The Pharmaceutical Journal
Vol 274 No 7334 p101
29 January 2005

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Government proposes price cuts on branded generic medicines

Branded generic medicines should be reimbursed in the same way as generic medicines and not be covered by the Pharmaceutical Price Regulation Scheme (PPRS), a Government consultation proposes this week.

The Department of Health aims to stop manufacturers being able to achieve higher prices for generic medicines simply by giving them a brand name. However, such a move would have implications for community pharmacists, wholesalers and dispensing doctors.

A new PPRS scheme started on 1 January (PJ, 6 November 2004, p669 and PJ, 18/25 December 2004, p873) with the promise that there would be a consultation on branded generics. The consultation proposes that “standard” branded generics should no longer be covered by PPRS and instead be transferred to the new arrangements for the reimbursement of generic medicines.

A “standard” branded generic medicine is defined as: “An out of patent product to which the manufacturer/supplier, who is not the originator company, has applied a brand name and that is comparable to a true generic that is readily available.” There are currently 125 substances with such generics on the market. Modified-release branded generic preparations which the Medicines and Healthcare products Regulatory Agency requires to be identified by brand name will remain within PPRS. The proposals do not apply to branded products produced by the originator manufacturer that are out of patent.

“The reason for the proposed transfer is that the PPRS recognises the cost of research and development in the prices of branded medicines supplied to the NHS,” the consultation states. “The Government does not believe that it is acceptable for the NHS to pay a similar price to the originator branded product for branded generic medicines which have not incurred significant R&D and where a comparable true generic is available.”

Therefore, it proposes that the future reimbursement price of standard branded generic medicines will be the lesser of the revised Drug Tariff price of the comparable true generic medicine or the list price of the standard branded generic medicine. The consultation closes on 15 April 2005.

A consultation on future arrangements for reimbursement of generic medicines closed in October 2003 (PJ, 6 September 2003, p295) and an announcement on the outcome is awaited. However, this week’s consultation document states: “The revised Drug Tariff price will be determined by new arrangements whereby quarterly data will be collected from manufacturers and wholesalers and an index for determining the Drug Tariff price will be calculated from that data.”