U.K. Government Outlines Proposals to Increase Generic Uptake in NHS by 5%

Rationale Behind Proposal

The United Kingdom's department of health (DoH) has published a consultation document outlining plans to further increase the use of generic drugs in the National Health Service (NHS). According to the DoH, 83% of total prescriptions in the United Kingdom are for generic drugs, and the remaining 17% are for branded drugs. In terms of expenditure, the NHS spent £10.3 billion (US$15.6 billion) on medicines in 2008, according to figures published by the Association of the British Pharmaceutical Industry. Expenditure on branded drugs alone amounts to £9 billion annually, says the DoH. Out of the 17% of branded drugs prescribed, there are 5% for which generic equivalents exist and can be prescribed. This means that there is still room for further savings to be made in terms of NHS drug spending. Official estimates indicate that the scheme could deliver savings of up to £20.5 million per year.

Proposals

The DoH has presented three different options on how to proceed in order to expand generic substitution. These options are:

• No changes;
• Generic Substitution will occur, but a selection of drugs will remain exempt;
• Generic Substitution will be limited to a selection of drugs.

Under the first option, the status quo will be maintained and no savings will be made to NHS drug spending. The remaining two options are designed to give doctors and pharmacists more choice in terms of prescription and dispensing habits. Under the second option, a list would be created of drugs that are exempt from the scheme. This would include drugs that are not thought to be suitable for generic substitution. Under the third option, pharmacists will not be allowed to substitute a particular branded drug for its generic equivalent, except when indicated to do so by the prescriber, for drugs listed as permissible for generic substitution. For the last two options, an opt in or opt out system will be created to determine whether a drug is eligible from the generic substitution programmes or whether it is exempt.

According to the DoH, the third option appears to be the most effective system in terms of ensuring clinicians' prescribing autonomy, while maintaining patient safety. Identifying a list of drugs that are appropriate for generic substitution will also make the scheme easier to implement. The document is now open for a 12-week public consultation, and the DoH is seeking a view on how the scheme should be implemented and what impact it would have.

Outlook and Implications

This generic substitution scheme falls under the wider Pharmaceutical Price Regulation Scheme (PPRS), which was introduced back in 2008 as a means of creating value for money in the NHS through a two-step price cut on branded pharmaceuticals (see United Kingdom: 20 November 2008: Industry, Government Unveil New U.K. Pharmaceutical Pricing Deal). The reason for the exact details of this generic substitution scheme being left out of the initial PPRS deal was due to the fact that the DoH needed to engage in consultations with key stakeholders in order to determine the potential impact of the scheme on the NHS, in terms of drug expenditure. This is yet another indication of the government's determination to deliver cost savings where possible, in order to control spiralling healthcare costs. However, in the context of current NHS expenditure on drugs, which stands at £10.3 billion, and the high levels of generic substitution that already exist in the NHS, this scheme is unlikely to have much of an impact in terms of the annual savings of £20.5 million it is expected to create. There is also a possibility that pharmacists may demand payments from the DoH for agreeing to perform mandatory substitution; if this occurs, it could also limit potential savings from the scheme.