The generics industry plays a vital role in the European healthcare landscape, providing essential solutions for a wide range of diseases, from oncology to cardiovascular diseases, diabetes to bacterial infections. The industry also made a significant contribution to managing the public health emergency during the H1N1 pandemic. The industry still faces many challenges: high inflation, combined with downward pricing policies, has had a significant impact on companies in the sector, which are already struggling with tight margins. This situation calls for critical reflection and targeted policy action, as Elisabeth Stampa, President of Medicines for Europe, explains to Makinglife.
Could you provide an overview of the current state of the generic drug market in Europe from your point of view?
Generic medicines are the cornerstone of public health in Europe. If you think of an essential medicine, it is likely a generic. Our industry provides 70% of medicines dispensed in Europe, treating the most serious diseases like cancer, auto-immune diseases, heart disease, diabetes, pain management, and bacterial infections. The sector mobilised in unprecedented ways during the pandemic, where an array of medicines were needed to ventilate critically ill COVID patients. Since then, there has been a newfound appreciation for the importance of the generic medicines sector from governments and health authorities.
The generic medicines market has recovered after the Covid-19 pandemic. There is a steady return to historical (single digit) volume growth. In some therapy areas, there have been significant demand spikes such as for antibiotic medicines due to surges in infections across Europe and globally.
However, the generic industry has suffered from the high energy cost inflation and logisitic disruptions. This high inflation combined with the downward pricing policies applied to medicines, to achieve the lowest price possible, have been very disruptive for our industry. In many countries in Europe, quality-assured medicines that are essential to patients, are only worth a couple of cents per daily treatment. This is unsustainable for generic medicines and has a number of knock on effects. The most serious of which is medicines shortages caused by the consolidation of supply. These shortages affect patients in every pharmacy across Europe. On a broader level, these pricing policies have led to more and more companies looking to reduce the cost of production and outsource the production of medicines and active pharmaceutical ingredients (API) to other contractors around the world. This puts a strain on secure supply chains for essential medicines and this needs political attention and action.
Our call to each country in Europe is to adapt pricing policy practices to a higher industrial cost base and to think about new payment models for generic medicines that value the results they bring and their importance to society, and not on price only.
What are the pillars of the industrial strategy that Medicine for Europe proposes to strengthen the European off-patent drug sector and how do you believe these can improve the efficiency and competitiveness of the sector?
Medicines for Europe supports the establishment of an EU-wide critical medicines act to support the off patent medicines sector.
We see five necessary pillars:
- Legal guidance on medicines public procurement and security of supply.
- A strategic EU reserve of essential medicines.
- EU funds and State aid projects to incentivise investments in greener and more secure manufacturing processes for essential medicines and active pharmaceutical ingredients (APIs).
- Digitalisation of the regulatory system and more use of data to increase the visibility and solidarity of medicines allocation in a shortage. This should include the use of European Medicines Verification System (EMVS) data.
- Regulatory flexibility to harmonise pack sizes and presentations which will reduce unnecessary complexities in the supply chain.
With these policies, we can leverage private sector investment and manufacturing know-how to restore strategic autonomy, efficiency and competitiveness in the generic medicines sector in Europe.
How do you think the European Parliament should specifically act in this context?
The European Union is currently doing a full review of the legislative framework for pharmaceuticals. The EU pharmaceutical legislation files had not been reviewed for twenty years. This major overhaul ranges from regulation, to intellectual property and to supply chains.
The off-patent medicines industry is fully engaged to ensure that reforms transform healthcare delivery and access for patients and to work with the European institutions, including the European Parliament to deliver on this reform. We hope for positive proposals from the European Parliament to ensure that generic and biosimilar medicines can enter markets at patent expiry, to modernise and digitalise the regulatory framework for more efficiency, and support off-patent medicines innovation, specifically in ‘value added medicines’. This allows for sustainable innovation that comes from repurposing and reformulating existing medicines, which has many benefits like reduced side effects or new treatment options with medicines that have a known and safe track record.
On the other hand, the European Parliment is working on a number of files to protect the environment and limit the advancement of climate change. We support investing in the future and we are committed to researching new, greener manufacturing techniques and processes. Our industy has to deliver on the environment while continuing to play its role in protecting public health.
