A TRAIL BLAZED BY GENERIC MEDICINES? The NHS case in the UK.
Katrina Megget, former Editor of PharmaTimes looks back to see how
generics transformed pharmaceuticals and how we have reached a point
today where 80% of medicines dispensed by the NHS are generic.
Generic (or non-proprietary) medicines have been part of the NHS since its
inception; and even before its foundation in 1948. Today they provide cheap
and safe, chemically identical alternatives to their branded counterparts once
these patents have expired, flaunting price reductions of as much as 90% of
the branded drug1. As such, the cost-saving benefits of generics today are
profound, saving the NHS more than £10 billion each year (1).
But this has not always been the case. In the early days of the 20th century,
the drugs that were available had questionable efficacy. Then after World War II, and during the first decade of the NHS, branded medicines gradually
flooded the market. This led to the birth of the industrialised pharmaceutical
industry and large-scale medicine production (2).
During the NHS’ first five years, the cost of prescribing rose by about 45% 2
and soon attempts were made to reel in the cost of pharmaceuticals. GPs, for instance, received breakdowns of their prescribing costs compared with their area average, while a committee was established to investigate the cost of Yet prescribing costs continued to climb. In 1959 it was suggested that
cheaper generic equivalents should be prescribed2 but by the 1960s and
1970s the vast majority of drugs were still prescribed by brand name, despite
the ready availability of cheaper alternatives.
The crackdown came in the late 1980s. Doctors were financially encouraged
to opt for cheaper alternatives when prescribing and were sent analyses of
their generic versus branded prescribing habits. Changes were implemented
whereby prescriptions, with few exceptions, had to be written in the generic or International Non-proprietary Name (INN) rather than in the brand name 2.
Meanwhile, the UK landscape was also influenced by changes to patent law
in the USA where the Hatch-Waxman Act of 1984 provided incentives for drug development and allowed earlier access to generics. These moves helped herald the rise of a more established global generics market from the 1990s (2).
Interestingly, the NHS did not immediately benefit from the increased
prescription of generics because pharmacists were still reimbursed by the
NHS for dispensing at prices more closely related to the original branded drug levels. In the late 1990s changes were instigated in the way generics were reimbursed, which led to the introduction of the current Category M
reimbursement system.
Today, as a result of competition and incentives, more than 80% of
prescriptions are now dispensed as generics, with the number of items
prescribed and dispended as brands falling by nearly a third since 1976,
according to a recent analysis by think tank The King’s Fund (3).
There are a number of benefits to the NHS’ increased use of generics. For
instance, competition between generic manufacturers keeps prices low, even
though there is freedom of pricing in the UK. It also minimises the scope for
product shortages because there are more manufacturers of the product,
while the use of cheaper alternatives means NHS resources can to be
distributed to pay for other treatments. Overall generics allow for cost savings but also greater patient access to drugs (4).
In 2013, for instance, the NHS saved £1.3 billion, largely as a result of a
number of patent expiries – most notably Pfizer’s cholesterol buster Lipitor
(atorvastatin). The influx of generic atorvastatin reduced the cost to the NHS
by almost 70% – the service had been spending more than £400 million
annually on Lipitor5 – and allowed over 40% more patients access to the
Since the recession and with the pressures of an ageing population, the NHS
has found itself in a particularly grim financial situation. The drugs budget,
about 10% of the overall NHS budget, has always been an easy target for
cost cutting and there have been continued moves to curb branded drug
prices and increase generic prescribing. In 2010, the Department of Health
proposed the introduction of automatic generic substitution – where a branded medicine is automatically switched to a generic version – but this was abandoned after it was met with controversy and claims it posed a threat to.
It is unlikely generic prescribing can be increased further, The King’s Fund
believes, because many drugs still have patent exclusivity while certain drugs are recommended to be prescribed and dispensed by brand name only.
Meanwhile, the market entrance of biosimilars – the generic equivalents of
highly complex biological therapies – will only provide limited cost savings
compared with small molecule generics because of the more complex (and
costly) development and regulatory process.
Yet the financial pressures will continue for the NHS. This means emphasis
will be increasingly placed on other areas that can drive down costs, such as
procuring other products and services. As Peter Ballard, vice chair of the
British Generic Manufacturers Association, warns: “Things have to get
cheaper – and faster than the increase in the burden of illness – otherwise the NHS will run out of money.”
1. BGMA briefing paper, British Generic Manufacturers Association, June 2010.
http://www.britishgenerics.co.uk/admin/files//1361437828_BGMA-Briefingpaper-
180610.pdf (accessed August 2015)
2. Rivett, G. National Health Service History. http://www.nhshistory.net/index.htm
(accessed August 2015)
3. Alderwick, H et al. Better value in the NHS: The role of changes in clinical practice,
The King’s Fund, July 2015.
http://www.kingsfund.org.uk/sites/files/kf/field/field_publication_file/better-value-
nhs-Kings-Fund-July%202015.pdf (accessed August 2015)
4. Generic prescribing, Patient.co.uk, November 2011 (v6).
http://patient.info/doctor/generic-prescribing (accessed August 2015)
5. Lipitor generics help NHS save £1m per day, PharmaTimes, May 2013.
http://www.pharmatimes.com/Article/13-05-
15/Lipitor_generics_help_NHS_save_%C2%A31m_per_day.aspx (accessed August
6. UPDATE: NHS saving extra £1.3bn from generic drugs, PharmaTimes, July 2014.
http://www.pharmatimes.com/Article/14-07-
29/UPDATE_NHS_saving_extra_%C2%A31_3bn_from_generic_drugs.aspx
(accessed August 2015)
7. Govt scraps generic substitution plans, PharmaTimes, October 2010.
http://www.pharmatimes.com/Article/10-10-
19/Govt_scraps_generic_substitution_plans.aspx (accessed August 2015)
Other references used:
Newdick, C. Using generic medicines: a UK view on legal rights and duties, European
Journal of Hospital Pharmacy, June 2013.
http://ejhp.bmj.com/content/20/5/287.extract (accessed August 2015)
News feature: A new way of paying for NHS generics, The Pharmaceutical Journal,
September 2003. http://www.pharmaceutical-journal.com/news-and-
analysis/feature/pj-online-news-feature-a-new-way-of-paying-for-nhs-
generics/20010152.article (accessed August 2015)