Does NICE influence the adoption and uptake of generics in the UK?

Victoria Serra-Sastre,Phill O’Neill,Jorge Mestre-Ferrandiz,Simona Bianchi

doi:10.1007/s10198-020-01245-1

Abstract

The aim of this paper is to examine generic competition in the UK, with a special focus on the role of Health Technology Assessment (HTA) on generic market entry and diffusion. In the UK, where no direct price regulation on pharmaceuticals exists, HTA has a leading role for recommending the use of medicines providing a non-regulatory aspect that may influence the dynamics in the generic market. The paper focuses on the role of Technology Appraisals issued by the National Institute for Health and Care Excellence (NICE). We follow a two-step approach. First, we examine the probability of generic entry. Second, conditional on generic entry, we examine the determinants of generic market share. We use data from IQVIA British Pharmaceutical Index (BPI) for the primary care market for 60 products that lost patent between 2003 and 2012. Our results suggest that market size remains one of the main drivers of generic entry. After controlling for market size, intermolecular substitution and difficulty of manufacturing increase the likelihood of generic entry. After generic entry, our estimates suggest that generic market share is highly state dependent. Our findings also suggest that while NICE recommendations do influence generic uptake, there is only marginal evidence they affect generic entry.

Highlights

The pharmaceutical sector is highly regulated including marketing approval, medicine reimbursement and intellectual property rights (IPR)
Conditional on entry, we look into generic diffusion using generic market share in a context of a dynamic model to allow for adjustment costs along the uptake of generic prescription
We find no evidence of an effect of National Institute for Health and Care Excellence (NICE) technology appraisals (TA) on generic entry, but this is in contrast to the large effect of NICE guidance in generic diffusion

Summary

Introduction

The pharmaceutical sector is highly regulated including marketing approval, medicine reimbursement and intellectual property rights (IPR). Regulators face the challenge of providing long term incentives for research and development for new medicines, on the one hand, and ensuring fast(er) access to generic versions of the originator product once the last element of IPR expires, on the other. Price Competition and Patent Term Restoration Act (Public Law 98-417), gives incentives to both generic and branded pharmaceutical companies to enter the market. It reduces the costs of entry to generic manufacturers, including the possibility of using an abbreviated regulatory pathway, and starting their bioequivalence studies before patent expiry. The Act compensates manufacturers of the branded product for the time lost (up to five years) from the patent term because of the regulatory process—the so-called patent term extensions or market/data exclusivities (see for instance [21])

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Conclusion