First posted: 23 May 2012 

Concerning biosimilars policies in Italy, view the following related articles:

Biosimilars policies in Italy

Biosimilar manufacturers fail to compete in Italy

The term ‘generic medicine’ was first defined in Italian legislation in 1996. A generic medicine has to be marketed under the international non-proprietary name (INN) followed by the name of the company. The definition of ‘generic medicine’ was extended in 2003 to cover all off-patent medicines, including copies (drugs of the same active substance marketed, with their own brand name, often by the originator itself) [1].

Italy does not have a coherent generic medicines policy and there is no generic medicines competition within the existing regulatory frameworks [2].

A reference pricing system (RPS) set at the level of the price of the cheapest medicine was introduced in Italy in 2001.

Physicians have few incentives to prescribe generic medicines and INN prescribing is only indicative. Physicians also have the power to stop generics substitution [3].

Regulation of retail pharmacies has also affected generics competition: the margins that the pharmacists receive on reimbursable drugs are established by law and are a fixed percentage of the product price, thus creating an incentive for the pharmacists to dispense the drugs at higher prices [4].

Patient co-payment exists in some regions and the government has attempted to inform patients of generic medicines through information campaigns.

Pricing
The Transparency Directive 89/105/EEC specifies a 90-day limit for adopting a decision on price and a 90-day limit for reimbursement. However the time delay for price approval in January 2005 surpassed 90 days in Italy, delaying the introduction of generics onto the Italian market [1].

In Italy, there is free pricing for non-reimbursable medicines (‘class C’, usually OTC products). For reimbursable medicines (‘class A’), the manufacturer price is determined through negotiations of the manufacturer with the Italian Medicines Agency (Agenzia Italiana del Farmaco, AIFA).

The two committees within AIFA concerned with the pricing procedure are the Scientific Technical Committee (Comitato Tecnico Scientifico, CTS) and the Pricing and Reimbursement Committee (Comitato Prezzi e Rimborso,CPR) [5].

Generic medicines in Italy have to be at least 20% cheaper than the originator medicine if they wish to be listed in the same patient co-payment class as the originator medicine [6].

However, with the advent of the RPS introduced in 2001 manufacturers of original products substantially reduced their prices in order to maintain market share [5].

Reforms introduced in April 2009, force branded pharmaceutical companies to maintain brand prices at a higher price than the first generic drug to market [7]. This is likely to increase generic competition post patent expiry.

Austerity measures
In June 2010, a decree law introduced austerity budget measures that included reimbursement limits for off-patent drugs, generic drug price cuts and a requirement for physicians to prescribe the cheapest equivalent drug. The measures proposed reductions in wholesaler margins and in the pharmacy share of the end-user price, thereby reducing the price pharmacies charged the National Health Service. A subsequent amendment reduced the pharmacy price cut from the proposed 3.65% to 1.82%; this was passed by the Senate in July 2010. To compensate for this change, drug manufacturers will be required to pay 1.83% of the price of their drugs to the regional health authorities [8].

Reference pricing
A reference pricing system (RPS) by active substance was launched in Italy in 2001. Additionally, there is the provision that, in order to gain access to reimbursement, generics should be priced 20% lower than the original product [5].

The reference price (RP) was originally calculated as the average price, weighted by volume of sales, of equivalent medicines where the price is inferior to that of the most expensive generic medicine. The RP was reduced at the end of 2001 and is now set at the level of the price of the cheapest medicine [9]. Case studies pertaining to three active substances revealed that prices of originator medicines dropped following the implementation of the 2001 rules governing the establishment of RPs [10].

There is some evidence that the RPS induced pharmaceutical companies to shift demand away from medicines covered by the RPS to medicines not covered by the RPS (so-called ‘reallocation of demand’). The Ministry of Health estimated that reallocation of demand was responsible for an increase of 3.1% in public medicines expenditure in 2003 [11].

The case of ranitidine shows that the falling market share of ranitidine following the advent of generic medicines was offset by increasing sales of patented medicines with the same therapeutic indication, e.g. omeprazole and its derivatives [10].

International price comparison
In 1996, Italy introduced a pricing calculation on the basis of an average European price (Prezzo Medio Europeo,PME), which took four countries (France, Germany, Spain, UK) into consideration [5].

In 1998, Italy changed its PME to include all EU countries over concerns that the previous scheme may have been violating the rule of free movement of goods by keeping prices so low that it discouraged imports [12].

Italy no longer applies the PME system (European average price) for pricing decisions. However, cross-border referencing is still a key element in the pricing procedure as prices in other European Member States are one of the criteria in the pricing negotiations. In fact, the prices of a medicine in other EU countries with statutory pricing (in particular France and Spain) seem to be the most important decision criterion [5].

Incentives for physicians
Physicians have few incentives to prescribe generic medicines. They are obliged to inform patients of the existence of generic medicines if the prescription concerns off-patent medicines. The more efficient prescription of medicines by physicians at local level has been stimulated by initiatives that periodically report to physicians on their prescribing patterns; by local agreements with physicians on medicines expenditure; and by the implementation of clinical guidelines [1].

Prescribing by INN is indicative for physicians [13] and they also have the power to stop generic substitution [3].

Incentives for pharmacists
From 2001 onwards, pharmacists were allowed, but not obliged, to substitute the cheapest generic medicine for an originator medicine subject to patient agreement and absence of physician prohibition to substitute [5].