We are concerned about some EU proposals, in particular on the, Urban Wastewater Directive which would introduce a tax on medicines consumption to finance new technology to remove all micro-pollutant components in waste water regardless of whether they originate from medicines or from other industrial goods. These taxes do not consider the complexity or potential impossibility of replacing pharmaceuticals with “greener alternatives” and do not take in to account that other sectors contribute much more to micropollutants in waste water. Our industry is investing in a greener future, but this system does not balance the public health value brought by the medicines industry and actually piles on the pressure on an industry already operating at thin margins.
Our ask to the European Parliament, but also the European Commission and Council is to develop policies and legislation for the future that is soundly evidence-based and has meaningful impact. We see some positive trends here on the EU pharmaceutical legislation and ground work for a Critical Medicines Act. But other files need some serious rethinking so that they ultimately do no more harm than good.
Covid-19 crisis has highlighted a number of critical issues in the pharma supply chain: how do you think the European Union can improve its strategic autonomy, particularly regarding the production and supply of off-patent drugs?
Spain recently held the Presidency of the European Council, and one of their main priorities was strategic autonomy and resilience in health. Their ‘Resilience2030’ report identifies the need to strengthen supply chains, manufacturing capacity and ultimately, open strategic autonomy in the field of both off patent medicines and API.
This is a completely aligned priority between EU heads of State and Medicines for Europe. We hope to see concrete action on this though, to advance the thinking and ambition to tangible results. This is where we see the need for a Critical Medicines Act, which can really get in to the details and support and strengthen the industry.
These reports give us really essential evidence for action, but we cannot forget the action part! These policies need support to come to life, they require collaboration from a number of actors in the health sector to advance. And that is worth acting for!
We are currently in discussions with the Commission on how to assess the situation with a study on industrial consolidation and dependencies for critical medicines. We would expect the next Commission to use that study to initiate an industrial strategy to reinvest in EU manufacturing of pharmaceuticals.
What strategies does Medicines for Europe propose to ensure that all patients in Europe have equitable access to off-patent drugs, particularly in areas with limited resources?
The off-patent medicines sector (generics, biosimilar medicines, value added medicines) exists to improve access to medicines. This is our ambition and we deliver. When off-patent medicines become available, more patients get the medicines they need (increased access) or get access earlier to the medicines they need, where previously they have been delayed or denied (timely access). The sector manages to deliver on this without impacting on pharmaceutical budgets. IQVIA data has shown quite convincingly that generic and biosimilar medicines can dramatically increase access to medicines when government policies de-restrict prescribing thanks to lower generic and biosimilar medicine prices. For example, in the UK around 40000 more rheumatoid arthritis patients could be eligble for biologic therapy1 thanks to biosimilar medicine access. A similar gap could be filled in Italy if certain conditions would be met.2 With generic medicines, our industry has contributed to significant access improvements – including making some medicines available to help prevent the development or the spread of a disease (ie. breast cancer development3 or the spread of HIV4).
But our job is not done: the incidence of non-communicable diseases (cancer, heart disease, diabetes, auto-immune diseases) is rising in Europe, the price of new medicines is extremely high and access gaps still exist, particularly in Central and Eastern Europe. For this reason, we are supportive of EU efforts to reduce the equity gaps between wealthy and less wealthy EU countries.
Our priorities to ensure our industry is strong and delivers for public health are to promote policies that:
Promote competition in the medicines sector, ensuring off-patent medicines can be in hospitals and on pharmacy shelves on day one following the originator patent expiry.
Build a modern, digitalised regulatory network, fit for the 21st century.
Secure Europe’s medicine manufacturing and open strategic autonomy in health.
Empower progress in healthcare by supporting sustainable innovation on off-patent molecules (value added medicine).
A question about my country, Italy: how is the situation of the generic drug market in Italy compared to that of other countries in the European Union and how could be improved?
Italy has been shown to be one of the countries with the lowest degree of generic penetration after the loss of exclusivity.
To improve value for money in pharmaceutical spending, Italy has implemented a series of measures to promote greater use of generics. Unless a reason is provided by the doctor to preclude substitution, the pharmacist must mention to customers if a cheaper equivalent product exists. If the doctor indicates that the medicine is ‘not substitutable’ or if the customer insists on purchasing the brand name, the patient must pay the difference between the price of the dispensed medicine and the cheapest alternative.
