GENERIC MEDICINES IN EUROPE

An Overall AssessmentConference on Generic Drugs

In Turkey and the EUIEIS – Ankara 2 June 2005

GREG PERRYEGA Director General

THE ROLE OF THE GENERIC MEDICINES INDUSTRY IN EU PUBLIC HEALTH

1.Increasing the access to pharmaceutical care through providing more affordable medicines.

2.Increasing patient provision by developing new formulations and methods of delivery.

3.Stimulating medicinal innovation through competition and increased consumer choice.

THE ROLE OF THE GENERIC MEDICINES INDUSTRY IN EU PUBLIC HEALTH

1.Providing budget head-room for innovation.

2.To increase Europe’s share in the growing global generic pharmaceutical market

3.To create new sources of enterprise to generate employment and investment in Europe

ROLE OF GENERIC MEDICINES

“Pricing studies have shown unequivocally that generic competition is the most effective way to ensure lasting price reductions”

WHO 55th Assembly

May 2002

“The promotion of generics can have important impact in reducing costs and creates headroom to help pay for new innovative products”

EU Council of Ministers

June 2000

G 10 RECOMMENDATION 4

To secure the development of a competitive generic market

Member States – facilitated by the Commission- should explore ways of increasing generic penetration in individual markets (including generic prescribing and dispensing). Particular attention should be given to improved market mechanisms in full respect of public health considerations

SOME KEY FACTS ON GENERICS

1. Generics sell at 20-80% of original price

2. Generating 13 Billion savings per year in EU 15

3. Highly competitive market with over 100,000 employees

4. Generic volume in EU 27% - USA >50%. But major differences within the EU:

5-8 % B/IT/E (not growing)

8-15% PT/F (expanding)

40-50% UK (established)

+60% CEE (established and regional)

8,7%6,1%

55%33%

10%7%

41,1%22,7%

42,0%25,5%

4%2%

70%30%

84%58%

5%8,6%

55%26%

52,8%32,1%

7%5%

55,4%23,7%

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0%

Belgium

Czech Republic

France

Germany

Hungary

Italy

Latvia

Poland

Portugal

Slovak Republic

Slovenia*

Spain

UK**

Generic Market Shares 2004 in Selected EU Countries

% Share (Volume) % Share (Value) Source: EGA Members

* 2002 figures ** 2003 figures

Product 2001 global Sales ($bill)

Patent expiry (EU)

Indication

EPO 6.4 2005 renal anaemia

insulin 4.0 2005 diabetes G-CSF 2.1 2006 neutropenia HGH 2.0 2002 growth

deficiency beta-interferon

1.9 2003 multiple sclerosis

alpha-interferon

1.7 2002 hepatitis C

On the Horizon Bio-Similar Products

GENERIC MEDICINES AND THE EU REGULATORY SYSTEM

1. Over 35% of major molecules are now patent free and patent expiry will continue

2. Combination of EU expansion, patent expiry and government policy results in the generic industry fast becoming the main supplier of medicines in the EU

3. The generic industry is the major user of MRP; will be the major user of the DCP and a new entrant into CP

THE GENERIC NECESSITY

GENERIC MEDICINES TREAT CRITICAL ILLNESSES

1. Cancer / Oncology

2. Depression

3. Hypertension

4. Diabetes

5. Hyperlipidaemia (cholesterol)

6. Serious bacterial infections

7. Asthma

EUROPE’S AGEING POPULATION

50

75

100

125

150

175

200

225

250

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Elderly

Working age

Employment

EXPENDITURE ON HEALTH CARE IN RELATION TO AGE

Source: Economic Policy Committee (2001) “Budgetary challenges posed by ageing populations

Denmark

Germany

Spain

Spain

France

France

Italy

Netherlands

Finland

United Kingdom

United Kingdom

0

5

10

15

20

0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95+

Age groups

Avera

ge

exp

end

itu

re p

er

hea

d e

xpre

ssed

as

a s

har

e o

f G

DP

per

cap

ita

(%)

Pharm

aceutical

s a

nd

Tech

nolo

gy

WHO - EDM

In poor countries drugs are largest household and second largest public expenditure for health

Economic impact

0 10 20 30 40 50 60 70

South AfricaArgentina

JordanTunisia

ThailandIndonesia

ChinaEgypt

Mali

LithuaniaSloveniaEstoniaPolandCroatia

HungaryCzech Rep.

