Denmark has a coherent generic medicines policy and generic medicines compete within existing regulatory frameworks [1].
The Danish Medicines Agency (Lægemiddelstyrelsen, DKMA) decides which generic medicines are suitable for substitution. Pharmacies must then give the least expensive products to the patient, unless the physician and/or the patient prefer another product. Due to competition between the manufacturers of original medicine and generics, the prices of the generics often vary greatly. Reimbursement from the national health service is organised to fit the substitution rules. This means that the national health service only reimburses the price of the least expensive product [2].
Pricing
In Denmark, pharmaceutical companies are in principle free to set medicine prices. However, prices of reimbursable off-patent pharmaceuticals and generics are indirectly influenced through the reimbursement price [3]. For reimbursement purposes, generic medicines need to be priced below the price level of the originator medicine [4].
Tendering
Tendering for generic medicines was introduced in Denmark in 1990 [5]. This has produced cost savings in the short term due to the significant reduction of medicines’ prices. However, a negative impact on the economy has been observed in the long term [5]. The change in the procurement method for generic medicines represents a major threat to the generic medicines industry in Denmark [6].
Reference pricing
A reference pricing system (RPS) by active substance was launched in 1993. Physicians can exempt patients from the RPS on specific medical grounds [4].
Originally, the reference pricing (RP) was set at the average price per dosage unit of the two lowest-priced medicines in the homogeneous group [4].
In 2000 the RP became the lowest average European price and since 2005, the price of the cheapest medicine in the group has been used to determine the RP [3]. The level of RPs tends to change every two weeks [4].
Incentives for physicians
The Danish Medicines Agency has introduced the ‘Medicine Profile’, a database that physicians and patients can access to check their individual medicine use and to compare the price of the prescribed medicine with that of equivalent medicines. The Agency also publishes a monthly newsletter targeted at physicians giving them advice on cost-effective prescribing [4].
Decentralised initiatives exist in all counties that stimulate generics prescribing through the use of databases which report only the cheapest medicine, through medical audit and dissemination of prescribing data, and through visits to physicians to discuss their prescribing behaviour. These initiatives have contributed to reducing the proportion of prescriptions where physicians forbid generics substitution [4].
The Danish College of General Practice and the Medical Colleges of the various specialties have compiled practice guidelines, but no incentives or sanctions have been attached to physician adherence (or lack of) to these guidelines. Physicians are neither legally required nor encouraged to prescribe medicines by INN (International Non-proprietary Name) [4].
Physicians may oppose substitution by clearly marking the prescription with ‘ej S’ without giving a reason for the refusal [3].
The prescribing behaviour of physicians is monitored by the DKMA via an Internet-based system called ‘Ordiprax’. However, as there are neither prescribing budgets nor sanctions for the refusal of generics substitution applicable for physicians the Ordiprax system is more an inspirational tool than a control mechanism [3].
Incentives for pharmacists
In 1991, voluntary generics substitution by pharmacists was introduced (the so-called ‘G-scheme’) and became mandatory in 1997 [3].
Mandatory generics substitution means that the pharmacist must always dispense the cheapest available product–generics or parallel import–of the same package. Substitution of a certain pack size by another pack size is only possible if it is within a range of 10–25% divergence in the size of package from the smallest package to the largest package in the group [3].
If the price of the prescribed medicine is less than DKK 100, the pharmacist must substitute with the least expensive (generics or originator) medicine that is at least DKK 5 cheaper than the prescribed medicine. For medicines priced between DKK 100 and DKK 400, substitution with the cheapest medicine is mandatory if it is at least 5% cheaper than the prescribed medicine. If the price of the prescribed medicine exceeds DKK 400, the pharmacist must dispense the cheapest medicine that is at least DKK 20 below the price of the prescribed medicine [4].
Physicians can write on the prescription form that generics substitution is forbidden. In the third quarter of 2005, generics substitution was not allowed on 6.1% of prescriptions (Danish Medicines Agency, 2006). The responsibility of informing patients of the availability of generic medicines lies with the pharmacist. Patients have the right to refuse substitution, but incur a higher patient co-payment if they do so [4].
Generics substitution is reinforced by dispensing budgets for pharmacists, which provide an incentive to dispense cheap generic medicines [4].
