Despite helping to halve the NHS drugs bill, generics manufacturers are still having to respond to government and beyond, reports Charles Gladwin

Generic medicines usage is at an all-time high and increasing every year. Generic prescribing was up to 83.9 per cent in 2013, from 77.8 per cent in 2003. The percentage of items prescribed and dispensed generically was at 75.2 per cent, while the percentage of dispensing by brand where no generic existed had fallen to 8.7 per cent in 2013, down from 22.4 per cent a decade before.

The contribution of this increase in generic usage is demonstrated by comparing total net ingredient costs. NIC saw a sub-inflationary rise of 10.5 per cent between 2003 and 2013, to £7.89bn, while prescription item numbers rose 58 per cent.

While more than two thirds of all medicines dispensed by the NHS are generics, they account for only around 29 per cent of the drugs bill. In addition, generics saved the NHS nearly £12.3bn in 2013, says the British Generic Manufacturers’ Association. This significant leap in annual savings has been “driven in part by the ongoing impact of several large volume originator products losing patent protection, such as atorvastatin,” it says.

Every further 1 per cent swing to the use of generic medicines saves a further £160m and promotes innovation by competing with established treatments

Competition from generic manufacturers of Lipitor (atorvastatin) delivered the greatest decrease in cost of any medicine over the year, from £166.6m in 2012 to £42.4m in 2013. As a result, generic competition allowed more than 40 per cent more patients to receive this medicine whilst reducing the cost to the NHS by almost 70 per cent.

More recently, celecoxib was launched by a number of generics manufacturers, following the patent expiry of Pfizer’s Celebrex. One of the companies in the release was Teva, which points out: “In the UK, around 10 million people are affected by a form of arthritis, costing the NHS in England some £5 billion every year. The introduction of generic versions of medicines saves the healthcare system considerable amounts of money. The average cost to the NHS of a generic medicine is £3.79, while the average cost of a branded medicine is £19.73.”

Doctors’ contribution

Doctors are also being asked to increase generic prescribing. In October 2014, the Academy of Medical Royal Colleges published a document outlining the many ways that doctors could help save the NHS nearly £2bn by concentrating on just 16 areas of clinical practice.

“There are two ways to increase the value of an intervention. First, patient outcomes can be improved, and second, costs can be reduced. A high value intervention meets patient expectations at minimal cost,” says the academy.

“An example of this might be treating gastro-oesophageal reflux disease with an off- patent proton pump inhibitor. This is a cheap, effective way to reduce symptom burden and disease progression. Prescribed at the minimum required dose, this medication is a high value intervention with little potential waste.”

BGMA director-general Warwick Smith welcomes the report, pointing out that “every further 1 per cent swing to the use of generic medicines saves a further £160m and promotes innovation by competing with established treatments. The use of generic medicines where they are the cost-effective alternative remains crucial to reduce the NHS drugs bill. Generic usage allows financial headroom to enable the NHS to afford newer treatments, as well as providing competition to incentivise the development of innovative medicines.”

The challenges

However, while the general outlook is good for generics, there are some clouds. One is hanging over branded generics, another is the matter of stock shortages.

The Department of Health issued a consultation last autumn on the statutory scheme controlling the prices of branded medicines that are not covered by the Pharmaceutical Price Regulation Scheme because their manufacturers have not signed up to the scheme. And because 40 per cent of BGMA members had not joined the PPRS, prices of their branded products would potentially be subject to this statutory scheme.

The new proposals “will undermine innovation, create uncertainty, reduce competition and ultimately undermine patient benefits,” says the BGMA. The consultation “does not recognise the importance for patient care of branded generic medicines and the competitive marketplace in which many of these products operate.”

The BGMA believes the proposals are not in anyone’s interests. “Competition has already delivered more than government intervention,” argues Mr Smith, who says that a branded generic medicine costs the NHS on average around 20 per cent less than the originator or reference product. “This is on top of the reduction in the price of the originator product that generic competition will have already created.”

The majority of branded generic and biosimilar medicines are identified by brand either because it is a requirement of the regulator in patients’ interests, or because the product has a patient benefit beyond the common pharmacological effect of the active ingredient and the manufacturer wishes to differentiate the product so that prescribers may choose to access that additional patient benefit, says Mr Smith.

Branded generic medicines within the statutory scheme have already faced a price cut of 15 per cent. “An additional price cut of a further 10 per cent will be unsustainable for some of these medicines, and will not support the investment in incremental innovation that the generic medicines industry provides. Patients will be denied the additional benefit that these medicines provide.”

Progress on shortages

Stock shortages were raised earlier last year by the All-Party Pharmacy Group. After reviewing the progress that had been made since last reviewing stock shortages, it noted improvements in branded medicines.

However, APPG chairman Sir Kevin Barron said: “We are concerned to hear that, unlike two years ago, there are growing problems in the supply of generic medicines. This is getting worse and it’s currently not being addressed by the Department for Health’s supply chain forum which was established to address branded medicines supply problems.

“We are concerned that shortages in the generics market could result in many patients being unable to get their medicines on time. This could be disastrous for patients. Some of the causes of generic shortages reflect the globalisation of the generics market. But that cannot be an excuse for no action here in the UK.”

He called for “urgent action and a willingness across the generics supply chain to work together,” adding: “We need collaboration, data sharing and more pre- emptive action to maintain sufficient supplies.”

Growth brings advantages

It’s not all bad news. The increasing demand for generics can be used to the advantage of pharmacy contractors where suppliers offer bigger discounts the greater the monthly spend, along with business support.

Jonathan Wilson, managing director at Actavis, explains: “By offering competitively priced products and a reliable service, we aim to reduce the costs and the time spent shopping around for medicines or solving supply issues. All of our customers have access to a dedicated account manager who works with them to help build their business. In addition, the Barnstaple-based telemarketing team helps keep pharmacists up to date with what’s happening in the market – from new products to shortages and personalised information which tracks monthly spend.”

The telemarketing team ensure that customers are maximising the discounts available through The Actavis Accumulator Scheme. The scheme has a clear pricing model and simple timesaving rebate system, says Mr Wilson. “This reduces administration, introduces net pricing, and enables those who purchase Actavis products monthly to graduate through ever more competitive pricing tiers. Customers benefit from direct monthly rebates. This helps the pharmacy’s cash flow.”