Cost Savings of Switching Private Sector Consumption from Originator Brand Medicines to Generic Equivalents. World Health Report (2010) - Background Paper, 35
(2010; 11 pages)

Abstract

In low- and middle-income countries, originator brand medicines generally cost substantially more than their generic equivalents. Patients purchasing medicines in the private sector pay, on average, 2.6 times more for originator brand than for their lowest-priced generic equivalent. In some low- and middle income countries, this price differential is more than 10-fold.

When generic medicines are of assured quality and are offered at lower prices than the corresponding originator brand product, there is a potential for patients and health systems to achieve equivalent health outcomes at a lower cost. The use of generics is therefore often promoted in the public and private sectors to reduce medicine costs, and increase product availability and consumer access. However, evidence shows that the uptake of generic medicines is sub-optimal. For example, even in Brazil where there are many manufacturers of generic medicines, these medicines represent only 14% of medicine revenues and 16% of total sales. In pharmaceutical markets where patent protection does not exist, barriers to the use of generic medicines include a lack of incentives for physicians to prescribe generics, economic disincentives for pharmacists to dispense generics, and a lack of confidence in the quality of generic medicines on the part of patients and health professionals.

While recognizing that these and other barriers exist to the optimal use of generic medicines, an analysis was conducted to estimate the cost savings that could be achieved if, for selected multisource products, consumption of originator brands could be shifted to their generic equivalents. The potential savings that could be obtained by switching purchases from originator brand medicines to the lowest-priced generic equivalents was therefore estimated for a selection of medicines in the private sectors of low- and middle-income countries. While the term generic medicine can be interpreted in different ways, for the purposes of this analysis it is defined as a pharmaceutical product intended to be interchangeable with the originator brand product, manufactured without a licence from the originator manufacturer and marketed after the expiry of patent or other exclusivity rights.

 
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