Generic medicines unpacked
unpacked Studies show that generic medicines are becoming more popular. RISKSA looks at the relative cost difference between generics and patented medicines.
It is currently a legal requirement for pharmacists and doctors to inform patients of generic alternatives. “The intention is to make sure that medicines stay within the reach of the majority of people living in South Africa and to improve the access to healthcare. As allowed by prescribed minimum benefit ( PMB) legislation, schemes are entitled to make use of formularies to manage the costs associated with the chronic treatment of PMB diseases. Patients are fully entitled to refuse generics or informulary products; however, they will be liable for any cost differences that are incurred,” says Peter Jordan, principal officer of Fedhealth medical scheme. Pharmaceutical benefit management company Mediscor PBM, recently revealed that medicine expenditure has continued the downward trend first exhibited in 2011, when spend decreased by 5.1 per cent. Commenting on the findings of the 2012 Mediscor Medicines Review ( MMR), Christo Rademan, managing director of Mediscor PBM, says medicine expenditure has again reflected a decrease, albeit by a slight 0.6 per cent. “This is good news for healthcare consumers and the medical schemes industry, as it indicates that efforts to control medicine costs are continuing to pay dividends,” he commented. According to Rademan, a number of complex, often inter- related factors have contributed to the continued reduction in medicine expenditure. He notes a 0.8 per cent decrease in the use of medicines among the approximately one million medical scheme members whose medicine usage comes under scrutiny in the MMR. There was little change observed in the item cost of the medicines used, which increased by 0.2 per cent.
Generics gaining popularity
“A positive trend in recent years is the fact that healthcare consumers are increasingly using less expensive generic medicines,” says Madelein Bester, manager of benefit management of Mediscor. “The number of generic items claimed increased to 53.4 per cent in 2012, compared with 52.4 per cent in 2011 and 50 per cent in 2010.” The increase in the use of generics is confirmed by medical aid schemes canvassed by RISKSA. Jonathan Broomberg, the chief executive of Discovery Health, says the use of generic medicines has increased consistently since 2005. “Currently, 20 to 25 per cent of the medicines available have generic substitutes. Generic medication is used approximately 65 per cent of the time where a generic can
be used, and the overall usage of generics at Discovery Health accounts for approximately 45 per cent of all medicine claims,” he says. Prof. Jacques Snyman, the clinical adviser at Resolution Health Medical Scheme, agrees, saying that since 2004 the private healthcare sector has been spending 14 per cent more on generics annually with an average round of 55 per cent to 65 per cent at present, option dependent. Neels Barendrecht, the chairman of Agility Global Health Solutions, says in general doctors and patients have realised that generics are the way to go. “The perception that generics are inferior is fast fading. However, one has to take research into account and, in some instances, the patented medicine has to be the first- line option.
Jordan says new drugs are developed under patent protection. “The patent protects the investment – including research, development, marketing and promotion – by giving the company the sole right to sell the drug while the patent is in effect, so that the company can recoup the money it has invested. After the patent expires, any generic manufacturer can make a generic product equivalent and sell it at a lower cost and under a different trade name. Once generic drugs are approved, competition keeps the price down,” he explains. Snyman says the average time for an expiry date for a patent is 20 years, but this usually drops to five to 10 years once the patent has been registered in South Africa. “This is because registration in South Africa is usually four to five years after first registration in Europe or the US,” he explains. Julia Hill, of medical humanitarian organisation Médecins Sans Frontières, says the availability of more affordable generic medication is being blocked locally because South Africa grants drug companies frivolous patents that prevent or delay competition. “Unnecessarily high drug prices drive up medical aid rates and impoverish people with life- threatening illnesses,” MSF’s Hill says. “If South Africa develops a strong legal framework for its new patent law ( which is currently being drafted) patients could have much better access to affordable life- saving medicines.”
“An increase in the use of generics results in significant savings for the healthcare consumer, as well as medical schemes,” observes Bester. “The use of generics is encouraged through the implementation of formularies, reference pricing and other benefit design strategies. The MMR indicates that the cost- effectiveness of generics is increasingly being embraced by funders and ordinary South Africans alike.” Jordan says generic drugs may be up to 30 per cent ( and often more) more cost- effective than the brand name drugs. “Generic drugs are less expensive because they don’t require the same investment cost required for the research and development of a new drug, which may total billions of Rand. These cheaper medicines can save patients and medical schemes thousands without compromising their quality of care,” he says. “Tight management on the part of healthcare funders can bear fruit while affording muchneeded protection for hard- pressed healthcare consumers,” says Rademan. “Mediscor remains committed to tackling the challenges of keeping healthcare costs to a minimum, while never losing sight of the fact that medical schemes exist because of their members and that their sole reason for being is to ensure that members receive the most appropriate and cost- efficient medical care. “We will continue playing a pivotal role in the industry by identifying and actively managing cost drivers, and by working in close partnership with our clients to stem the tide of runaway medicine costs to ensure the longterm sustainability of the healthcare funding industry,” he concludes.
Efficacy of generics
Broomberg points out that all medicines, including generics, must be registered with the Medicines Control Council of South Africa ( MCC). “This registration ensures that all medicines meet the required standards for safety, quality and efficacy.” Jordan adds that for the greater majority of medicines, generic drugs offer the same safety and efficacy as their more expensive equivalents. “The MCC requires that a generic drug delivers the same amount of the same active ingredient into the bloodstream at the same rate and they’re very strict about this requirement,” he says.
Medical scheme policies
Broomberg says the benefit design of the medical schemes under Discovery Health management ensures that generic medicines are preferentially funded from the acute and chronic medicines benefits. “Acute medicines are funded without a co- payment in the acute environment whereas nongeneric medication attracts a co- payment of up to 25 per cent. In the chronic benefit, the chronic disease medicine list preferentially includes generics over their brand innovator comparators because generics offer a significant price advantage,” he says.