Lead Author: Felix Lobo
Organization: Universidad Carlos III de Madrid
Country: Spain

Abstract

1. INTRODUCTION
The expansion of generic medicinal products to the entire world over the past 35 years is generally acknowledged as one of the phenomena that have contributed most to getting affordable prices and facilitating access to medicinal products in the developed and developing countries, including the disadvantaged. Generic medicinal products make it possible to provide great savings to individual patients, private health insurers and public health systems.

The policy that has fostered this development of generic medicinal products is based on appropriate national and international regulation, for international nonproprietary names (INN) as well as for the bioequivalence requirements allowing for interchangeability of brand names with generics and generics with other generics. This two-tier regulation allows for market transparency and price competition, resulting in affordable price levels. Added to this are the regulations fostering quick market access once the patents expire, eliminating the need to submit redundant clinical studies.

It is therefore of the highest importance to have appropriate national and international  legislation and medicinal product policies so the generic medicinal products can continue to develop throughout the world..

There are currently some problems that could limit expansion of generic medicinal products, We are referring to two in particular:

• New legal texts in some countries that create confusion between generics and brand names, reflected in a hybrid legal construction called "randed generics ."

• The measures being adopted in the World Health Organization International Nonproprietary names systemsto designate the new biological medicinal products that couldjeopardize the integrity of this system and be an obstacle to market transparency while making price competition more difficult between innovative biological products and their biosimilar products that appear once the patent expires.


2. THE WHO INN SYSTEM AND ITS SOCIAL BENEFITS
In 1950 the WHO committee of experts for unification of pharmacopoeias decided to create a common international nomenclature for medicinal products. In 1953 they introduced  the WHO International Nonproprietary Names (INN). These are generic names, in nontechnical language. Later the majority of national legislations adopted the INN.

Transparent generic medicinal product markets with price competition are based on national and international regulations arising from the INN and they have four cornerstones:

1. Common international nomenclature created by WHO, called INN.
2. Obligation of the manufacturers to use the generic name on labels and advertising.
3. Substitution by the pharmacist, or direct selection by the health system, of the less expensive generic for the more expensive brand name.
4. Incentives including the obligation for physicians to prescribe by generic name (Prescription by active ingredient)/

The INN (WHO International Nonproprietary Names) bring major social benefits:

Public health improvements:
• They facilitate mutual understanding between scientists and health professionals.
• They facilitate the work of the public health regulatory authorities.
• They improve patient safety and decrease medical errors.

From an economic point of view, the INN are public assets, which allow for transparency of the generic  markets and price competition, leading to affordable price levels, much lower than those for the brand name product originally patented.

And other economic benefits:
• Network externalities: the more they are used the greater the benefits for all
• They reduce transaction costs (Kindleberger, 1986).
• They promote trade
• They do not impede innovation.


3. IT IS ONLY NECESSARY TO RECOGNIZE AS GENERIC MEDICINAL PRODUCTS THOSE THAT IN ADDITION TO BEING EQUIVALENT ARE SOLD UNDER THE INTERNATIONAL COMMON NAME.

In order to be able to talk about generics that allow for market transparency and price competition and in order for all of these public health and economic benefits to come to fruition, it is necessary to have competition in the necessary conditions  but neither of these is sufficient:

• Equivalence between the generic medicinal product and the innovative medicinal product having lost its patent
• For the generic medicinal product to be sold under the international nonproprietary name. This has to appear in the medicinal product name prominently, on the packaging, in the leaflet, in the data sheet, on all labeling and in advertising.

Unfortunately, quite frequently there is confusion caused by the belief that all medicinal products are generic. This is not true. All generics must be equivalents but not all equivalent medicinal products are generic. In particular, sometimes some medicinal products are considered as generic that are equivalent but not sold under the International Nonproprietary Name but under a trademark. Sometimes these are called “branded generics,” even in economic studies and even in World Health Organization documents.

Clearly, these  “branded generics” do not produce the above public health benefits. Also, they do not compete mainly on price, but by differentiating the product, allowed by using the brand name, according to the market structure and the behavior of the traditional branded medicinal product company market. Although they are equivalent to the originals, they are not generic and do not generate the public health and economic benefits that come with price competition. The traditional example of this type of products is "copies," which come from countries with weak patents allowing for sale of the innovative medicinal products by competitors even before the patent expires. In many cases, the legislation does not require demonstration of bioequivalence.

Allowing access by the “branded generics” – which provide no public health benefit or price competition - the legal system of the generics, such as easy market access, or preference in purchases from the public health systemor in government intervention on prices, is not appropriate. It Is necessary to retain the clarity of regulation so the generics markets continue to be beneficialfrom the point of view of public health while maintainingtransparency and functionality under full price competition


4. THE 2004 STANDARD ON GENERICS FROM THE EUROPEAN UNION INTRODUCED THIS CONFUSION BETWEEN GENERICS AND BRAND NAMES

Before 2004, European legislation did not contain a “definition” of generic medicinal product as such. It regulated the "essentially equivalent" medicinal products and the permissible names of the medicinal products, to include the combinations of INN plus the manufacturer name and INN plus the brand name. This correct regulation allowed for development of generics meeting the two conditions indicated above: bioequivalence and name that includes the INN.

But in 2004 Directive 2004/27/EC changed and introduced confusion between generics and brand names, allowing  "branded generics" to appear and to use the generics legal system”:

It defines the generic medicinal products exclusively by the first condition but not the aforementioned bioequivalence.
Does not establish any requirement for naming generics.
Allows for “branded generics

The legislation from the member countries provided no improvement but simply transposed and incorporated this standard.

5. ACTIONS TO CLARIFY THE CONCEPT OF GENERICS AND FOSTER THEIR FUTURE DEVELOPMENT

The World Health Organization should promote discussions, studies and resolutions that definitively clarify the legal concept of generic medicinal product and its regulation nationally and internationally.

To do so, it should require simultaneous application of both of the aforementioned conditions:

• Equivalence between the generic medicinal product and the innovative medicinal product having lost its patent
• For the generic medicinal product to be sold under the international nonproprietary name.

This will reinforce market transparency, price competition, affordable price levels and improved access to the medicinal products in all countries, including the disadvantaged.

Bibliography and References

LOBO, F.: Políticas actuales de precios de medicamentos en Europa: panorama general. [Current medicinal product price policies in Europe: a general overview], Springer Healthcare, Madrid 2015. 181 p. ISBN 978-84-940-3469-5

LOBO, F.: La intervention de precios of the medicamentos en España. Panorama de la regulation y los estudios empíricos [Medicinal product price intervention in Spain: overview of regulation and empirical studies], Springer Healthcare, Madrid 2013. 159 p. ISBN 978-84-940-3468-8.

FELDMAN, R. y LOBO, F.: “Competition in prescription medicinal product markets: the roles of trademarks, advertising, and generic names”, The European Journal of Health Economics, 14(4): 667-675, August 2013. ISSN 1618-7598; e-ISSN 1618-7601. DOI 10.1007/s10198-012-0414-7.

LOBO, F. y FELDMAN, R.: ”Generic Medicinal product Names and Social Welfare”, Journal of Health Politics, Policy and Law, 38(3): 573-597, June 2013.
ISSN: 0361-6878; e-ISSN: 1527-1927. DOI 10.1215/03616878-2079505. http://jhppl.dukejournals.org/content/38/3/573.abstract.html