Strategic Issues in the Development of a Generics Market: Lessons from Spain and the Netherlands

Abstract

The authors have carried out a comparative study between two countries with a huge difference in terms of development of the generics market: Spain and the Netherlands. The main conclusion of this paper is that, currently, the most important factor for the development of a generics market is the existence of a suitable regulatory structure (explicit and implicit, formal and informal rules) adapted to the characteristics of each country and limited by the arguments that the pharmaceutical industry (branded and generics companies) can support in order to control the pharmaceutical invoice and, as a consequence, healthcare expenditure. The current development models are expensive and complex and, moreover, do not contribute to the consolidation of their development, given that they are influenced by agents and variables that are certainly difficult to control. If the objective is to develop a generics market because it will contribute in a positive way to reducing the public pharmaceutical expenses there is an urgent need to act on end consumers, eg patients, to enrich their perception of generic medicines.

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References

It is exploratory research. Therefore, a qualitative technique was used (personal semi-structured interviews with agents and experts of the system) as proposed by authors such as Nogales

Fernández

(2003)¹¹ and Hair et al. (2003).¹² The target sample was a group of agents of the healthcare system. The research setting was Spain and the Netherlands. The sample size was 38 and the date of the field work was September 2004 to February 2005.

Until 1992, patent protection permitted only chemical process patents, not chemical entity patents. There is no doubt that it gave inadequate protection against copying active ingredients. The result was that a substantial part of the market in Spain is still supplied by so-called copy products, eg ‘me too’ (Gutiérrez de Mesa y Muñoz, 2004;¹³ Gutiérrez de Mesa, 2004).¹⁴.

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There is a preceding situation in Spain that supports such an argument. The Spanish army uses medicines without brand (it could be considered as a curious antecedent of the current generic medicines) with the objective of cutting costs given the enormous volume it purchases. Those products are known by civilians for the greater therapeutic effects that people confer upon them.

It must be said that Spanish drug policy is being reviewed at this time by the new government of President Zapatero.

For further details, see the complete work of Whitaker Sánchez (2001)¹⁵ and their arguments about co-payment. From the authors’ point of view, co-payment is one of the most effective measures to control the demand on Pharmaceuticals in the long term. The case of Spain, one of the European countries with highest levels of co-payment, is not representative given that 75 per cent of the total number of prescriptions is for pensioners who have free access to medicine and only 25 per cent of the prescriptions are for workers who have a 40 per cent co-payment.

10.

Nevertheless, it must be pointed out that there are some cost containment measures taken by both countries in the past 15 years whose only impact has been to increase the governmental financial resources. That is the case in Spain of the Agreement of 1996 and the one from 1998 called ‘contributions of the pharmaceutical industry’ by which the industry agreed to pay the state a ‘special tax on its profits’ of €180m in 1996 and €390m in 1998 (Whitaker and Sánchez, 2001).¹⁵ In the Netherlands, there is the case of the so-called ‘claw back’ whereby pharmacists have to offer an effective discount of 6.80 per cent on the price of the drug since patients have no co-payment. Consequently, the measure just implies a direct increase in the government's financial resources.

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(2003) ‘Manual de Investigación de Mercados’, ESIC Editorial, Madrid, Spain.

12.

Hair

Bush

Ortinan

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de Vázquez

Gutiérrez Mesa E.

Muñoz Ruiz

(2004) ‘Study of the National Innovation System on the Spanish (bio)pharmaceutical sector’, available at www.oecd.org/sti/innovation.

14.

de Vázquez

Gutiérrez Mesa E.

(2004) ‘De la Destrucción Creativa a la Cooperación Creativa en la Industria (Bio)farmacéutica: Un Análisis Económico-contable’ PhD thesis, Universidad Complutense de Madrid, Spain.

15.

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Sánchez

P. L.

(2001) ‘Diagnóstico y Perspectivas del Gasto Farmacéutico en España’, Informe Realizado por NERA para Farmaindustria, Madrid, Spain.