Maximising the Benefits from Generic Competition
(2008; 12 pages)


In recent years, one of the ways in which OECD countries have sought to address the increasing cost of health care is by increasing the use of generic medicines. Early literature provided evidence of the lower cost of generics, compared to their original brand equivalents, which encouraged governments to introduce supply and demand-side regulations that promote generic substitution. Such regulations ranged from allowing pharmacists to substitute generics, providing physicians with financial and non-financial generic prescribing incentives, and introducing patient cost-sharing.

As discussed this issue’s overview article, these regulations have resulted in varying degrees of success in increasing the use of generics. Consequently, the ensuing savings to health insurance also have varied, leaving room for further savings in most cases. This case study quantifies the additional potential savings to health insurance from genericization, or in other words, the current savings foregone to health insurance.

The case study uses proprietary sales, retail price and volume data from Intercontinental Medical Statistics (IMS) for omeprazole, simvastatin, lisinopril, paroxetine and metformin in the UK, France, Germany, Italy, Spain, US and Canada, during the period 2000–2005. All original brand drugs in this sample went off patent during this period, albeit in different years. Thus, the degree of generic diffusion, and hence potential savings, may partially reflect the differing timescales since generic entry across molecule and country markets, as well as countries’ differing pharmaceutical regulations.

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