In 2002, generic substitution became mandatory, i.e. the pharmacist has to dispense the cheaper generic unless the physician explicitly prohibits substitution or the patient is willing to pay the price difference up to the most expensive medicine. Until mid-2005, this measure applied only to reimbursable (‘class A’) medicines. A 2005 decree-law 700 established generic substitution by pharmacists also for prescription non-reimbursable (‘class C’) medicines [5].

Pharmacists who do not supply a generic drug in place of an original product—when asked to and when available—can receive penalties [5].

In Italy, the remuneration of pharmacists consists of a fixed mark-up on the public price (excluding VAT) of reimbursed medicines. Mandatory discounts on pharmacist margins for medicines covered by the National Health Service (Servizio Sanitario Nazionale, SSN) were initiated in 1997, with higher discount rates applying to higher price ranges (discounts ranged from 3.75% for prices less than Euros 25.82 to 19% for prices greater than Euros 154.94 in 2003) [1].

This system of regressive pharmacist margins contributed to, but did not completely succeed in, removing the financial disincentive to dispense the cheaper generic medicines. In 2003, SSN mandatory discounts on pharmacist margins on generic medicines priced below or at the level of the RP were abolished. Nevertheless, the regressive effect of this system remains limited. Pharmacists are still financially better off by dispensing the more expensive originator medicines. They can gain extra discounts from generic medicines companies, but the legality of this practice is arguable [1].

Incentives for patients
Medicine co-payments and charges were introduced in Italy in 1978, but abolished in 2001. To curb the subsequent increase in medicines expenditure, some regions re-initiated patient co-payments in 2002 [1]. In 2006 patient co-payments were being applied in 7 out of the 20 regions in Italy [5].

Besides (regional) prescription fees, patients have to co-pay for medicines in the RPS priced above the reference price [5].

Information campaigns were run in 2001 and 2005 to raise patient awareness of generic medicines [14].

AIFA was allocated a budget of up to Euros 1 million per year for 2005, 2006 and 2007 to fund information programmes, directed towards patients and physicians, to promote the usage of generics. Generics are now called ‘equivalents’, rather than generics, in order to increase patients’ acceptance [5].

Policy analysis

Key factor aiding the development of the generic medicines market

• Patient co-payments are lower for generics [1].

Key factors hindering the development of the generic medicines market

• The existence of a market of copies and the extension of patent coverage posed barriers to the development of the Italian generic medicines market [1].
• Setting the RP at the level of the cheapest generic medicine inhibits generic medicines entry, especially when considered in combination with the low volume of generic medicines consumption [1].
• The Italian Medicines Agency (AIFA) recommends, for clinical reasons, that no substitution of biologics takes place [15].
• Medical students are not taught to prescribe by INN.
• Physicians have few incentives to prescribe generic medicines [1].
• Physicians can prohibit generics substitution [3].
• Pharmacists are financially penalised for dispensing generic medicines [1].
• Confusion among patients still exists between branded and unbranded generics and there is a perception of generics as second-class drugs [3].

References

1.  Simoens S, De Coster S. Sustaining Generic Medicines Markets in Europe. April 2006. [monograph on the Internet]. Brussels, Belgium, European Generic medicines Association (EGA) [cited 2012 May 11]. Available from: www.egagenerics.com/doc/simoens-report_2006-04.pdf

2.  Bongers F, Carradinha H. European Generic medicines Association (EGA) Health Economics Committee. How to Increase Patient Access to Generic Medicines in European Healthcare Systems. June 2009.

3.  Espicom. Italy - Will the Italian generics market catch up with its European neighbours? 17 May 2010.

4.  OECD. Generic Pharmaceuticals 2009. DAF/COMP(2009)39. 5 October 2010.

5.  Österreichisches Bundesinstitut für Gesundheitswesen (ÖBIG). Surveying, Assessing and Analysing the Pharmaceutical Sector in the 25 EU Member States. July 2006.

6.  Assogenerici. Il Farmaco Generico - Equivalente: Cos’è [The Generic drug - Equivalent: What] [page on the Internet]. Italy, Assogenerica [cited 2012 May 11]. Italian. Available from: www.assogenerici.org/newsite/default.asp?modulo=ilfarmaco

7.  Aarkstore. Italy Pharmaceutical Market Overview Generic penetration set to rise. 1 December 2010.

8.  Espicom. The Pharmaceutical Market: Italy. 10 December 2010.

9.  Simoens S. Generic medicine pricing in Europe: current issues and future perspective. J Med Econ. 2008;11(1):171-5.

10.  Ghislandi S, et al. Pharmaceutical policy in Italy: towards a structural change? Health Policy. 2005;72:53-63.

11.  OsMed. L’uso dei Farmaci in Italia. Rapporto nazionale OsMed anno 2003. Italian Ministry of Health. 2004. Italian.

12.  Mrazek MF. Comparative Approaches to Pharmaceutical Price Regulation in the European Union. Croat Med J. 2002;43:453-61.

13.  Österreichisches Bundesinstitut für Gesundheitswesen (ÖBIG). Rational use of medicines Europe. February 2010.

14.  Pisani J, Bonduelle Y. Opportunities and barriers in the biosimilar market: Evolution or revolution for generics companies? 2006.

15.  Horton LR, The European Experience With Follow-on Biologics Legislation. 21 November 2008.