Saturday, April 20, 2024

Revolutionary Generic Medicine Pricing Strategies for Sustainable Competition in the European Market

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In the realm of European generic medicines, the confluence of price erosion over time, existing pricing policies, and mounting operational costs due to inflation is jeopardizing long-term sustainable competition. As a response to this challenge, a study endeavors to identify and evaluate potential new pricing models for retail generic medicines in Europe. It encompasses an assessment of their advantages and disadvantages, offering examples both within and outside the pharmaceutical sector.

The research method employed a targeted literature review, supplemented by one-on-one interviews and an advisory board meeting featuring experts from five European countries. The study identified ten pricing models applicable to generic medicines, each with distinct characteristics. One of the promising models, the tiered pricing model, has the potential to ensure ongoing competitiveness but necessitates effective market monitoring through IT infrastructure support.

Furthermore, the study discusses models like de-linking the price of generic medicines from that of off-patent originator drugs to prevent unsustainable pricing pressures and introduces the automatic indexation model to address cost increases attributed to inflation. These models aim to bolster the sustainability of generic medicines within the European market.

Additionally, the research considers alternative pricing approaches, such as the one-in-one/multiple-out model, tax credits, value-based pricing, volume-based savings, and guaranteed margin/fee models. It highlights the importance of adapting the pricing model to the impact on innovative medicines and the specific characteristics of the healthcare system in each country.

Nevertheless, certain models like the hypothecated tax and cost allocation models, which involve adding patient fees to generic medicines prices, may not be socially acceptable.

In conclusion, addressing the economic sustainability of generic medicines in Europe requires innovative pricing models. These models should be crafted while considering their influence on innovative medicines and the unique attributes of each country’s healthcare system. The study underscores the need for continuous monitoring of competition levels within the off-patent medicines markets and the identification of sustainability risks to ensure reliable, long-term access to essential generic medicines.

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