Warwick Smith, BGMA Director General. Photo: Graphic Photo

Warwick Smith, director general of British Generic Manufacturers Association (BGMA) has said the UK is “the lowest priced market in Europe” for generic drugs.

Smith told delegates at the Sigma Conference in Cebu in the Philippines that a recent independent study conducted by economics consultancy Oxera compared the UK’s pricing structure with five European countries and found that generics medicines in those countries were more expensive than in the UK.

“The fact that we have freedom of pricing that allows flexibility means that we can have low prices and a market that works. There are low barriers to entry so people can enter and exit the market, depending on what the market is doing,” Smith added.

Prices for most generic drugs are set by competition in the UK, with manufacturers bidding for a share on the market rather than going through any central or governmental price-setting mechanisms that exist in some European countries.

Smith pointed out that when a generic drug is launched in UK it comes with a 75 per cent discount on the originator’s price which can move up as more manufacturers join the market.

“Very quickly we get to a 95 per cent discount.”

However, he noted there can be fluctuations in pricing depending on several market factors and level of competition amongst manufacturers and suppliers.

“You get a price spike technically due to a problem in the supply chain. [For example] if an API manufacturer falls over, there’s a massive competition for materials and the only way that the manufacturers can cope with that is to put the price up and it is a spike.

“There’s a second sort of increase that takes place much more slowly. It’s important to realise that when we see a big spike and there’s a concession price that protects pharmacy, that is not market failure.

“That is market success because the patient still gets the medicine.”

Those price spikes, he said, actually allow the manufacturers to stay on the market.

“If you look at countries that don’t have the flexibility to allow those price spikes the data are overwhelming. In November, we had 78 products on the Department of Health’s shortages list, Switzerland had 600.”

Smith explained that the UK generics industry was getting more benefits than its European counterparts because the country allows manufacturers the flexibility to raise prices, reduce volume or pull out altogether if the market ceased to remain profitable.

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