Generic Substitution in France Creates Total Savings of 1 bil. Euro in 2009, Generic Penetration to Reach 80% in 2010

Total Savings of 1 bil. Euro in 2009

According to a report published by the French public health insurer CNAM (Caisse Nationale d'Assurance-Maladie), 1 billion euro have been saved as a result of generic promotion in the country in 2009. This represents additional savings of 105 million euro compared with 2008. In parallel, an additional 90 million euro was saved as a result of pricing cuts following patent expiries in the pharmaceutical market. According to the French insurer, the progression is similar to the trend observed in previous years with average annual savings of 200 million euro linked to patent expiry and generic substitution. In 2009, 23% of reimbursed drugs were generic versions of patented products while the market penetration of generics remained high with a significant 82.5% of substitution for generic versions marketed for more than 18 months and 80% of substitution for those marketed for more than one year. The CNAM estimates that 12 months are on average necessary to reach a substitution rate of 75% for a new generic.

Generic Penetration Expected to Rise in 2010

In 2010, the CNAM and pharmacists representatives have inked an agreement under which pharmacists made the commitment to continue promoting the use of generics with a double objective:

• Reach an overall substitution rate of 80%;
• Focus on recent off-patented drugs with high saving potentials.

Several important drugs face patent expiry in the near future or have already fallen off patent such as Plavix (clopidogrel) marketed by the French drug maker Sanofi-Aventis which faces generic competition since October 2009. Generics of the blockbuster antiplatelet treatment could alone generate savings of more than 200 million euro. Total savings linked to these significant patent expiries are likely to amount to 300 million euro in 2010. A list of targeted generics has been agreed between the CNAM and pharmacists and includes:

• Anti-viral valaciclovir (Zelitrex, GlaxoSmithKilne, U.K.);
• Hypertension drug losartan (Cozaar, Merck & Co., U.S.);
• Antidepressant venlafaxine (Effexor, Wyeth, U.S.);
• Blood-thinner clopidogrel (Plavix, Sanofi-Aventis, France).

Among the targeted drugs, clopidogrel represents the highest potential in terms of savings. In 2008, reimbursement costs for the blood-thinner reached 625 million euro in France. Plavix's patent is only set to expire in 2013 but since last October, numerous generic competitors have entered the market securing positive recommendations from the EMEA by mixing clopidogrel with a different salt (see France: 14 May 2009: Sanofi-Aventis Faces New Round of Generic Threats to Plavix in Europe). According to the CNAM, its substitution rate has quickly increased to reach 60% two months after the first generic versions entered the market.

Outlook and Implications

Savings realised in 2009 come as no surprise in light of the additional savings linked to generic substitution and patent expiry reaching approximately 200 million euro each year. The ambition for the French public insurance going forward will be to cut drug spending by promoting generic substitution of recent off-patented drugs for which reimbursement costs represent significant amounts for the CNAM. Among them, generic versions of Zelitrex (valaciclovir), Cozaar (losartan), Effexor (venlafaxine) and Plavix (clopidogrel) have the potential to provide significant additional savings to the French insurer. The agreement signed with representatives of pharmacists will boost and promote generic substitution with a special focus on these four products, accelerating market share erosion for GlaxoSmithKline, Merck & Co., Wyeth and Sanofi-Aventis.

In an attempt to avoid disproportionate market share erosion, some research-based pharma companies have launched generic versions of their own products. Early this year, Sanofi-Aventis marketed its own unbranded version of Plavix in France as generic competitors entered the market (see France: 8 October 2009: Sanofi to Launch Generic Version of Plavix to Counter Competition). The strategy could prove to be a successful attempt as more pressure on generic substitution will impact sales of Plavix in coming years.