Purely price-based attempts to control drug spending put all health care players at risk, and “enforced and unpredicted” price cuts can cause serious damage, a new report warns European Union (EU) governments.

Moreover, importing one aspect of health care from another country could have “serious consequences,” as “the varied nature of health care systems within Europe means that what is successful in one country may not be applicable in another,” adds the report, from IMS Health.

The use of generic versions of innovative drugs which are set to lose patent protection over the next four years will create savings in the major markets reaching $100 billion, the highest level ever, says IMS. However, beyond that period, savings opportunities will diminish as biotechnology drugs replace small-molecule medicines and, with generics unable to compensate for the growth arising from innovative products, pharmaceutical expenditures will escalate, it warns.

Therefore, with drug spending set to increase by around 5% annually in the near-term, the savings provided by generics over the next four years should be used to formulate a longer-term plan for their use, the report recommends.

Pointing out that gold-standard treatments for cardiovascular disease, central nervous system disorders, gastrointestinal disorders and many other chronic ailments are now available as generics, it stresses that initiation and continuation of treatment for these conditions should involve the use of generics as first-line therapy. This will generate sustainable savings, allowing for the use of truly innovative medicines, it says.

While the generics industry now supplies more than half the volume demand for medicines across Europe, it represents less than 18% in cost terms, and this has secured the provision of quality health care across the region, says IMS. “Without the presence and availability of affordable generic medicines, it is doubtful whether governments and payers could have sustained the growing demand for medicines,” it notes.

Moreover, while the generics industry is perceived as a threat to the R&D-based sector, recent examples of diversity within originator companies indicate changing dynamics and will lead to increase competition across all markets, which should be to the benefit of health care providers and ensure sustainable business models for the pharmaceutical industry, it forecasts. However, the report stresses that: “what should not be allowed to happen is any abuse of a dominant position by the R&D-based companies that leads to unfair competition or use of delaying tactics that cannot be defended.”

“To meet the rising demand from more patients who are living longer lives, requiring chronic therapy and expecting an improved quality of life, generic medicines offer established treatment at an affordable price – there is no other single, simple solution,” says IMS.

Presenting the study’s findings at a conference organised by the European Generic Medicines Association (EGA) in Brussels late last week, Alan Sheppard, global head of generics at IMS, said it was “essential that generics are available immediately on patent expiry and that benefits accrue into the future.”