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Generic Medicines in Europe

The Role of Generic Medicines in Europe

The area of critical illness is where pharmaceuticals are mostly paid for indirectly through health insurance and tax contributions, that generic medicines play the most crucial role in Europe.

The Use of Generic Medicines in Europe

European citizens are most familiar with generic medicines in the self-medication area where payment is made directly from their own pocket. For example, consumers invariably choose the lower-priced generic paracetamol over the branded Panadol™ for pain relief, or generic loratadine as opposed to Claritin™ for tackling hayfever or allergies.

However, it is in the area of critical illness, where costs are mostly paid for indirectly through health insurance and taxes contributions, that generic medicines play the most crucial role.

Generic medicines, selling at a 20-90% price differential to the patent expired originator product, currently generate some €18 billion in savings each year for EU healthcare systems. If generic medicines were taken out of the health economics equation, the EU’s healthcare systems would become financially unsustainable.

The Generic Medicines Market in the European Union

By the end of 2004 some 35% of the top selling pharmaceuticals that year became patent expired, creating a major opportunity over the following years for increasing the purchase of generic medicines, both in community prescription and in hospital sectors.

Whilst most EU governments have started to promote generic medicines, the potential for greater cost-effective medicinal provision in the off-patent market is staggering. Many EU Members States are far from maximising their potential for savings from generic medicines, even in the retail sector (see graph below).

Generic Medicines Market Share by Volume & Value

[click graph to enlarge]

The situation is significantly different in many Central and Eastern European countries where generic medicines make up as much as 70% of all medicines prescribed in terms of volume, whilst in value terms generics represent only 30% of pharmaceutical expenditure. Consequently, the availability of affordable generic medicines in these countries, many of which joined the EU in 2004 and 2007, is actually a major budgetary factor in both the retail and hospital sectors.

Central And Eastern Europe – "Healthcare Gap"

Generic medicines play a key role in healthcare provision in the new EU Member States. They are crucial to making quality medicines accessible to patients who can not afford high co-payments for essential treatment. These points will perhaps be appreciated more clearly if we stop to considering the following:

  • GDP per capita in the new Member States is 5 times lower than the EU Average.
  • Real spending per capita on healthcare in the new Member States is less than €400 compared to over €1,600 in the EU.
  • Several new Member States are already experiencing healthcare budget deficits due, at least in part, to rising pharmaceutical costs.
  • Many patients do not buy their prescriptions simply because they cannot afford the high out-of-pocket co-payments.

Healthcare Gap
Healthcare spending per capita in 2004

Healthcare Gap

How New Member State Patients Benefit
Generics supply 70% of medicines at 30% of cost

70% of medicines at 30% of cost.

Biosimilar Medicines

Focus is now increasingly directed to competitive biosimilar products. The new EU pharmaceutical legislation, which entered into force in Autumn 2005, created a regulatory procedure for their registration in the EU, and the European Commission, in line with the EU’ medical experts (CMDh), have now approved several of these new comparable medicines (see the section on Biosimilar Medicines.)

Generic Availability and the New EU legislation

The new EU pharmaceutical legislation is exerting a major impact on generic medicines, in particular because it:

  • Encourages generic R&D before patent expiry;
  • Allows marketing of generic medicines where originator pharmaceuticals have been withdrawn for commercial reasons;
  • Provides a more efficient system for the registration of generic medicines (ie, the new Decentralised System);
  • Ensures greater harmony between newly approved generic medicines and older approved originator products;
  • Provides clear scientific and legal definitions of generic and biosimilar medicines which were lacking in EU law.

Whilst this legislation has simplified the registration of generic medicines and promotes their increased manufacture in the EU, the new law has also extended the overall period of time that generic manufacturers must wait before registering their products. As a result, both hospital purchasers and pharmacists are experiencing certain delays in the availability of new generic alternatives. See the Pharma Review section for more details.

>> Promoting Generic Medicines


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