More details have emerged about the measures just introduced by Italy’s federal government aimed at making new savings on pharmaceutical spending of 550 million euros this year and 600 million euros in 2011.

The austerity package, which has been published in the Official Gazette of the Italian Republic, clarifies that the prices of most generic drugs will be cut by 12.5% from June 1 to the end of the year, continuing the reductions that were brought in May last year to help the relief efforts following the earthquake in the Abruzzo region in early April. The price cuts will apply to all products qualifying for reimbursement by the national health service (SSN), except for those which have been the subject of price negotiations since September 2008, original patented drugs and those which have received licenses related to patented products.

Moreover, a tendering process will be introduced from the beginning of next year by the national drug agency (AIFA), under which no more than four equivalent products per active ingredient will be selected for full reimbursement by the SSN, based on the lowest prices. All drugs in each group other than these four which are available through the SSN will be the subject of reference pricing, and patients who wish to receive them will have to pay out-of-pocket the difference in price between their preferred drug and the reference product.

The AIFA will conduct comparisons of pharmaceutical expenditures in each of Italy’s 20 regions, in order to ensure that the most efficient cost-containment measures are implemented relevant to each region’s particular situation, and will centralise purchasing by hospitals and local health authorities. The agency will also establish a list of regionally-distributed medicines which have in the past been supplied by hospitals but will now be made available through pharmacies instead, making manufacturers rather than the regional authorities liable to cover any overspend.

The measures will hit manufacturers of both innovative and generic drugs, according to analysts at IHS Global Insight; while generics firms will benefit from measures aimed at boosting the use of their products, they will also have to deal with severe price reductions, not only from the mandated price cuts but also as a result of their products having to compete for reimbursement status.

The innovative drugmakers, on the other hand, will incur greater financial liability as a result of the changes to regional distribution systems and the requirement that consumers must pay the cost difference if they want any product supplied by the SSN which is not a one of the four reference products for each group.

“However, the continued lack of trust in generics among many Italians may mean that they will be prepared to pay the extra cost,” suggest the IHS analysts, who also point out that previous attempts in Italy to boost the use of generics have been “circumvented” by non-generics makers.