Use of Generic Drugs and Effects of the Reference Price System in Sweden

Abstract

A survey of the use of generic drugs in Sweden was performed. About 30% of the pharmaceuticals used in Sweden are generics. The market share for generics in 1996 was 70% in volume and 38% in value. It is difficult to introduce new generic drugs in Sweden. Within five years of introduction, almost 50% of all generic drugs were taken off the market.

The effect of the reference price system introduced in 1993 was studied. In this system, prescribed drugs were reimbursed to a maximum price of 10% above the price of the least expensive equivalent drug, which usually is a generic equivalent. An immediate effect of the introduction of the system was that most original pharmaceuticals out of patent and high priced branded generics reduced their prices to the reference price level. It was concluded that from 1993 to 1996 the system led to a total cost reduction of $100-$125 million (800–1000 MSEK) or about 1% of the total drug expenditure.