GENERIC MEDICINES IN EUROPE An Overall Assessment

Conference on Generic Drugs In Turkey and the EU IEIS – Ankara 2 June 2005 GREG PERRY

EGA 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)

On the Horizon Bio-Similar Products

Product

EPO insulin G-CSF HGH beta interferon alpha interferon

2001 Sales ($bill)

6.4 4.0 2.1 2.0 1.9 1.7

global Patent (EU) expiry Indication

2005 2005 2006 2002 2003 2002 renal anaemia diabetes neutropenia growth deficiency multiple sclerosis hepatitis C

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

250 225 200 175 150 125 100 75 50 Employment Working age Elderly 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

EXPENDITURE ON HEALTH CARE IN RELATION TO AGE

Source: Economic Policy Committee (2001) “Budgetary challenges posed by ageing populations United Kingdom 20 15 France A ust ria Germany B elg iu m Finland Sweden Spain Netherlands Italy United Kingdom 10 Denmark Spain 5 0 France Au st ria 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

Economic impact

In poor countries drugs are largest household and second largest public expenditure for health Pharmaceutical spending, as % of total health spending

Greece Germany Italy France Spain Denmark UK United States Netherlands Norway

Developed countries (7 - 20%)

Bulgaria Czech Rep.

Hungary Croatia Poland Estonia Slovenia Lithuania Mali Egypt China Indonesia Thailand Tunisia Jordan Argentina South Africa

0 10 20 30 Transitional countries (15 - 30%) Developing countries (24 - 66 %) 40 50 60 70 WHO - EDM

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

70 30 20 10 0 60 50 40 C V

Originals

C V

Generics

3 FOUNDATION STONES FOR AFFORDABLE MEDICINES

Access to Affordable Medicines

EU Review

Efficient Regulatory System

National

Prescribing Dispensing Practices Balanced Patent System

SPC/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.

2 years Market Excl.

(1 year ME) Marketing Authorisation of Reference Product

Generic Application

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

Launch of generics

if no patent, no +1 year Additional 1 year Market Excl. if new indication registered by originator during first 8 years

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 MAX TIME (Weeks)

UK GR M L DE CZ FR IE CY NL DK P L SK B E SV LV ET CR B U SW IT ES A U P T RO LT 0 5 10 15 20 25 30 35 40

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

Europeans have a right to affordable 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. European Generic medicines Association

“Making medicines affordable and industry competitive”