In 2022, generic medicines represented 14.8% of the expenditure (26,4% considering only reimbursed medicines) and 22% of community consumption (31,1% considering only reimbursed medicines). There is also a great variability across Italian regions, with generic medicines expenditure ranging from 43 to 19% of the overall off- patent medicines expenditure (mean value in 2021 was 30%) and a volume penetration following the same path. In 2022, this results in 1,1 billion euro of citizen co-payment corresponding to 18.3 euro per capita.
Fast market entrance of generic medicines in Italy is hindered by several factors: the large market for copies other than the originator, multiple cases of patent linkage and the lack of a sustainable pricing and reimbursement level majority of life saving off patent medicines. Prices of generic medicines in Italy are low compared to other European countries. To contain pharmaceutical expenditure, pharmaceutical companies are currently forced to pay back in case of overspending, which disproportionally penalizes generic companies which are contributing with important savings for the healthcare system. Current demand-side policies do not successfully stimulate the use of generic medicines and the cultural blockage need a much more vocal communicational campaign. The current market environment surrounding the Italian generic medicines retail market (i.e., low prices, low volumes) threatens its long-term sustainability.
On the regulatory side important progresses have been implemented: the simplified generics P&R procedure has accelerated generics market entry, placing the country in a better competitive position compared to previous years. According to the Medicines Agency data, since its introduction in 2020, 89% of generics P&R applications have been filed following the new fast-track pathway, which in December 2021 was extended to new packs of reimbursed drugs that offer an increase or reduction in dosage when compared with presentations that are already reimbursed. The main result is a significant reduction in the timeline for P&R for generic medicines.
Lat but not least, an alarm was raised – European and national data in hand – by the 2023 edition of the Nomisma Observatory on the “Generic Drug system in Italy”, presented by Nomisma and EGUALIA, the Italian association member of Medicines for Europe, in November last year.
The data outline the generic medicines industry caught between the rock of prices and the hammer of production costs. A mix that makes long supply chains increasingly vulnerable, also burdened by dependence on a single source or geographical area.
One example of what the industry is experimenting: in Italy, in 10 years, for two drugs widely used – an antibiotic and an anticancer drug – the number of suppliers has decreased from 10 to 3 and from 18 to 2 respectively.
Urgent measures are needed to safeguard the “internal” biodiversity of the pharmaceutical sector and avoid an otherwise inevitable structural shortage of medicines, which are the same needed at EU level.
Could you provide an overview of the current state of the generic drug market in Europe from your point of view?
Generic medicines are the cornerstone of public health in Europe. If you think of an essential medicine, it is likely a generic. Our industry provides 70% of medicines dispensed in Europe, treating the most serious diseases like cancer, auto-immune diseases, heart disease, diabetes, pain management, and bacterial infections. The sector mobilised in unprecedented ways during the pandemic, where an array of medicines were needed to ventilate critically ill COVID patients. Since then, there has been a newfound appreciation for the importance of the generic medicines sector from governments and health authorities.
The generic medicines market has recovered after the Covid-19 pandemic. There is a steady return to historical (single digit) volume growth. In some therapy areas, there have been significant demand spikes such as for antibiotic medicines due to surges in infections across Europe and globally.
However, the generic industry has suffered from the high energy cost inflation and logisitic disruptions. This high inflation combined with the downward pricing policies applied to medicines, to achieve the lowest price possible, have been very disruptive for our industry. In many countries in Europe, quality-assured medicines that are essential to patients, are only worth a couple of cents per daily treatment. This is unsustainable for generic medicines and has a number of knock on effects. The most serious of which is medicines shortages caused by the consolidation of supply. These shortages affect patients in every pharmacy across Europe. On a broader level, these pricing policies have led to more and more companies looking to reduce the cost of production and outsource the production of medicines and active pharmaceutical ingredients (API) to other contractors around the world. This puts a strain on secure supply chains for essential medicines and this needs political attention and action.
Our call to each country in Europe is to adapt pricing policy practices to a higher industrial cost base and to think about new payment models for generic medicines that value the results they bring and their importance to society, and not on price only.
What are the pillars of the industrial strategy that Medicine for Europe proposes to strengthen the European off-patent drug sector and how do you believe these can improve the efficiency and competitiveness of the sector?
Medicines for Europe supports the establishment of an EU-wide critical medicines act to support the off patent medicines sector.
