When your doctor prescribes a generic drug, are you pleased, indifferent or affronted? Or are you perhaps uncertain and wondering what exactly generic means and how it will affect you?
Health authorities and insurers in most countries want to encourage physicians to prescribe generics because they are cheaper. Patients can benefit from that but also need to be assured that they are still getting the best medicine and not merely a cheaper form of second-class therapy.
What is a generic drug?
All drugs have a generic name. They can also have a brand name.
A generic name is that of the active drug substance. A brand name is the registered trademark under which the drug is being sold.
For example, Prozac is the brand of a drug whose generic name is fluoxetine. The generic name of Viagra is sildenafil. In most countries of the industrialised world, doctors may prescribe drugs either by their generic or their brand names.
As long as the active drug substance is protected by patents, only the patent holder’s own brand name or those that are licensed under agreements with the patent holder may be used. Once the patent has expired, other companies may register the drug with health authorities and sell it under their own brand names or by its generic name. In the UK, most generics are unbranded. In some countries generics are commonly branded, but the underlying trend is in favour of cheaper unbranded products.
The doctor’s choice: brand or generic?
New drugs are normally prescribed by their brand name. If the drug is covered by a patent, the pharmacist will also dispense the brand, even if the physician has actually prescribed the drug by its generic name: patented drugs are in effect single-source brands.
After patent expiry, generics can enter the market and compete with the original brand. Generics have no medical advantage over brands. Their appeal is that they are cheaper. For branded drugs with high sales, many generic competitors will enter the market after patent expiry. Generics will offer a price advantage by undercutting not only the brand but also one another.
At this point, the question arises whether your doctor will continue to prescribe the original brand or switch to a generic version of the same drug.
Doctors’ attitudes differ greatly from country to country. Today, most health authorities encourage doctors to prescribe generics; but some still put obstacles in the way of generic entry into the market, for example by insisting on lengthy and costly registration procedures. Some health care payers put pressure on doctors (with incentives or penalties) to prescribe generically. Others take the decision out of the doctor’s hands by allowing (or even requiring) the pharmacist to substitute a cheaper generic in place of the prescribed brand.
Generic substitution means that the pharmacist switches the physician’s prescription by dispensing a generic instead of the prescribed brand. Depending on national or state regulations, the pharmacist may do so either with or even without the physician’s prior consent, although there is usually a box that the physician can tick if in his or her opinion the brand should be dispensed as prescribed.
In some countries, patients may refuse a generic switch; in others, patients who insist on the prescribed brand may be asked to pay the price difference between it and an available generic.
The main reason why the authorities and health care payers support and encourage generic prescribing and dispensing is financial: generics save money.
In which countries are you most likely to receive a generic prescription?
Countries where more than half of all prescriptions were estimated* to have been generic in 2009 or 2010 include:
In the European Union:
Bulgaria, Czech Republic, Cyprus, Denmark, Estonia, Germany,
Hungary, Latvia, Lithuania, Netherlands, Poland, Romania,
Slovakia, Slovenia, UK.
Australia, Canada, China, Croatia, India, New Zealand, Russia(?),
Serbia, Turkey, USA and many emerging economies in Asia
and Latin America.
*Miscellaneous sources and author’s estimates. Not all sources state the precise basis of their volume estimates which can be as a percentage of prescriptions or of standard unit packs, and may be defining the ‘market’ as total prescriptions or only retail prescriptions.
Among the ten largest pharmaceutical markets in the world where generic penetration has been rising but was still well short of 50% by volume in 2010 were Japan, Brazil, France, Italy and Spain.
Developments in the U.S. (nationally the largest pharmaceutical market in the world by sales value) illustrate the interaction of strong patent protection for new medicines with deep market penetration by generics after patent expiry. In 2011, 80% of all U.S. prescriptions were reported to have been generic, but competitive pricing meant that generics were responsible for only 27% of all prescription costs (13% branded, 14% unbranded). Twelve years earlier, the corresponding levels of generic market share in the U.S. were about 41% of prescriptions and 10% of sales value.
The massive advance of generic market penetration in the U.S. is at the expense of prescriptions for branded medicines whose patent protection has expired. Recent years, in particular, have seen the expiry of an exceptionally high number of ‘blockbuster’ medicines, a trend that will continue before eventually slowing down materially from 2016 onwards.
