In reference-based pricing, drugs are classified into clusters based on generics groups, related drug groups or groups according to similar therapeutic effects. The payer sets a reference price for each cluster based on, for example, either the lowest or the average price of drugs in that group. The reference price defines the maximum reimbursement for all products in the group. Only drugs that are priced at or below the reference price are subsidized; drugs that are more expensive must be paid for – either in part or completely – by the patient [2].

In South Africa, generically similar products are grouped together and the reimbursement rate is set at the average price. However, little evidence exists in low- and middle-income countries with regards to the impact of this policy over time. Therefore, Henk de Jager and Fatima Suleman carried out a retrospective longitudinal study to determine the impact of the introduction of generics and generic reference pricing on candesartan and rosuvastatin in the South African private healthcare sector in terms of medicine utilization, medicine price and medicine expenditure.

The researchers obtained medicine claims for candesartan (n = 1,444) and rosuvastatin (n = 10,452) from a Pharmacy Benefit Manager in South Africa. The study covered a 48-month period from January 2012 to December 2015 and provided a pre- and post-reference price period for analysis. Both rosuvastatin and candesartan received generics competition in this period and generic reference pricing was subsequently introduced on the active ingredients. Generic reference pricing was introduced in April 2013 for rosuvastatin, and in February 2014 for candesartan. For candesartan, 765 beneficiaries had claims in both the pre- and post-reference price periods, and for rosuvastatin 4,738 beneficiaries claimed in both periods. Medicine utilization was measured as the number of Defined Daily Doses (DDD) dispensed per 100,000 beneficiaries.

Candesartan experienced a 19.6% reduction in DDD dispensed per 100,000 beneficiaries over the study period, or an average 7.0% year-on-year change over the four years. Rosuvastatin experienced a 15.6% increase in DDD dispensed per 100,000 beneficiaries over the study period, or an average 5.0% year-on-year over the four years. Although the overall number of DDD dispensed per 100,000 beneficiaries was not affected by the introduction of generics and generic reference pricing, there was a notable change in the mix of originator brand-name products versus generics equivalents dispensed after the introduction of generics and generic reference pricing.

The introduction of generic reference pricing produced an additional saving on medicine expenditure of 34.6% for candesartan and 20.9% for rosuvastatin. This was in addition to the 31.0% and 13.9% saving that resulted from the reduction in price per DDD because of the introduction of generics equivalents. The total savings in medicine expenditure per DDD was 54.8% for candesartan and 31.9% for rosuvastatin.

The authors concluded that the ‘introduction of generics and generic reference pricing did not have an impact on medicine utilization, but reduced the price and expenditure of both candesartan and rosuvastatin’. They added that ‘further studies are needed on more products as well as the impact on the entire therapeutic class to ensure that beneficiaries aren’t switching to other products not affected by reference pricing’.

Conflict of interest
The authors of the research paper [1] declared that there was no conflict of interest.

Editor’s comment

Readers interested to learn more about generic reference pricing are invited to visit www.gabi-journal.net to view the following manuscript published in GaBI Journal:

Reference pricing and generics in Finland

Generics substitution: Ireland’s plan for reference pricing

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References
1. de Jager H, Suleman F. The impact of generics and generic reference pricing on candesartan and rosuvastatin utilisation, price and expenditure in South Africa. Int J Clin Pharm. 2018 Nov 26. doi:10.1007/s11096-018-0758-x. [Epub ahead of print]
2. GaBI Online - Generics and Biosimilars Initiative. Effect of reference pricing on generics entry [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2019 Feb 15]. Available from: www.gabionline.net/Generics/Research/Effect-of-reference-pricing-on-generics-entry

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