Strategies for pricing of pharmaceuticals and generics in developing countries

Godman, Brian and Hassali, Mohamed Azimi (2017) Strategies for pricing of pharmaceuticals and generics in developing countries. Generics and Biosimilars Initiative journal. ISSN 2033-6403 (In Press)

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Abstract

Rida and Ibrahim are to be congratulated on their extensive review of ongoing pricing strategies in developing countries (1), also referred to as lower and middle income countries (LMICs). These include advocating policies regarding mark-ups for pharmaceuticals, pricing formulae for medicines, external reference pricing, as well as encouraging greater use of generics (2-4). However, there are concerns over external reference pricing (ERP), especially for new medicines where pharmaceutical companies are potentially delaying launch or not launching in some countries to maintain high prices (5). There are also concerns over the ability to rapidly obtain low prices for generics if prices under ERP systems are only reviewed annually or biannually. Aggressive pricing policies in the Netherlands, including 3-monthly tendering, led to prices of generic omeprazole and simvastatin dropping to just 2% of the originator price in a short time period (6). In Sweden, compulsory generic substitution with the lowest priced generic also led to rapid price erosion following generic availability. Prices fell further following the instigation of monthly auctions where the cheapest generic was guaranteed a substantial proportion of the market the following month (7, 8).

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