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

¹graduated from the Katholieke Universiteit Leuven in 2006 where he obtained a master's degree in Applied Economics with specialisation in International Business Relations. For his Master's thesis, he conducted research on the role of the government in the generic medicines industry. After his studies, he spent one year working for the Flemish authorities. Currently, he is enrolled in a traineeship programme at the European Medicines Agency (EMEA) in London.

²is a PhD student at the Center for Economic Studies of the Katholieke Universiteit Leuven. His research deals with the non-parametric efficiency measurement of local public utilities, in particular drinking water utilities. In addition, his research interests include local public finance and public policy.

³is a professor at the Research Centre for Pharmaceutical Care and Pharmaco-economics of the Katholieke Universiteit Leuven. 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 sector, and economic evaluation of medicines and medical devices. He has been involved in several research projects examining generic medicines policy in Europe.

Received 14 December 2007; Revised 14 December 2007; Published online 6 March 2008.

Abstract

There is little European evidence on how originator and generic medicines set prices in the off-patent market and on the factors that influence pricing strategies. The aim of this study was to examine pricing strategies of originator and generic medicines following patent expiry in Belgium. To this effect, the evolution of the public price of originator and generic medicines was investigated from July 2001 to December 2005. Regression and scenario analyses show that the Belgian off-patent market is a segmented market when it comes to pricing. Pricing strategies are influenced by regulatory aspects, such as successive reductions in reference prices and prescription status of medicines; by market incentives in the form of price competition between generic medicines and competition between originator and generic medicines; by medication class; and by market power of the manufacturer of the originator medicine. Therefore, there is no single pricing strategy that authorities or manufacturers can use to predict the pricing behaviour of originator and generic medicines following patent expiry and to foresee the development of the generic medicines market.