Bulgaria

NorwayNetherlands

United StatesUK

DenmarkSpain

FranceItaly

GermanyGreece

Developed countries(7 -20%)

Transitional countries(15 -30%)

Developing countries(24 -66 %)

Pharmaceutical spending, as % of total health spending

CEE HEALTH CARE GAP – THE CHALLENGE OF AVAILABILITY

Average GDP per capita in CEE is 5 times lower than EU average

Real spending per capita on health in CEE is <400 Euros compared to >1,600 Euros in EU

CEE GENERICS %: 70% OF VOLUME FOR 30% OF COST

0

10

20

30

40

50

60

70

Originals Generics

V CC V

3 FOUNDATION STONES FOR AFFORDABLE MEDICINES

EfficientRegulatory

System

Prescribing

Dispensing

Practices

Balanced PatentSystem

Access to Affordable Medicines

EU Review

NationalSPC/Patents

BETTER REGULATORY ENVIRONMENT

New Pharma Legislation introduces:

- A scientific definition of a generic medicinal product

- European Reference Product

- Restrictions on strategic withdrawal

- New Decentralised Procedure

- Option to use the Centralised Procedure

- A legal framework for biogenerics/biosimilars

- EU Bolar provision to encourage EU generic R&D

However...

DATA EXCLUSIVITY- MOMENT OF GENERIC APPLICATION

1. 8 + 2 +(1) formula for all MA procedures

0-8 years Data Excl.

Marketing Authorisation of Reference Product

2 years Market Excl. (1 year ME)

Generic

Application

Assessment, MA granted, MRP, price, reimbursement; preparation of launch, production (if there is not patent)

Additional 1 year Market Excl. if new indication registered by originator during first 8 years

Launch of generics if no patent, no +1 year

COUNTRIES REQUESTING TRANSITIONAL PERIOD FOR DATA EXCLUSIVITY

1. Poland

2. Hungary

3. Slovenia

4. Slovakia

5. Malta

TIME (WEEKS) AFTER MA FOR PRICE AND REIMBURSEMENT GRANT

0 5 10 15 20 25 30 35 40

DE

ML

GR

UK

P L

DK

NL

CY

IE

FR

CZ

LT

RO

P T

AU

ES

IT

SW

BU

CR

ET

LV

SV

BE

SK

MAX TIME (Weeks)

EU SINGLE MARKET FAILURE

1. Maximisation of price competition restricted in Europe by lack of a single market

25 pricing systems and medicines agencies

Differing prescribing and substitution cultures

Must produce packs and leaflets in accordance to 18 different national requirements and languages

Work through national wholesalers

Registration fees for each MA and line extension

2. Creation of added costs which are significant in a predominantly price competitive industry based on high volume sales. Significant contrast to USA (Note no registration fee for generics at FDA).

INCREASED EU IP PROTECTION

1992 SPC Regulation

1992-1994 introduction of Product Patents for pharmaceuticals in CEE and Southern Europe

Mid 1990s Increasing use of secondary patents

1994 TRIPS

2004 extension of data exclusivity to up to 11years

2004 over 6000 Patent extensions granted through SPC Regulation

2006 Paediatric extensions

NEW FOCUS FOR INNOVATION

1. Despite increased IP in EU the rate of “innovation is declining in EU”

2. In EU emphasis should be focused on:

A EU rival to USA National Institutes of Health

Better links between Science and Business

Pricing structures for real innovation

Improving not increasing patent system - Community Patent

It is these factors that make US better place for R&D than Europe - not IP nor pricing issues

Truth on Pharma Innovation

1. Only 22% of “New” medicines are truly innovative (Public Citizen July 2001)

2. Only 15% of R&D is by industry - the vast majority is through public funding. “Public researchers often tackle the riskiest and most costly research, which is basic research, making easier for industry to profit” (NIH 2000)

3. R&D times are down 35% since 1996 (Scrip 2002)

4. Profit as % of Revenue is 18% or Big Pharma compared to average of 2-3% of other Fortune 500 companies

These facts and others need to be taken into account when making pharma policy.

G10: LISBON GENERICS WORKSHOP 2003 RECOMMENDATIONS

Educating prescribing doctors to use Generics

Assisting doctors in understanding the economic implications of prescription decisions

Increasing the use of electronic prescribing

Creating substitution lists

Increasing incentives for generic dispensing and substitution (regarded as particularly important in systems where doctors are not economically sensitive)

G10: LISBON GENERICS WORKSHOP 2003 RECOMMENDATIONS

Improving consumer awareness of generic quality and availability

Increasing pharmaco-economic evaluation of new products in comparison with existing products

Establishing generic-oriented reimbursement and health insurance systems

Adopting reference pricing and free pricing systems instead of controlled price systems

Reducing the time delay for authorisation for and marketing of generic product

CONCLUSIONS

Generic medicines play critical role in ensuring equitable access to medicinal care in the EU 25.

Role will increase as population ages and demands increase on healthcare systems

Market environment for generic medicines needs improvement to maximise potential

New focus on innovation - no longer based on increases in IP protection but R&D environment

All sectors need to work together to ensure equitable access to medications for all EU Citizens – A European value worth striving for

Generic Medicines ...… Affordable Healthcare

European Generic medicines Association

“Making medicines affordable and industry competitive”

Europeans have a right toaffordable healthcare.

Generic medicines help make it a reality!

Generic medicines are less expensive than brand-name equivalents. They save EU patients Є13 billion each year, and create the budget

headroom needed to pay for the newer expensive products, treatments and services.