In the U.S., the growing but modest generic share by sales value is attributable partly to their low prices and partly to the ‘American compromise’ whereby patented medicines enjoy pricing freedom and high prices in order to encourage pharmaceutical innovation in which the U.S. continues to lead the world, both in chemical synthesis and in biotechnology.
Are generics ‘first class’ medicine?
That generics are a cheap form of medicine is indisputable. Whether they always represent good medicine or the best medical value is more controversial. There are four main questions to be considered:
1 – Are generics safe?
2 – Is their quality as good as that of the corresponding brand?
3 – Is your doctor or pharmacist wise in switching your usual brand to a generic?
4 – Are generics as effective as newer, medically innovative and more costly drugs that your doctor could prescribe for the same illness?
Provided you live in a country with strict regulatory control of medicines, the answer to the first two questions is “YES”: generics are safe and their quality is not inferior. Unregulated Internet trading of prescription drugs from sources that are outside the grasp of national regulatory control could cast doubt on their safety and quality. However, that applies not only to generics but also to counterfeit brands. That said, generics from respectable suppliers are safe and of good quality.
The answer to Question 3 is less clear-cut. Doctors are sometimes reluctant to switch your prescription from a branded drug that ‘works’ and has never given you any trouble, to an equivalent generic, even though that generic is chemically and pharmacologically identical with the brand. The doctor may be quite happy to prescribe the generic to a new patient, but may be reluctant to switch existing patients on the principle “if it ain’t broke……” – Why take a chance that you will come back and say “Doctor, I used to have the green tablet: this one is white, and I don’t think it works quite as well….?” The doctor will want you to stop worrying, even though you may just be imagining a problem. On the other hand, the doctor will also be under pressure not to exceed his budget for prescription drugs, or the pharmacist will be urged by the authorities to substitute a generic for the brand. Finally, if you are a new in-patient in hospital, you will probably never be aware of the fact that, in many countries, hospital pharmacists regularly switch brands to generics according to hospital rules and budgets, because you will not actually have seen your prescription.
Undoubtedly, the trend in most countries is to increase generic prescribing and dispensing whenever possible, certainly for new patients but also increasingly by switching. Most patients will accept that this is a reasonable economy measure and that it will not harm them.
There are exceptional situations for some drugs where it is difficult or impossible to produce a generic that is in every respect identical with the original brand in terms of its availability within the body. That can lead to serious adverse reactions in some patients. Three old-established drugs where brands and generics are not regarded as automatically ‘switchable’ are digoxin (for heart failure), phenytoin (for epilepsy) and theophylline (for asthma).
Biological medicines: a special situation
Doubts about a generic version being identical and clinically interchangeable with the original brand have become scientifically and politically prominent with the recent onset of patent expiry of major recombinant biological medicines that were first launched in the 1980s and were recognised as highly innovative: for example, epoetin alfa (for treatment of anaemia in kidney failure, or after chemotherapy); filgrastim (for treatment of neutropenia in various types of cancer therapy); and interferon beta (for multiple sclerosis).
The traditional approach to generic prescribing and brand substitution after patent expiry is now widely seen as unrealistic for biologics. In recombinant biotechnology, complex therapeutic protein molecules are not as accurately reproducible as small-molecule drugs obtained by chemical synthesis. Tiny variations in biotech processing may or may not produce changes in clinical performance which may be beneficial, insignificant, or adverse.
In other words, the answer to the first three questions about generics (their safety, quality and interchangeability) cannot be a simple, affirmative ‘Yes’ for biologics. Bioequivalence has to be proven. That is why the original description of such medicines as ‘biogenerics’ has now been superseded by the expression ‘biosimilars’ or (in the U.S.) ‘follow-on biologics’. There are even efforts to produce so-called ‘biobetters’: follow-on products that are clinically superior to the patent-expired pioneer.
So biosimilars are not generics. Their advent has created the need to devise new legislation for regulatory control of safety, efficacy and quality before such products can be prescribed after patent expiry of the originals.
In the European Union, the first official guideline for regulatory control of biosimilars was issued by the European Medicines Agency [EMA] in 2006. In essence, it requires manufacturers to demonstrate that their biosimilar product “is representative of the active substance present in the reference medicinal product” (normally the original brand which must have been authorised for marketing in the EU).
