Health is a typical field where the economic theory of market competition does not enjoy the basic conditions to work and the pharmaceutical market is no exception. However, as soon as a patent expires, price competition is opened up.
While generics have been widely used for decades, this is not yet the case for the more recent biosimilars [1]. Garattini and co-authors from the Center for Health Economics in Italy compared these two types of off-patent medicines using the well-known business tool of ‘4P’s (product, place, promotion and price) marketing mix’ [2].
Product
A generic medicine is a chemical drug designed and developed to be equivalent to its originator. A biosimilar product is developed to be similar to an originator biological medicine and there may be minor differences due to their complex nature and production methods.
Place
Most generics and the few biosimilars so far approved are prescribed in quite different settings. Generics are mainly dispensed through community pharmacies, while biosimilars are usually used in hospital, so the influential role of community pharmacists is still limited overall.
Promotion
An important question for generics in the long run is how patients perceive the quality of the products; this is mainly influenced by health professionals and pharmaceutical companies, which have an obvious interest in undermining their credibility. Biosimilars still face substantial barriers when competing with brand-name originators for market share since third-party payers seem cautious about encouraging their spread.
Price
Most national authorities have specific pricing and reimbursement schemes for generics, to encourage their wider use. The most common price regulation system in the Western European Union countries is the so-called ‘reference pricing’ scheme [3], while pricing arrangements for biosimilars are still confused and uneven [4]. Tenders might offer the most effective way to lower the prices of biosimilars.
The authors conclude that ‘right now international patent regulation seems to be the main hurdle to the spread of biosimilars’. They therefore believe that ‘once this major international barrier has been overcome and biosimilars reconnected to generics from a regulatory point of view, the widespread diffusion of biosimilars on domestic markets at competitive prices will be managed more or less successfully by national authorities, as has happened for generics for decades.
Conflict of interest
The authors of the research paper [2] did not declare any conflicts of interest.
Abstracted by Professor Livio Garattini*, Center for Health Economics, IRCCS Institute for Pharmacological Research ‘Mario Negri’, Ranica, Italy.
*Member of International Editorial Advisory Board, GaBI Journal.
Editor’s comment
Readers interested to learn more about regional tenders on biosimilars in Italy are invited to visit www.gabi-journal.net to view the following manuscript published in GaBI Journal:
Regional tenders on biosimilars in Italy: potentially competitive?
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References
1. GaBI Online - Generics and Biosimilars Initiative. Biosimilars approved in Europe [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2015 Apr 3]. Available from: www.gabionline.net/Biosimilars/General/Biosimilars-approved-in-Europe
2. Garattini L, Curto A, van de Vooren K. Western European markets for biosimilar and generic drugs: worth differentiating. Eur J Health Econ. 2015 Mar 20. [Epub ahead of print]
3. Vogler S. Reference price systems: stakeholder dialogue and involvement. Generics and Biosimilars Initiative Journal (GaBI Journal). 2012;1(3-4):114-5. doi:10.5639/gabij.2012.0103-4.031
4. Olry de Labry A, et al. Biosimilars in the European market. Generics and Biosimilars Initiative Journal (GaBI Journal). 2013;2(1):30-5. doi:10.5639/gabij.2013.0201.012
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