Ireland - How is the recession affecting the pharmaceutical market environment?

The economic downturn has led to reductions in healthcare spending, necessitating cost-saving measures such as reference pricing.

As a result of the economic downturn, the government faces an extremely tight financial operating environment in the next few years. Ireland needs to make savings of over 1.0 billion euros (US$1.4 billion) in 2010, out of a health budget of 16.0 billion euros (US$22.2 billion). In order to do this, cost-saving measures will be implemented wherever possible.

Firstly, reference pricing will be introduced in 2010. Under the new system, only the reference drug selected by the HSE from a group of treatments will be reimbursed. In addition, although reimbursement for the over 70s was more or less automatic between 2001 and 2009, a means test has now been introduced, in attempt to slow consumption.

In February 2010, the prices of nearly 300 branded medicines were cut by 40%. It is anticipated that the move will make savings for the government of up to 94 million euros (US$130 million) over 12 months. The 40% reductions mean that many patented drugs are now cheaper than their generic versions.

Another measure currently being considered by the government is to impose prescription charges on the country’s 1.4 million medical card holders, of around 50 cent per item prescribed. This would work in two ways; by raising money and discouraging the over-prescribing of medicines. The Prime Minister claimed in November 2009 that this would generate savings of around 30 million euros (US$41 million) a year.

In addition, the Irish Medical Organisation (IMO) is calling for savings to be made through increased generic prescribing and reducing prices of generics. There is vast potential for savings in this area, as use of generics is currently very low. However, this is to try and support manufacturers based in the area, and so this is not likely to be a priority area for cost savings.

Further reading - A detailed analysis of the Irish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Ireland (published May 2010)

Finland - How is the Finnish government attempting to contain the rising costs of pharmaceuticals?

A reference price system has been introduced in an effort to reduce the use of more expensive pharmaceuticals.

Several cost-containment measures have been implemented in the past few years. Generic substitution was first implemented in April 2003 and has generated considerable cost savings since then. In January 2006, the government followed the example of other EU member states, and for the first time statutorily cut the approved wholesale prices for all reimbursable pharmaceuticals by 5%.

The most recent measure is the introduction of a reference price system for medicines, which came into force in April 2009. The new system is expected to reduce the use of more expensive pharmaceutical products, thus lowering the costs for patients and reducing the pressure to raise health insurance payments. A recent study has estimated that the reference price system will reduce the costs of medicines in Finland by 10%, while total pharmaceutical expenditure is also expected to fall by 5%. However, the effect of the reference price system on medicinal costs may be less significant than would normally be expected due to the strong price reductions resulting from generic substitution.

Also in April 2009, generic substitution was extended to include medicinal products protected by analogy process patents, which were previously excluded. This will result in further cost savings, but patented original products are entering the generic price competition phase several years before product patents expire in other European countries.

Further reading - A detailed analysis of the Finnish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Finland (published April 2010)

Ireland - How will the aftermath of recession affect the pharmaceutical market?

The economic downturn has led to reductions in healthcare spending, necessitating cost-saving measures such as reference pricing.

As a result of the economic downturn, the government faces an extremely tight financial operating environment in the next few years. Ireland needs to make savings of over 1 billion euros in 2010, out of a health budget of 16 billion euros. In order to do this, cost-saving measures will be implemented wherever possible.

Firstly, reference pricing will be introduced in 2010. Under the new system, only the reference drug selected by the HSE from a group of treatments will be reimbursed. In addition, although reimbursement for the over 70s was more or less automatic between 2001 and 2009, a means test has now been introduced, in attempt to slow consumption.

Another measure currently being considered by the government is to impose prescription charges on the country’s 1.4 million medical card holders, of around 50 cent per item prescribed. This would work in two ways; by raising money and discouraging the over-prescribing of medicines. The Prime Minister claimed in November 2009 that this would generate savings of around 30 million euros a year.

In addition, the Irish Medical Organisation (IMO) is calling for savings to be made through increased generic prescribing and reducing prices of generics. There is vast potential for savings in this area, as use of generics is currently very low. However, this is to try and support manufacturers based in the area, and so this is not likely to be a priority area for cost savings.

Further reading - A detailed analysis of the Irish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Ireland (published January 2010)

Italy - Will generics continue to gain greater acceptance in the Italian market?

A number of high profile drugs have lost patent protection; will the Italian generic market take off as a result?

The Italian pharmaceutical market is expected to remain one of Europe’s slower growing markets over the next five years. Growth will continue to be constrained by low economic growth, cost containment measures for reimbursable products, reference pricing and an expected expansion of the generics market due to patent expiry on several high volume products.

On the plus side, this may be good news for the generic industry. Even by southern European standards, the Italian generics market is small. Excessive price regulation, long national patent supplementary protection, a lack of incentive distribution margins, confusion between branded and unbranded generics, a perception of generics as second-class drugs and the empowerment of doctors to stop generic substitution are all factors that have traditionally constrained the unbranded generic sector.

The combination of high profile drugs losing patent protection and the need to reduce costs should provide a boost to the generic market. In addition to the blockbusters that have lost patent protection in Italy in the last couple of years, a large number of medicines will lose their national supplementary certificates during 2010. Consumer perception of generics and generic awareness continue to improve. The Italian generic market is also being consolidated by leading generic producers in the country.

However, the generic industry has been coming under increasing pressure from manufacturers of branded products, which have begun to implement price cuts to minimise loss of market share. Significant price reductions have been closing the gap between off-patent brands and unbranded generics. The generic industry still has some way to go, but anticipates continued growth in market share and a progressive alignment with the rest of Europe.

Further reading - A detailed review of the Italian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Italy (published January 2010)