The system was readjusted so that the pharmacies will have an approximate similar profit on all pharmaceuticals. A desired ‘side effect’ of the adjusted system is that it favours the sale of cheaper (generic) pharmaceuticals, thus encouraging the pharmacist to comply with the obligatory generics substitution system that was introduced in April 2005 [3].
From 1 April 2007 pharmacies will be remunerated with a flat rate mark-up of 8.5% on the Pharmacy Purchasing Price, to which DKK 13.35 will be added. The fixed prescription fee will also remain and will amount to DKK 10 (including VAT) [3].
Incentives for patients
Since 2005, patients incur the full costs of medicines up to DKK 520 per year. Once expenditure surpasses that level, patient co-payment as a percentage of medicine costs decreases as expenditure crosses specific thresholds: 50% co-payment from DKK 520 to DKK 1,260; 25% from DKK 1,260 to DKK 2,950; and 15% from DKK 2,950 onwards. Reimbursement is calculated on the basis of the price of the cheapest medicine among the different products with the same active substance and effect [4].
Patients may oppose substitution but then must–in addition to the ‘normal’ co-payment ̶ pay the difference to the reimbursement price. However, if a physician decides to forbid substitution of a branded medicine the patient may not ask for substitution in the pharmacy by him/herself but then also has to pay the price difference out-of-pocket. But if the patient cannot tolerate a cheaper (generics) product, the physician can apply to the DKMA for an increased reimbursement for the more expensive (often branded) medicinal product [3].
Patient co-payments are amongst the highest in Europe. In 2008 Danes paid an estimated 41.2% of the retail price for prescription medicines [7].
No campaigns to raise patient awareness of generic medicines have been conducted [4].
Policy analysis
Key factors aiding the development of the generic medicines market
- The RPS and generics substitution by pharmacists reward generic medicines companies that set competitive prices for an active substance with high sales [4].
- Pharmacists are financially rewarded for dispensing generics [3].
- Physicians tend to have a favourable attitude towards generics substitution by pharmacists and face non-financial incentives to prescribe generic medicines [4].
- Medical students are taught to prescribe by INN at medical school [8].
Key factors hindering the development of the generic medicines market
- Prescribing by INN is neither legally required nor encouraged and there are no budget sanctions for physicians [4, 9].
- Though there is obligatory substitution by pharmacists, both physicians and patients may deny it [3].
- Strong price competition and low prices could endanger the long-term sustainability of the generic medicines industry [4].
References
1. Bongers F, Carradinha H. European Generic medicines Association Health Economics Committee. How to Increase Patient Access to Generic Medicines in European Healthcare Systems. June 2009.
2. Danish Medicines Agency (Lægemiddelstyrelsen, DKMA). Questions and answers about generic substitution [monograph on the Internet]. Copenhagen, Denmark, DKMA [cited 2011 December 06]. Available from: www.dkma.dk/1024/visUKLSArtikel.asp?artikelID=7979
3. Österreichisches Bundesinstitut für Gesundheitswesen (ÖBIG). Surveying, Assessing and Analysing the Pharmaceutical Sector in the 25 EU Member States. July 2006.
4. Simoens S, De Coster S. Sustaining Generic Medicines Markets in Europe. April 2006. [monograph on the Internet]. Brussels, Belgium, European Generic medicines Association [cited 2011 December 06]. Available from: www.egagenerics.com/doc/simoens-report_2006-04.pdf
5. Leopold C, Habl C, Vogler S. Tendering of Pharmaceuticals in EU Member States and EEA Countries. Results from the Country Survey; ÖBIG Forschungs- und Planungsgesellschaft mbH: Vienna, Austria, 2008.
6. Alan Sheppard. Generic Medicines: Essential contributors to the long-term health of society Sector Sustainability Challenges in Europe. IMS Health.
7. European Federation of Pharmaceutical Industries and Associations (EFPIA). The Pharmaceutical Industry in Figures. Edition 2010.
8. Simoens S. Trends in generic prescribing and dispensing in Europe. Exp Review Clin Pharmacol. 2008;1(4):497-503.
9. Vogler S, Schmikl B. Rational use of medicines in Europe. Österreichisches Bundesinstitut für Gesundheitswesen (ÖBIG). February 2010.
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