Switch to generic drugs can help innovation, says G-10

Date: 04/10/01

By Laurence Frost

HEALTH services should stop buying expensive branded drugs when their patents expire and switch to cheaper generic 'copies', according to a panel of commissioners, national ministers and top executives from pharmaceutical firms.

In a blueprint consultation paper, the 'G-10' group argues that the savings generated should be channelled into the purchase of cutting-edge medicines, to boost the EU drug industry's flagging competitiveness.

The paper calls on governments to tackle inflexible prescription and reimbursement systems in countries that still "encourage over-reliance on old branded medicines", inhibiting competition from cheaper generics and reducing the "financial headroom for new innovative medicines".

The G-10 wants to see resistance to generics tackled in countries such as France, where doctors and patients are reluctant to abandon known brands.

The group was set up by Industry Commissioner Erkki Liikanen earlier this year amid concerns that EU-based firms were losing competitiveness to their US rivals. Health chief David Byrne also sits on the panel, alongside French, German, British, Portuguese and Swedish ministers and industry leaders including GlaxoSmithKline (GSK) president Chris Viehbacher.

Drug firms operating in Europe have long complained about the lengthy and separate price negotiations they have to complete in each member state where they want to market a new medicine. They say the process eats into patent periods and forces patients in certain countries to wait longer for potentially life-saving treatments.

The proposal aims to speed up negotiations and boost both prices and the firms' incentives to innovate. "Instead of governments trying to delay the introduction of new medicines [for cost reasons], this money could be freed up so there was equitable access to new medicines across Europe," said Alastair Benbow, sherpa to the G-10 meetings for GSK. "There are examples of markets where the uptake of generics is already much higher," he added, citing Germany and the UK. "It's no coincidence that these are two of the markets where access to our products is quickest and at the best prices." The paper also calls for an end to government price controls on over-the-counter medicines - already abolished in most member states.

However, it is unclear how the measures could be implemented once endorsed by the G-10's final report to Commission President Romano Prodi in March 2002. Union governments are traditionally fierce in their defence of their own sovereignty over health policy and spending, while previous EU attempts to coordinate by recommending 'best practice' have been ignored.

Liikanen's spokesman, Per Haugaard, said it was too early to assess the likelihood of a bid to boost the EU's legal competence in drug pricing at the next revision of the EU Treaty in 2004. But to improve coordination between countries, he said, "there would need to be a willingness on the part of member states to accept a Community rule".

Health services should stop buying expensive branded drugs when their patents expire and switch to cheaper generic 'copies', according to a panel of commissioners, national ministers and top executives from pharmaceutical firms.