European Austerity Measures Lead Change in Generic Drug Pricing
Generic drugs are expected to help countries cope with healthcare cuts brought about by strict austerity measures, according to a new report by business intelligence experts.
The new report “Pricing and Reimbursement in Generics – European Austerity Measures and Healthcare Cost Containment Puts Innovation-Driven Pharma Companies under Pressure” suggests that lower priced generic drugs help control costs, saving patients, drug manufacturers, retailers and the government a considerable amount of money.
In the US, the average price for a brand-name drug prescription is $84.20, while it costs only $30.60 for a generic drug prescription. Generic drugs help consumers in the US save approximately $8 to $10 billion a year at retail pharmacies, and many European countries are looking to increase their use of generic drugs, implementing measures to do so in an attempt to control increasing costs. The Primary Care Trust (PCT) in the UK encourages physicians to prescribe low-cost generic drugs in order to save costs, while the Spanish government demands that doctors prescribe generics and pharmacists dispense the cheapest generic available, in order to save €2.4 billion ($3 billion) a year.
Reference pricing is a popular methodology in several countries, as the method helps lower the price of generic drugs and brings about considerable savings for the country. 13 countries, including Germany, Spain, Hungary and Finland, have adopted reference pricing for generic drugs.
Price cuts have also proven to be an effective tool in limiting pharmaceutical expenditure and budget deficits. Austerity measures announced by the Italian government in July 2010 included a mandatory price cut of 12.5% on generic drugs. The Spanish government also implemented a €15 billion ($22 billion) austerity package in 2010, which led to an average 25% cut in generic prices.