Unlike the procedures for traditional small-molecule generics which can obtain marketing approval by ‘referring’ to the clinical data originally submitted by the former patent holder, biosimilar applicants in the EU have to carry out some clinical work of their own in order to demonstrate that safety, efficacy and quality are comparable with the reference product. The additional costs involved in such regulatory requirements imply that biosimilars have much less scope for deep price cuts below those of the reference brands than is customary for small-molecule generics. This, together with initial hesitation by doctors to prescribe, explains why market penetration of biosimilars in Europe has been slower than had originally been expected by public sector payers in their search for cuts in expenditure.
The U.S. is lagging behind Europe: it was only in March 2010 that the Biological Price and Competition Innovation Act [BPCI] was passed by Congress; nearly two further years elapsed before the Food and Drug Administration issued draft guidelines for biosimilars in February 2012. These had not been finalised by late-2012, and “no biosimilars have been approved or even filed under the new pathway”.
A topic of major political contention in the U.S. is the proposed length of ‘data and market exclusivity’ of the original biotech brand before a biosimilar can be marketed. Data exclusivity refers to clinical and other research data submitted to the regulatory authorities by the original applicant. The production of such data involves high levels of expenditure. Its ‘exclusivity’ represents the number of years (usually from the date of market introduction) during which the information remains the exclusive property of the originator and cannot therefore be used by biosimilar applicants as reference material for their own purposes without the consent of the owner.
In Europe, for most biosimilars launched since late-2005, this period has been 8 years data exclusivity + 2 years market exclusivity + 1 year for a new indication. In the U.S., the BPCI Act set an exclusivity period of 12 years which the Obama Administration has proposed to cut to 7 years. The outcome was still unclear at the beginning of 2013.
Meanwhile, Europe has advanced further with a new set of guidelines for biosimilars containing monoclonal antibodies which came into effect on 1st December 2012.
That may sound obscurely technical, but read on:
it could soon directly affect you or someone you know.
That is because biological drugs containing monoclonal antibodies are among the leading prescription medicines for serious illnesses like rheumatoid arthritis, psoriasis, Crohn’s Disease, ulcerative colitis, a variety of cancers and eye diseases; they are also being developed for many other conditions including the rejection of organ transplants and perhaps Alzheimer’s Disease. Some of the leading drugs in this group, costing health services billions in annual expenditure, will shortly begin to lose their patent protection and provide opportunities for biosimilar versions at lower prices in countries where a ‘pathway’ for their entry exists.
Overall, biosimilars will by comparison with small-molecule generics involve much higher development cost. Consequently, their capacity for price cutting will be lower, at least initially. Health care payers (including YOU – the patient) will nevertheless welcome any reductions in the high cost of biological medicines as long as their safety, efficacy and quality are guaranteed.
Your medicine: the cheapest or the best?
This is much the most difficult and perhaps the most important question for you as a patient:
Are generics as effective as the newer, medically innovative and more costly drugs
that your doctor could prescribe for the same illness?
This is where the conflict between the best medicine and saving money is sharp. New, innovative medicines have transformed drug therapy during the last eighty years and saved the lives of millions from bacterial infections (like pneumonia, meningitis, and after surgery) and viral attack (like HIV/AIDS). They have also enormously helped patients (especially elderly patients) to live more comfortably with chronic conditions like heart disease, arthritis, ulcers, diabetes and depression.
Such innovative drugs are not cheap and should not be expected to be cheap in the industrialised world. They are the result of costly research and development with high risks of product failure before a new drug can be proven safe and effective and launched for prescription in hospitals and/or in the community. Pharmaceutical patents were first introduced in the 19th Century in order to encourage this type of research and development by rewarding inventors for a limited period of exclusivity, and with the express objective to stop the piracy of intellectual property.
Today’s and tomorrow’s problems can be stated very simply: Who is to pay for all this?
The state? the insurer? the employer? the employee? or you – the patient – when you hand your prescription to the pharmacist?
The health care systems of various countries have tried to find different answers to the question ‘Who Pays?’, but there is general agreement that the health benefits that innovative drugs bring to medicine and patients need to be weighed against their cost and how that cost is to be shared.
That is where the conflict between prescribing cheap generics or costly innovative drugs comes to a head. The budget of health care payers will obviously benefit if old generics are prescribed and new medicines reserved only for exceptional cases. But will you, the patient, benefit? Will your health be maintained or improved as effectively with a generic that has been prescribed for the past 30 years as with the latest drug? That is not a conflict between brand and generic (as in Questions 1, 2 and 3, above) but between traditional and innovative remedies.
