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The European Journal of Health Economics
Published in: The European Journal of Health Economics 2/2021

Open Access 01-03-2021 | Original Paper

Does NICE influence the adoption and uptake of generics in the UK?

Authors: Victoria Serra-Sastre, Simona Bianchi, Jorge Mestre-Ferrandiz, Phill O’Neill

Published in: The European Journal of Health Economics | Issue 2/2021

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Abstract

The aim of this paper is to examine generic competition in the UK, with a special focus on the role of Health Technology Assessment (HTA) on generic market entry and diffusion. In the UK, where no direct price regulation on pharmaceuticals exists, HTA has a leading role for recommending the use of medicines providing a non-regulatory aspect that may influence the dynamics in the generic market. The paper focuses on the role of Technology Appraisals issued by the National Institute for Health and Care Excellence (NICE). We follow a two-step approach. First, we examine the probability of generic entry. Second, conditional on generic entry, we examine the determinants of generic market share. We use data from IQVIA British Pharmaceutical Index (BPI) for the primary care market for 60 products that lost patent between 2003 and 2012. Our results suggest that market size remains one of the main drivers of generic entry. After controlling for market size, intermolecular substitution and difficulty of manufacturing increase the likelihood of generic entry. After generic entry, our estimates suggest that generic market share is highly state dependent. Our findings also suggest that while NICE recommendations do influence generic uptake, there is only marginal evidence they affect generic entry.
Footnotes
1
Data Exclusivity prohibits the re-use of clinical trials data, and thus generics cannot be validated by the relevant regulator—the Food and Drugs Administration (FDA) in the US and European Medicines Agency (EMA) respectively. Market exclusivity prohibits the copy and marketing of the medicines during the exclusivity period—for instance, in Europe, until after 10 years a drug cannot be placed in the market even if it has received marketing authorisation.
 
2
There are also additional incentives for orphan medicinal products and paediatric investigations of medicinal products, which are beyond our scope—but noting that such incentives obviously will delay entry of generic medicines.
 
3
Bioequivalence means that the generic medicine produces the same levels of the active substance in the body as the reference medicine.
 
4
For instance, the European Commission competition inquiry of 2009 into the pharmaceutical sector led to regular monitoring exercises to better understand factors that delayed generic market entry to the detriment of the European consumer (https://​ec.​europa.​eu/​competition/​sectors/​pharmaceuticals/​inquiry/​). More recently, it was argued generic policies vary greatly between countries (see the 2018 Copenhagen Economics report https://​ec.​europa.​eu/​docsroom/​documents/​29521), and yet many OECD countries do not fully exploit the potential of generic entry [5].
 
5
Examples of demand-side policies aimed at exploiting the potential of off-patent medicines include mandatory generic prescribing, incentives (financial and non-financial) for physicians to prescribe generics, incentives for pharmacists to substitute branded products for generics, and education programmes to encourage consumer uptake, which collectively will help drive generic uptake and competition. Supply-side policies include pressure on generic prices, in the form of internal reference pricing, price capping or relative price with respect to the branded product, preferential and shortened licensing and/or registration review of product dossiers for generic products [5, 25, 26, 50].
 
6
This was the case of statins, for instance, for which Technology appraisal guidance (TA94) was issued in 2006 but later updated and replaced in its Clinical Guideline CG181 (Available at: https://​www.​nice.​org.​uk/​guidance/​cg181/​chapter/​1-Recommendations).
 
7
It is worth noting that these references look at the agreement between agencies for particular drugs and may not accurately reflect the concordance in recommendations between UK agencies for the drugs we study. For instance, [32] examines agreements in decisions for orphan drugs, whereas [40] look at cancer drugs.
 
8
We are unable to use information after 2013 due to a change in how IQVIA data was collected.
 
9
In the UK, there is no price regulation for branded products, instead pharmaceuticals can set prices under the Pharmaceutical Price Regulation Scheme (PPRS), a profit control system, that limits the return on capital and return on sales to be up to 21% and 6%, respectively
 
10
In the documents that put forward the new 2005 regulation, the DH stated that “where there is effective competition in respect of any given generic medicine, the DH would not interfere in the operation of that market for that medicine” (page 7, [15]); however, the DH also stated they would intervene if the normal market mechanisms failed to ensure that the NHS paid a fair price for the medicine(s) concerned [15]. Further regulation in the UK has given more controlling and monitoring powers to the DH, including 2017 Health Service Medical Supplies (Costs) Act. It should be noted that currently further changes to the functioning of the off-patent market in the UK are being considered.
 
11
The variable on NICE TA’s was collected by assessing coverage of patients recommended to have access to the medicine, as stated in the decision, relative to the medicines license/scope of the appraisal. Using a theoretical example if 100 patients could potentially be recommended to have access to the medicine and NICE, in fact, recommend that only 80 should have access, then the decision is defined as “restricted”. Such a restriction is invariably based on specific clinical characteristics. For a discussion of restricted decisions and specific examples see [38]. Similarly, if NICE recommended the use of a medicine by all relevant patients, the decision was defined as “recommended”.
 
12
Our variables are aggregated at the molecule level and therefore any behaviour of specific formulations can’t be accounted for in detail. A common explanation will be cases where a particular formulation was classed as Category C being type of products “which are not readily available as a generic, where the price is based on a particular proprietary product, manufacturer or as the case may be supplier” (https://​psnc.​org.​uk/​dispensing-supply/​endorsement/​how-the-price-change-mechanism-works/​).
 
13
In Column (3) we exclude molecules Calcipotriol, Fentanyl, Ipratropium Bromide and Salbutamol. In addition to these molecules we further exclude in Column (4) Cilazapril, Fosinopril, Galantamine and Trandolapril.
 
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Metadata
Title
Does NICE influence the adoption and uptake of generics in the UK?
Authors
Victoria Serra-Sastre
Simona Bianchi
Jorge Mestre-Ferrandiz
Phill O’Neill
Publication date
01-03-2021
Publisher
Springer Berlin Heidelberg
Published in
The European Journal of Health Economics / Issue 2/2021
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI
https://doi.org/10.1007/s10198-020-01245-1

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