Measuring Performance in Off-patent Drug Markets: a Methodological Framework and Empirical Evidence from Twelve EU Member States

This paper develops a methodological framework to help evaluate the performance of generic pharmaceutical policies post-patent expiry or after loss of exclusivity in non-tendering settings, comprising five indicators (generic availability, time delay to and speed of generic entry, number of generic competitors, price developments, and generic volume share evolution) and proposes a series of metrics to evaluate performance. The paper subsequently tests this framework across twelve EU Member States (MS) by using IMS data on 101 patent expired molecules over the 1998-2010 period. Results indicate that significant variation exists in generic market entry, price competition and generic penetration across the study countries. Size of a geographical market is not a predictor of generic market entry intensity or price decline. Regardless of geographic or product market size, many off patent molecules lack generic competitors two years after loss of exclusivity. The ranges in each of the five proposed indicators suggest, first, that there are numerous factors--including institutional ones--contributing to the success of generic entry, price decline and market penetration and, second, MS should seek a combination of supply and demand-side policies in order to maximise cost-savings from generics. Overall, there seems to be considerable potential for faster generic entry, uptake and greater generic competition, particularly for molecules at the lower end of the market.