Correspondence: Steven Simoens, Research Centre for Pharmaceutical Care and Pharmaco-economics, Faculty of Pharmaceutical Sciences, K.U. Leuven, Onderwijs en Navorsing 2 P.O. Box 521, Herestraat 49, 3000 Leuven, Belgium. Tel: +32 0 16 323465; Fax: +32 0 16 323468; E-mail: steven.simoens@pharm.kuleuven.be

¹is a professor at the Research Centre for Pharmaceutical Care and Pharmaco-economics. He is a health economist and leads the Centre's research into the economics of medicines, medical devices and related products. His research interests focus on issues surrounding competition and regulation of the pharmaceutical industry, and economic evaluation of medicines and medical devices. Previously, Steven worked at the Organisation for Economic Co-operation and Development and at the University of Aberdeen.

²graduated from the Katholieke Universiteit Leuven as a pharmacist. She spent two years in the pharmaceutical industry, where she participated in the regulatory affairs of herbal medicines. She then joined the Research Centre for Pharmaceutical Care and Pharmaco-economics as a research fellow. Her research interests focus on pharmacotherapy. In addition to this, she works part-time as a community pharmacist.

Received 28 June 2006; Revised 28 June 2006.

Abstract

This study aims to estimate annual savings from increased generic substitution in the retail market of 11 European countries in 2004. Savings from generic substitution were calculated for the top ten active substances by public expenditure on originator medicines in each country. For each active substance, average price levels weighted by volume of sales of medicines belonging to the group of originator medicines and to the group of generic medicines were calculated. The price difference between originator and generic medicines was multiplied by the volume of originator medicines to be substituted. The analysis considered that, following generic substitution, 5 per cent of market volume for each active substance would be made up by originator medicines and 95 per cent by generic medicines. Increased generic substitution for the top ten active substances generated total potential savings of around 3bn, with country savings ranging from 11m in Poland to 1bn in Germany. Increased generic substitution would be expected to reduce public expenditure on originator medicines containing these active substances by at least 20 per cent in each country. Countries that pursue the development of their domestic generic medicines market, therefore, can expect to gain substantial savings from increased generic substitution.