We see five necessary pillars:
- Legal guidance on medicines public procurement and security of supply.
A strategic EU reserve of essential medicines. - EU funds and State aid projects to incentivise investments in greener and more secure manufacturing processes for essential medicines and active pharmaceutical ingredients (APIs).
- Digitalisation of the regulatory system and more use of data to increase the visibility and solidarity of medicines allocation in a shortage. This should include the use of European Medicines Verification System (EMVS) data.
- Regulatory flexibility to harmonise pack sizes and presentations which will reduce unnecessary complexities in the supply chain.
- With these policies, we can leverage private sector investment and manufacturing know-how to restore strategic autonomy, efficiency and competitiveness in the generic medicines sector in Europe.
How do you think the European Parliament should specifically act in this context?
The European Union is currently doing a full review of the legislative framework for pharmaceuticals. The EU pharmaceutical legislation files had not been reviewed for twenty years. This major overhaul ranges from regulation, to intellectual property and to supply chains.
The off-patent medicines industry is fully engaged to ensure that reforms transform healthcare delivery and access for patients and to work with the European institutions, including the European Parliament to deliver on this reform. We hope for positive proposals from the European Parliament to ensure that generic and biosimilar medicines can enter markets at patent expiry, to modernise and digitalise the regulatory framework for more efficiency, and support off-patent medicines innovation, specifically in ‘value added medicines’. This allows for sustainable innovation that comes from repurposing and reformulating existing medicines, which has many benefits like reduced side effects or new treatment options with medicines that have a known and safe track record.
On the other hand, the European Parliment is working on a number of files to protect the environment and limit the advancement of climate change. We support investing in the future and we are committed to researching new, greener manufacturing techniques and processes. Our industy has to deliver on the environment while continuing to play its role in protecting public health.
We are concerned about some EU proposals, in particular on the, Urban Wastewater Directive which would introduce a tax on medicines consumption to finance new technology to remove all micro-pollutant components in waste water regardless of whether they originate from medicines or from other industrial goods. These taxes do not consider the complexity or potential impossibility of replacing pharmaceuticals with “greener alternatives” and do not take in to account that other sectors contribute much more to micropollutants in waste water. Our industry is investing in a greener future, but this system does not balance the public health value brought by the medicines industry and actually piles on the pressure on an industry already operating at thin margins.
Our ask to the European Parliament, but also the European Commission and Council is to develop policies and legislation for the future that is soundly evidence-based and has meaningful impact. We see some positive trends here on the EU pharmaceutical legislation and ground work for a Critical Medicines Act. But other files need some serious rethinking so that they ultimately do no more harm than good.
Covid-19 crisis has highlighted a number of critical issues in the pharma supply chain: how do you think the European Union can improve its strategic autonomy, particularly regarding the production and supply of off-patent drugs?
Spain recently held the Presidency of the European Council, and one of their main priorities was strategic autonomy and resilience in health. Their ‘Resilience2030’ report identifies the need to strengthen supply chains, manufacturing capacity and ultimately, open strategic autonomy in the field of both off patent medicines and API.
This is a completely aligned priority between EU heads of State and Medicines for Europe. We hope to see concrete action on this though, to advance the thinking and ambition to tangible results. This is where we see the need for a Critical Medicines Act, which can really get in to the details and support and strengthen the industry.
These reports give us really essential evidence for action, but we cannot forget the action part! These policies need support to come to life, they require collaboration from a number of actors in the health sector to advance. And that is worth acting for!
We are currently in discussions with the Commission on how to assess the situation with a study on industrial consolidation and dependencies for critical medicines. We would expect the next Commission to use that study to initiate an industrial strategy to reinvest in EU manufacturing of pharmaceuticals.
What strategies does Medicines for Europe propose to ensure that all patients in Europe have equitable access to off-patent drugs, particularly in areas with limited resources?
