TY - JOUR
T1 - New pricing models for generic medicines to ensure long-term sustainable competition in Europe
AU - Francois, Clement
AU - Gawlik, Gabriela
AU - Mestre-Ferrandiz, Jorge
AU - Pana, Adrian
AU - Perelman, Julian
AU - Yfantopoulos, John
AU - Simoens, Steven
N1 - Funding Information:
This study was funded by Medicines for Europe.
Funding Information:
CF and GG worked for Creativ-Ceutical (Which has been taken over by Putnam PHMR) which received funding from Medicines for Europe to undertake the study. SS has previously held the EGA Chair “European policy towards generic medicines”.
Publisher Copyright:
Copyright © 2023 Francois, Gawlik, Mestre-Ferrandiz, Pana, Perelman, Yfantopoulos and Simoens.
PY - 2023
Y1 - 2023
N2 - Background: Price erosion of generic medicines over time as a result of existing pricing policies in combination with increasing operational costs of these products due to high inflation, undermine long-term sustainable competition in European off-patent medicines markets. Therefore, the aim of this study is to identify new potential pricing models for retail generic medicines in Europe, examine their pros and cons, and illustrate them with examples inside or outside the pharmaceutical sector. Methods: A targeted literature review, one-to-one interviews and a joint advisory board meeting with experts from five European countries were carried out to assess potential pricing models for generic medicines. Results: We identified ten pricing models that can be applied to generic medicines. The tiered pricing model is viewed as a sustainable solution ensuring competitiveness, but requires market monitoring using a supportive IT infrastructure. De-linking the price of generic medicines from that of the off-patent originator medicine prevents the originator from forcing generic medicines’ prices to unsustainable levels. Higher costs due to inflation can be compensated in the automatic indexation model. Other pricing models that have less implementation potential include the one-in-one/multiple-out model, tax credits, value-based pricing, volume for savings and guaranteed margin/fee models. The hypothecated tax and cost allocation models, which add a patient fee to generic medicines prices, are not likely to be socially acceptable. Conclusion: When considering a new pricing model for generic medicines, the impact on innovative medicines and the characteristics of the healthcare system in a given country need to be taken into account. Also, there is a need to continuously follow up the level of competition in off-patent medicines markets and to identify sustainability risks.
AB - Background: Price erosion of generic medicines over time as a result of existing pricing policies in combination with increasing operational costs of these products due to high inflation, undermine long-term sustainable competition in European off-patent medicines markets. Therefore, the aim of this study is to identify new potential pricing models for retail generic medicines in Europe, examine their pros and cons, and illustrate them with examples inside or outside the pharmaceutical sector. Methods: A targeted literature review, one-to-one interviews and a joint advisory board meeting with experts from five European countries were carried out to assess potential pricing models for generic medicines. Results: We identified ten pricing models that can be applied to generic medicines. The tiered pricing model is viewed as a sustainable solution ensuring competitiveness, but requires market monitoring using a supportive IT infrastructure. De-linking the price of generic medicines from that of the off-patent originator medicine prevents the originator from forcing generic medicines’ prices to unsustainable levels. Higher costs due to inflation can be compensated in the automatic indexation model. Other pricing models that have less implementation potential include the one-in-one/multiple-out model, tax credits, value-based pricing, volume for savings and guaranteed margin/fee models. The hypothecated tax and cost allocation models, which add a patient fee to generic medicines prices, are not likely to be socially acceptable. Conclusion: When considering a new pricing model for generic medicines, the impact on innovative medicines and the characteristics of the healthcare system in a given country need to be taken into account. Also, there is a need to continuously follow up the level of competition in off-patent medicines markets and to identify sustainability risks.
KW - competition
KW - Europe
KW - generic medicines
KW - pricing
KW - sustainability
UR - http://www.scopus.com/inward/record.url?scp=85174855264&partnerID=8YFLogxK
U2 - 10.3389/fphar.2023.1200641
DO - 10.3389/fphar.2023.1200641
M3 - Article
C2 - 37876734
AN - SCOPUS:85174855264
SN - 1663-9812
VL - 14
JO - Frontiers in Pharmacology
JF - Frontiers in Pharmacology
M1 - 1200641
ER -