Spanish government introduces harsh generic price cuts

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Spanish government introduces harsh generic price cuts

Home/Policies & Legislation | Posted 04/06/2010 0 Post your comment

There has been a sustained slowdown in the Spanish economy since 2008. This has been aggravated by the major international financial crisis, resulting in a decrease in the Spanish Gross Domestic Product (GDP) of 3.6% in 2009. The government has therefore introduced measures to decrease the budget deficit, which include reduction of expenditure by the National Health System.

The Royal Decree on the Rationalisation of Drug Expenditure (Real Decreto de Raconalizacion del Gastro Farmaceutico [RDL4/2010]) aims to rationalise (and reduce) drug expenditure by the National Health System. Its adoption in March 2010 introduced drastic price cuts of up to 30% for both branded and generic medicines. For generics, the extent of these reductions depends on the difference between the reference and retail prices (for the public) and applies to all generics with a retail cost of more than Euros 3.12.

Lowering the price of generic medicines

The wholesale price of generic medicines funded by the National Health System, and which are included in the system of reference prices, were reduced by the percentage difference between the reference price and the generic retail price (including tax). This means that for generics that have a difference of 0–1% a reduction of 30% has been applied, between 0.01–5% the reduction is 25%, a 5.01-10% difference means a 20% price cut and a 10.01–25% difference results in a 15% reduction. Generic medicines with differences of more than 25% are not subject to any price reductions.

Those generic medicines not included in the reference pricing system were reduced by 30%.The only exception to these price cuts was those generics with a retail cost of Euros 3.12 or less.

Government urged to introduce new measures

These price reductions for generics have been described by the European Generic Medicines Association (EGA) as ‘harsh, stringent’ and putting ‘in danger the economic sustainability’ of the generics industry in Spain. The EGA has further urged the government to introduce incentives to encourage prescribing and dispensing and to increase the volume of generics in Spain.

Reference

Real Decreto-ley 4/2010, de 26 de marzo, de racionalización del gasto farmacéutico con cargo al Sistema Nacional de Salud.