Pricing Strategies of Originator and Generic Medicines following Patent Expiry in Belgium

Abstract

There is little European evidence on how originator and generic medicines set prices in the off-patent market and on the factors that influence pricing strategies. The aim of this study was to examine pricing strategies of originator and generic medicines following patent expiry in Belgium. To this effect, the evolution of the public price of originator and generic medicines was investigated from July 2001 to December 2005. Regression and scenario analyses show that the Belgian off-patent market is a segmented market when it comes to pricing. Pricing strategies are influenced by regulatory aspects, such as successive reductions in reference prices and prescription status of medicines; by market incentives in the form of price competition between generic medicines and competition between originator and generic medicines; by medication class; and by market power of the manufacturer of the originator medicine. Therefore, there is no single pricing strategy that authorities or manufacturers can use to predict the pricing behaviour of originator and generic medicines following patent expiry and to foresee the development of the generic medicines market.