The off-patent medicines sector (generics, biosimilar medicines, value added medicines) exists to improve access to medicines. This is our ambition and we deliver. When off-patent medicines become available, more patients get the medicines they need (increased access) or get access earlier to the medicines they need, where previously they have been delayed or denied (timely access). The sector manages to deliver on this without impacting on pharmaceutical budgets. IQVIA data has shown quite convincingly that generic and biosimilar medicines can dramatically increase access to medicines when government policies de-restrict prescribing thanks to lower generic and biosimilar medicine prices. For example, in the UK around 40000 more rheumatoid arthritis patients could be eligble for biologic therapy5 thanks to biosimilar medicine access. A similar gap could be filled in Italy if certain conditions would be met.6 With generic medicines, our industry has contributed to significant access improvements – including making some medicines available to help prevent the development or the spread of a disease (ie. breast cancer development7 or the spread of HIV8).
But our job is not done: the incidence of non-communicable diseases (cancer, heart disease, diabetes, auto-immune diseases) is rising in Europe, the price of new medicines is extremely high and access gaps still exist, particularly in Central and Eastern Europe. For this reason, we are supportive of EU efforts to reduce the equity gaps between wealthy and less wealthy EU countries.
Our priorities to ensure our industry is strong and delivers for public health are to promote policies that:
- Promote competition in the medicines sector, ensuring off-patent medicines can be in hospitals and on pharmacy shelves on day one following the originator patent expiry.
- Build a modern, digitalised regulatory network, fit for the 21st century.
- Secure Europe’s medicine manufacturing and open strategic autonomy in health.
- Empower progress in healthcare by supporting sustainable innovation on off-patent molecules (value added medicine).
A question about my country, Italy: how is the situation of the generic drug market in Italy compared to that of other countries in the European Union and how could be improved?
Italy has been shown to be one of the countries with the lowest degree of generic penetration after the loss of exclusivity.
To improve value for money in pharmaceutical spending, Italy has implemented a series of measures to promote greater use of generics. Unless a reason is provided by the doctor to preclude substitution, the pharmacist must mention to customers if a cheaper equivalent product exists. If the doctor indicates that the medicine is ‘not substitutable’ or if the customer insists on purchasing the brand name, the patient must pay the difference between the price of the dispensed medicine and the cheapest alternative.
In 2022, generic medicines represented 14.8% of the expenditure (26,4% considering only reimbursed medicines) and 22% of community consumption (31,1% considering only reimbursed medicines). There is also a great variability across Italian regions, with generic medicines expenditure ranging from 43 to 19% of the overall off- patent medicines expenditure (mean value in 2021 was 30%) and a volume penetration following the same path. In 2022, this results in 1,1 billion euro of citizen co-payment corresponding to 18.3 euro per capita.
Fast market entrance of generic medicines in Italy is hindered by several factors: the large market for copies other than the originator, multiple cases of patent linkage and the lack of a sustainable pricing and reimbursement level majority of life saving off patent medicines. Prices of generic medicines in Italy are low compared to other European countries. To contain pharmaceutical expenditure, pharmaceutical companies are currently forced to pay back in case of overspending, which disproportionally penalizes generic companies which are contributing with important savings for the healthcare system. Current demand-side policies do not successfully stimulate the use of generic medicines and the cultural blockage need a much more vocal communicational campaign. The current market environment surrounding the Italian generic medicines retail market (i.e., low prices, low volumes) threatens its long-term sustainability.
On the regulatory side important progresses have been implemented: the simplified generics P&R procedure has accelerated generics market entry, placing the country in a better competitive position compared to previous years. According to the Medicines Agency data, since its introduction in 2020, 89% of generics P&R applications have been filed following the new fast-track pathway, which in December 2021 was extended to new packs of reimbursed drugs that offer an increase or reduction in dosage when compared with presentations that are already reimbursed. The main result is a significant reduction in the timeline for P&R for generic medicines.
Lat but not least, an alarm was raised – European and national data in hand – by the 2023 edition of the Nomisma Observatory on the “Generic Drug system in Italy”, presented by Nomisma and EGUALIA, the Italian association member of Medicines for Europe, in November last year.
The data outline the generic medicines industry caught between the rock of prices and the hammer of production costs. A mix that makes long supply chains increasingly vulnerable, also burdened by dependence on a single source or geographical area.
One example of what the industry is experimenting: in Italy, in 10 years, for two drugs widely used – an antibiotic and an anticancer drug – the number of suppliers has decreased from 10 to 3 and from 18 to 2 respectively.
Urgent measures are needed to safeguard the “internal” biodiversity of the pharmaceutical sector and avoid an otherwise inevitable structural shortage of medicines, which are the same needed at EU level.
