Oxstones Investment Club™In 2010 the generic drug market in Central Europe increased by 12%, whereas that of original medicines grew at a rate of around 10% in euro terms, according to information contained in the latest report by PMR, a research and consulting company, entitled “Generic and innovative drug market in Central Europe 2011”. In 2011 and 2012 the trends which boosted generic sales in 2010, including price pressure and other restrictive measures, will continue. This is why the generic market will develop more rapidly than its original counterpart during these years.
Generic growth rate will exceed that of originals
No significant increase in the share of innovative medicines is expected in the very near future, because in 2009 and 2010 governments in Central European countries (Poland, Romania, Bulgaria, Hungary, Slovakia and the Czech Republic) were aiming to boost generic consumption and therefore limit national spending on more expensive innovative medicines.
For example, in Bulgaria the innovative pharmaceutical manufacturers (24 companies belonging to the Association of Research-Based Pharmaceutical Manufacturers) agreed to offer a 5% discount on all drugs for which the NHIF pays between June and December 2010. If all pharmaceutical manufacturers adhered to this agreement, this would save the NHIF approximately BGN 1.5m (€0.7m) per month.
In the Czech Republic in 2009 the State Institute for Drug Control (SUKL) concentrated on changes to ex-factory prices for reimbursement medicines. Maximum prices were reduced for 390 SUKL codes, and increased for 190 SUKL codes. The SUKL expected to save CZK 2.4bn (€94.9m) by means of the revision of the prices of 1,270 reimbursed drugs introduced on 1 April 2010. As a result of this, health insurance companies would pay the same amount for drugs with the same active ingredient, adjusted to the price of the cheapest alternative.
Plans announced for future changes are in step with these prior activities. According to PMR estimates, the generic drug market will, therefore, develop at a CAGR in excess of 6% between 2011 and 2013, whereas original drugs will grow at a rate of 4% during the period in question.
Poland: will legal regulations hamper innovation?
As clinical trials are one of the main modes of access to the most innovative medicines for Polish patients, it is quite easy to recruit clinical trial participants in Poland, in comparison with other countries. The potential of clinical trials in Poland is, however, not used to the full, as a similar number of trials (450-500 per annum) are carried out in, for example, Hungary and the Czech Republic, countries with smaller populations. One of the reasons for this is the ambiguous legislation, which, is one of the most obstructive obstacles to the development of companies operating on the Polish clinical trials market.
There is no single legal act in force in Poland, which would regulate the clinical research market comprehensively. The relevant provisions pertaining to the clinical trials market are contained in various legal acts of various categories, including those relating solely to the pharmaceutical market (e.g. the Pharmaceutical Law), but also the Civil Code and the Penal Code. It is also worthy of note that provisions of various acts are frequently inconsistent with each other.
Another problem is VAT applied on clinical trials. In these area Poland has still not harmonised its legislation with the European Union directives. Pursuant to the so-called VI EU Directive, expert services, including clinical research, should be subject to taxation only in the country of the client; nevertheless, most companies operating in Poland pay 23% VAT as the monitoring of clinical trials, according to the effective statistical classification can be classified into four different groups of services and which group it is categorised under depends on the civil servant’s interpretation.
Improvement in these areas would not only lead to an increase in the number of clinical trials conducted by international concerns in Poland (which would improve patient access to innovations) but could also encourage domestic manufacturers to invest in innovative medicines. This could, in the longer term, prompt an increase in the share of innovative medicines as a proportion of the Polish pharmaceutical market, which is one of the leas substantial in Central Europe.
Hungary: R&D expenditures no longer tax-deductable
A Hungarian government proposal suggests that drug manufacturers in Hungary will no longer be able to deduct their R&D expenses from the fee of the medical sales representative and the 12% tax on revenues from reimbursed drugs paid to the National Health Insurance Fund (OEP). The legislative changes could constitute a burden for some of the largest drug manufacturers on the Hungarian pharmaceutical market. This could also adversely affect manufacturers of innovative drugs, which may, as a result, reduce their R&D spending. The deduction was introduced in 2009, when 20% of the R&D costs could have been subtracted from the expenditures, and this was increased to 100% in 2010.
The Hungarian government is also planning to change the existing system which involves obligatory courses for doctors who allegedly prescribe excessively expensive medicines. It hopes, instead, to convince doctors to prescribe cheaper generic drugs, thus saving public money by establishing an incentive system. Furthermore, pharmacists would also be involved and rewarded when they replace a prescribed medicine with the product with the lowest reimbursement level.
Slovakia: reimbursement reform to boost generic consumption
After an allegation that the Categorisation Committee lacked transparency, the Slovak Health Ministry has decided to make drug policy more open and the individual steps within the categorisation process of drug reimbursement more transparent. Several regulations pertaining to the drug reimbursement system could come into force in Slovakia in 2011.
The proposed changes in the area of generic and innovative medicines include the earlier appearance of generics and conditional drug categorisation, along with the introduction of API prescription by doctors.
The proposed changes will allow the submission of applications for the categorisation of new drugs before a decision on their registration has been made. As a result, the assessment of applications for registration and categorisation will be carried out simultaneously. The ministry believes that this move will accelerate the arrival of cheaper generics on the market and save about €5m per annum.
The Health Ministry is also considering the introduction of new regulations which will stipulate that doctors in Slovakia should prescribe only the active pharmaceutical ingredient (API) instead of the specific drug name. A pharmacist would then advise patients on the drugs available, particularly those which carry the lowest co-payments, and patients would take the final decision. The new system would not cover all drugs – cancer and psychiatric medication would still be a matter for the doctor. At the moment, the schedule for the introduction of the new prescription system is not clear.
This press release is based on information contained in the latest PMR report entitled “Generic and innovative drugs market in Central Europe 2011. Comparative analysis, reimbursement policies and development forecasts for 2011-2013“.
PMR is a British-American company providing market information, advice and services to international businesses interested in Central and Eastern European countries as well as other emerging markets. PMR’s key areas of operation include business publications (through PMR Publications), consultancy (through PMR Consulting) and market research (through PMR Research). Being present on the market since 1995, employing highly skilled staff, offering high international standards in projects and publications, providing one of most frequently visited and top-ranked websites, PMR is one of the largest companies of its type in the region.
Tags: Central Europe, Eastern Europe, european companies, generic drugs market, innovative drugs, pharmacy, private markets