This document summarizes recent developments in several countries' policies around capping the prices of generic drugs relative to the prices of their brand-name equivalents. It finds that many European countries as well as Canada, Japan, and others have lowered their price caps for generics in recent years, with caps now ranging from 25-70% of the originator price. While price caps remain a popular cost containment tool, internal reference pricing is also typically used. The tighter generic price caps aim to reduce pharmaceutical spending while raising out-of-pocket costs for patients.

1. Generic Price Linkage as a
Policy Choice: Review of
Recent Developments
Izmirlieva M & Ando G (IHS, London, United Kingdom)
Background è The Czech Republic allows the use of an “accelerated review
procedure” (shortening the pricing and reimbursement review
Price capping of generics in relation to the originator (also known to 50 days) for companies accepting a reduction in the
as price linkage) has been in use for some time despite studies maximum price of 32% below the originator’s price for
questioning its efficacy as a cost-containment mechanism. In generics.
particular, a 2007 study from Norway—where internal reference
and generic price linkage to the originator co-existed for some è In Slovakia, under 2011 regulations, the price of generics is
time—found that both originator and generic prices fell capped at 30% below the originator’s price level, replacing the
significantly, but the price decline impact was sharper for previous price limit of 20% below the originator’s price level.
originator drugs in the reference pricing group than in the price
è nder austerity measures in Greece, the price of generics has
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caps group.
been capped at 60% of the originator price.
Objectives è In Romania, under 2010 regulations, generics have their prices
capped at 70% of the price of the originator product, instead
This study seeks to evaluate if price capping remains a policy of of the previously applicable price cap of 65%.
choice in the current austerity climate.
è nder 2010 legislation, Japan caps the price of new oral
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generics at 60% of the originator’s price in cases where more
Methods than 10 versions are seeking price approval, replacing a
previous cap of 70% of the originator’s price. Under a separate
Research focused on a review of current PR regulations for 2011 rule, generics priced at less than 30% of the price of the
generics in EU countries and major markets outside Europe to originator will all be granted the same National Health
identify which countries have adopted, or are in the process of Insurance price, which will be set at the weighted-average
adopting, new price caps, or have amended existing price caps market price.
for generics versus the originator from the start of 2010 to date.
è In Canada, Nova Scotia caps the price of generics at no more
than 35% of the originator’s price from 1 July 2012, while the
Results Ontario government announced it will cap generic prices at
Several countries recently introduced changes to the ceiling price 25% of the originator’s price for medicines reimbursable under
of generics in comparison with the originator’s price: the Ontario Drug Benefit scheme. Meanwhile, private payers
have reduced generic price caps from 50% of the originator
Generic price capped in drug price in 2010 to 35% on 1 April 2011 and 25% on 1 April
Country
relation to originator's price 2012. In Saskatchewan, for existing generics drug, prices have
Austria √ been reduced to 45% of the originator’s price from 1 June
Belgium √ 2011 and to 35% of the originator’s price from 1 April 2012,
Cyprus √ while for new generic drugs, the maximum price is capped at
Czech Republic √ 35% of the originator’s price from April 2012.
Estonia √
Finland
France
√
√ Conclusions
Greece √ France, Portugal, Hungary, the Czech Republic, Romania,
Hungary √ Slovakia, Greece, Japan, and Canada are among the countries
Italy √ that have recently amended their use of generic price linkage in an
Latvia √ attempt to contain pharmaceutical spending. While price caps
Lithuania √
remain popular, it is rare for countries to use them in isolation.
Netherlands √
Internal reference pricing is typically also in use. Among countries
Portugal √
that have recently made changes to their generic price linkage
Romania √
Slovakia √ system, several have also undertaken changes to their internal
Spain √ reference pricing system, as governments attempt to tackle the
Sweden √ cost-containment paradigm from all sides.
United Kingdom √
Generic price caps in relation to the originator clearly remain
popular as a cost-containment mechanism. Their impact on the
è France limits the price of generics to 60% of the originator’s
entire pharmaceutical market is magnified through the use of
price from January 2012, replacing a previous price cap of these prices in setting an internal reference price in therapeutic
55% of the originator’s price. groups, with a positive impact for reimbursement authorities and a
negative impact for patients in the form of higher OOP payments.
è Portugal caps the price of the first-to-market generic at 50%
of the originator’s price under new legislation published in
January 2012.
è Hungary requires new generics to be priced at least 35%
below the originator’s price for the first-to-market generic, 45%
for the second-to-market generic, and 55% for subsequent-
entry generics.
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