In the past, your problem as a patient was that you were not really in a position to judge whether your physician’s prescribing choice was the best for you. The majority of older patients were brought up to accept the doctor’s decision without question. They were not even told what drug was being prescribed, but handed a bottle labelled “The Medicine” – and that was that.
That was the past. Today, the situation has changed radically. There are self-help groups and patients’ advocacy groups for most diseases in the USA, in Europe, and increasingly in the emerging economies. There is the Internet. You can, if you wish, become fairly expert in the range of drugs that are available for the treatment of your illness. Above all, you can seek independent advice from advocacy groups whose pharmaceutical knowledge may be more up-to-date than that of physicians who have not taken refresher courses on Recent Advances in Pharmacology.
The idea is not that we should all become our own doctors or second-guess the professionals. It is simply that we have a right to understand whether we are being fobbed off with cheap, obsolete, second-class medicine or whether cheap happens also to be best – which in many cases it may well be.
You and generic medicines
Generics are here to stay. Increasingly, your physician will prescribe them in place of the original brand, either willingly or under budgetary pressure from health authorities. How should patients react?
According to a Harris Poll in the U.S. in December 2008, nearly half of those who agree to purchase a generic would be willing to pay up to US$10 for 30-days supply, and a further third would be willing to pay between $10 and $25 out-of-pocket.
Harris Poll also asked: “If you had a choice between getting a brand name prescription drug or a generic drug, how often would you choose one over the other?”
The answer was that 81% would choose a generic drug more often, compared with only 19% favouring brands more often. Indeed, 40% of respondents would always choose a generic while only 4% would always prefer a brand.
More recently, in a 2012 survey in the U.S. by Deloitte, as many as “34% of prescription medication users switched to generics for cost reasons” during the past year.
These are clear indications that, in a country where the patient pays or contributes out-of-pocket to the cost of drug therapy, generics have been accepted and, being much cheaper, are widely preferred to identical branded originals. That would not have been the case thirty years ago when brand loyalty was strong and generics were still under suspicion of being ‘inferior’.
Your attitude? Common sense suggests that it will be determined on the one hand by your circumstances and on the other by your alertness. Circumstances will influence the policy of health care payers and how much you (as distinct from your insurer) will be expected to pay out of pocket if you opt for the brand instead of the generic.
Common sense will also help to convince you that, for the majority of older drugs in countries with strong regulatory control, generics will be as safe and as effective as brands. Moreover, common sense will scare you away from ‘cowboy’ generics obtainable from suspect sources (which may include unknown Internet suppliers in other countries).
Alertness is your greatest asset in making sure that cheap generics are not being prescribed in preference to better, costlier innovative drugs that would be more effective in maintaining or improving your health.
There is no substitute for being vigilant and becoming more knowledgeable, or getting to know independent advisers who know about the ‘latest and best’ in a health care system that naturally gravitates towards the cheapest. Be alert!
The author acknowledges original publication of this article by the Novartis Foundation for Gerontology in 2000.
This revised and updated version © Heinz Redwood 2013
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 IMS Institute for Healthcare Informatics, “The use of medicines in the United States: Review of 2011”, April 2012
 IMS America, as reported in Pharma Pricing & Reimbursement 4(5), 111, May 1999
 Carlen, “Kosten sparen mit Generika?”, Schriftenreihe No. 47, Schweizerische Gesellschaft für Gesundheitspolitik, Muri, Switzerland 1995
 Biosimilars are widely available in countries where the earlier biotech medicines were not protected by basic patents, for example in India, China and South Korea (World Health Organisation, “Informal Consultation on regulatory evaluation of therapeutic biological and medical products”, Geneva 19-20th April 2007).
 European Medicines Agency, CHMP, “Guideline on similar biological medicinal products containing biotechnology-derived proteins as active substance: Quality Issues”, London 22nd February 2006
 Scrip Intelligence, “Biosimilars: boom or bust?”, 30th November 2012, page 6
 EMA, “EMA procedural advice for users of the centralised procedure for generic/hybrid applications”, Question 12, January 2012
 EMA, “Guideline on similar biological medicinal products containing monoclonal antibodies – non-clinical and clinical issues”, 30th May 2012
 Harris Poll, “Substantial increase in public preference for generic over brand name drugs”, Harris Interactive, online 26th January 2009
 Deloitte, “2012 Survey of health care consumers”