are based on competition with the minimum of government interference. This lack of bureaucracy ensures that the NHS benefits from high levels of savings due to early generic entry to the market. Other EU member states' more bureaucratic systems achieve lower savings and then only after considerable delay.
The following reports review the generic medicines market in the UK and its contribution to reducing NHS costs.
OECD - Health at a Glance: Europe 2016 - How does the United Kingdom compare?
In 2016, the OECD published a report (Health at a Glance: Europe 2016) which stated that the development of generic medicines markets across Europe has provided a good opportunity to increase efficiency in pharmaceutical spending. It stated that generics accounted for 84% of the volume of pharmaceuticals sold in the UK in 2014 - the highest among EU countries - but that this represented only around a third of the total market value. The OECD’s specific UK findings can be found here.
NERA - Manufacture, distribution and reimbursement of generic medicines in the UK
A 2001 report conducted by economic consultancy NERA into the manufacture, distribution and reimbursement of generic medicines in the UK reviewed the effectiveness of the freedom of pricing system, as well as alternative pricing and reimbursement systems. NERA’s analysis highlighted the benefits of a reimbursement system based on market prices (not list prices) fixed by competition in preference to other alternatives such as tendering, reference pricing, profit controls or direct price controls. Following the report, the Department of Health implemented a reimbursement system based on market prices – which helped realise more savings for the taxpayer and supported widened patient access to medicines. The report can be found here.
A generic medicine contains the same active medicinal substance as an originator pharmaceutical product. Because it acts in the same way in the human body, it is interchangeable with the originator product. Generic medicines are launched when the originator product's patent has expired.
In the EU a generic medicine is identified either by a company name plus its International Non-proprietary Name (INN), or by its own invented brand name. Generic medicines are increasingly used by general practitioners, specialists, and hospitals as equally effective alternatives to higher-priced originator pharmaceuticals.
Generic medicines contain the same active ingredients as originator pharmaceuticals and act in the same way on patients. Equivalent generic medicines may contain different non-active ingredients (such as colourings, starches, sugars, etc) and they may differ in size, colour or shape, but none of these have any impact on the therapeutic effect, i.e., the way they work in the patient's body.
In some cases, the active ingredient in generics and originators may also differ in salts and esters. And just as when originators modify the non-active ingredients, salts or esters in their products, these differences must not affect the therapeutic equivalence between the different products.
In the EU, all medicines, originator or generic, have to be authorised before they may be produced and distributed to patients. The medicines agency of each EU Member States, or the European Medicines Agency (EMEA) in London, does this by assessing the quality, safety and efficacy of the medicine. To receive market approval, a generic medicine must be 'bioequivalent' to the originator product - i.e., it must work in essentially the same way in the patient's body. Generic medicines are subject to the same European procedures as originator products and are carefully scrutinised by the competent authority.
Yes. Generic medicines must comply with exactly the same standards of quality, safety and efficacy as all medicinal products. They are produced in inspected plants under what is known as 'GMP' or 'Good Manufacturing Practice'. And, just like originator products, once a generic medicine is sold on the market, it must be monitored by the manufacturer in case any adverse reactions are reported.
Yes and the savings are significant. Generic medicines cost 20% to 90% less than the original price of their brand-name equivalents. In addition, competition from rival generic products forces originators to reduce their own prices after - or sometimes before - patent expiry.
When we use generic medicines, our national healthcare systems save considerable sums of money - many billions of Euros. This frees up money to pay for other, more expensive treatments and services that patients need, including funding the research into new treatments and medicines.
Generic competition also acts as an important stimulus for originator companies to focus on new research to create new patented medicines.
Generic medicines can be made available to patients in the EU only after the relevant patents on the originator product have expired.
As in other industries, the standard patent is 20 years. But, uniquely for pharmaceuticals and plant technologies, this can be extended by up to a further 5 years by gaining a Supplementary Protection Certificate (SPC).
Yes. Pharmaceutical products are covered by a number of patents, sometimes by as many as 30 to 40 patents or more. In addition, a patent on a new use ('indication'), formulation, salt or ester can block the registration or marketing of a generic medicine for treatments where the base patent has already expired.
This is a strategy known as 'evergreening' which aims to prevent or delay competition from generic medicines by extending market protection through patents on minor changes to the original product.
The registration of a generic medicine usually takes 1 to 2 years, but can sometimes take longer.
Moreover, access to the market in many EU Member States is delayed for generic medicines - as for originator products - by having to wait for pricing and reimbursement status.
Generic medicines manufacturers also spend considerable time and money on developing their products which are not, as sometimes alleged, mere 'copies' of the originator product. It can take several years to bring a generic medicine to the market following the original commercial decision to do so.
Data exclusivity is a separate and additional provision to patent protection for the originator medicine. It defines a period of time during which the generics applicant is restricted from applying to the medicines authorities for market authorisation. Consequently generic medicines can only be evaluated and approved by the medicines authorities after the data exclusivity period has expired unless unusual and much more expensive procedures are used, which only happens very rarely.
Data exclusivity was introduced in 1987 to compensate for insufficient product patent protection in some countries at that time. Although strong product patents are now available in all EU Member States, data exclusivity was nevertheless maintained in the new EU pharmaceutical legislation which entered in force in 2005.
No. Generic medicines applications do not make use of any data from the originator registration file. In fact, the data of originator products are never revealed to third parties, and so cannot be used by generic medicines researchers. Instead, generic medicines producers research and develop their own formulation of the product which must then be approved under the same EU requirements as originals.
Since generic medicinal products contain well-known, safe and effective substances, the pre-clinical tests and clinical trials performed by the originator are not repeated. Indeed, it would be unethical and contrary to international convention to do so. The safety and efficacy of a generic product is cross referenced with the originator product's dossier by the medicines authorities who alone have access to these files.