When you go to the chemist to get your prescription medications, the pharmacist will often ask if you’d like the generic version. When you ask what the difference is, he or she will usually say: “they’re exactly the same”. So you figure, hey, why the hell not? What you may not realise is that your pharmacist could have a financial motivation in dispensing generic medicines rather than branded medicines. Changes to the system are currently underway, however, and you’re set to benefit from them so long as you’re aware of your choices and how they affect you.
Photo remixed from original by Mario Villafuerte/Stringer (Getty Images)
The introduction of price disclosure is one important part of broader reforms to the PBS, the program that subsidises prescription medicines in Australia. Price disclosure will require pharmaceutical companies to tell the Government the actual price at which medicines are supplied to pharmacies. So instead of subsidising generic medicines based on the labelled prices, the Government will reimburse pharmacies the discounted wholesale price that pharmacies are actually paying for buying medicines in bulk. The first round of these price reductions will begin on April 1, 2012.
The price disclosure arrangement ensures that the Government reaps the benefits of these discounting arrangements between the pharmacies and its suppliers. Since the Government only subsidises up to the price of the lowest medicine in a group, it’s expected that these reforms will save the Government hundreds of millions of dollars over just a few years, which can then be directed elsewhere in the public health system.
For example, if sertraline (an antidepressant) has an approved price of $10, the government is using taxpayer funds to reimburse pharmacists $10 under the PBS, even if the pharmacy is able to purchase the medicine at a $5 discount for buying in bulk. The Medical Journal of Australia provides this example:
For example, the dispensed price of generic simvastatin 20 mg is $34, $22 of which is intended to cover its wholesale cost. The results of the first round of price disclosures for simvastatin indicate that pharmacists have actually been paying, on average, $10 for this drug.
Using data from Medicare Australia, it is possible to estimate that total PBS payments to cover the wholesale cost of simvastatin amounted to around $150 million between May 2010 and October 2011. Price disclosure data reveal that pharmacies only spent $70 million on the drug, due to discounts from manufacturers.
So these reforms mean that where pharmacies may have previously had the opportunity to pocket the difference, they will soon have less of a financial motive to encourage you to switch to a generic medicine. We’re not suggesting that pharmacies are all acting inappropriately in the first place — after all generic medicines are no different to branded medicines in that they can only be sold to you on a doctor’s prescription — but you have the right to know the facts, so that you can make the right choice for you.
“A good pharmacist will work hard to negotiate deals with generic manufacturers to increase their bottom line,” says Luke Owen, pharmacist manager at Terrigal Pharmacy on the NSW central coast. “It is in a pharmacist’s best interest to substitute, because, put simply, originator brands charge a pharmacist more money for the same thing.”
While it’s true that pharmacists are offered price incentives to offer generic medicines where appropriate, increased competition provides more choice and a better outcome for patients. “The consumer stands to win from switching their medicines to a generic, as the price premium paid for an original brand of medicine can be substantial,” says Sydney-based pharmacist Mandy Ambler. “Neither the pharmacist, nor the government pocket this extra cost — the pharmaceutical companies do. To an elderly pensioner taking many medications, the brand price premium can be prohibitive.”
Given the opportunity to spend less for an identical product, most of us would do that. But that in turn raises another question:
Are generic medicines really the same as their branded counterparts?
The short answer is yes. The longer answer: Generic medicines and branded medicines contain the same active ingredient, but they may have different inactive ingredients. The active ingredient is the part of the drug that makes you better, and the inactive ingredients, known as excipients, are the bulking agents, fillers and lubricants that bind the medicine together and allow the medicine to be reliably produced, stored, delivered and absorbed in the body.
The Therapeutic Goods Administration (TGA) requires generic medicines to undergo a bioequivalency test to ensure that they meet the same quality criteria and manufacturing standards as the brand-name products. This means that the generic medicine must have an equivalent drug-plasma concentration profile to the original, non-generic brand.
Andrew McLachlan, Professor of Pharmacy (Aged Care) at the University of Sydney, says that bioequivalence testing ensures that the effects of generic medicines are the same as branded medicines:
[Bioequivalence testing] involves administration of each brand of that medicine to healthy volunteers, usually on two separate occasions. They provide blood samples in which they measure the concentration of the drug itself, or whatever it’s broken down to, and they make a direct comparison between each brand of the medicine to make sure the concentration in their blood is the same whether they receive the generic or whether they receive the branded medicine… if you achieve the same concentration in your blood, you should expect the same beneficial effects and even harmful effects.
Owen says that those of us who choose generics have nothing to worry about. “It is a common misconception that generics are like comparing your favourite supermarket brands with home brand, or a cheaper and inferior product,” he says. “This is not the case; the active ingredient is, for efficacy and safety purposes, a carbon copy of the originator.”
According to the Generic Medicines Industry Association (GMiA), generics make up just 36 per cent of medicines dispensed in Australia, although it’s as high as 78 per cent in the US. Despite the evidence, it’s clear that doubts about generic medicines persist for one reason or another. A national survey in 2008 (PDF) found that 20.6 per cent of pharmacists either agreed or strongly agreed that generic medicines were not always as effective as branded medicines, while a further 22 per cent were undecided. Similarly, one-fifth of general practitioners (PDF) either agreed or strongly agreed that generic medicines were not as effective as branded medicines, with 30.8 per cent undecided. With financial and political motives overshadowing the agenda, it’s no wonder that consumers are also confused.
When should I NOT substitute?
Owen says that a patient’s stability should not be compromised by brand swapping. For example, dispensing generic brands to epilepsy patients is not recommended (PDF), as inactive ingredients may affect the level of the active ingredient in the blood stream. The sensitive nature of the disorder means that even the slightest change can be dangerous to the patient. “If we vary brands we may cause the serum levels to fluctuate significantly giving rise to the potential risk of a seizure,” says former pharmacist Jeff Baker. “Carbamazepine is an anti-convulsant that should not be substituted for this reason.”
If one particular brand of medicine contains an inactive ingredient that you may have an allergy or intolerance to, such as gluten or lactose, your doctor or pharmacist will give you the brand that is most appropriate for your individual needs.
Baker also brings an ethical argument into consideration, saying that GPs may be biased and actively support drug companies and specific brands. This is a controversial point beyond the scope of this article, but if you’ve ever seen the 2010 movie Love and Other Drugs, you’ll know that brand favouritism is not a far-fetched idea.
“As long as the generic has been proven bioequivalent by TGA and the doctor has not ticked ‘brand substitution not allowed’, it is at the pharmacist’s discretion to choose what brand they would like to dispense,” says Owen. “When pharmacists ask if patients would like the generic it is purely a courtesy and not a legal requirement.”
Baker says that we shouldn’t underestimate the importance of generic medicines. “Many drug companies supply generic manufacturers with raw material and enjoy income from both generic and branded sources. The generic market allows for greater prescribing and treatment at reduced costs. This in itself allows for the masses to be treated rather than the privileged few.”
The best thing you can do for yourself is to be armed with the right information and ask the right questions. If you’re allergic or intolerant to anything, tell your doctor and pharmacist so that they can give you the most appropriate treatment. Learn the active ingredient of the medicines you’re taking — not just the brand name. If you’re taking lots of different medicines at once, make sure you know what each one is for. And don’t be afraid to ask questions about your medicines — you have a right to know your choices.
What’s your take on generic medicines? Share your experience with us in the comments.
Special thanks to Andrew McLachlan, Jeff Baker, Mandy Ambler, Luke Owen and Kate Lynch for their contribution.