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Vol 271 No 7272 p587-589
25 October 2003

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Patent expiries — how should they affect prescribing advice?

By Angus Thompson, MSc, MRPharmS

In this article the author looks at recent trends in the generic drugs market and how these should influence the policy decisions of primary care organisations

Angus Thompson is an independent prescribing adviser, e-mail [email protected]

For a number of years, it has been National Health Service policy to increase the percentage of generic drugs prescribed in order to achieve better value for money. This is particularly relevant with chronic conditions such as coronary heart disease where prescribing is a major component of overall costs, accounting for £558m of the estimated £7.06bn CHD costs per annum.1

What is now the most cost-effective solution for primary care organisations faced with a confusing choice between branded and generic statins?

Each year in the United Kingdom many long-standing products reach the end of their patent-protected period, resulting in the introduction of new generic products. This year is no exception and one of the most notable was the expiry of the patent on Zocor (simvastatin) which occurred on 5 May. Patent expiries have traditionally provided an opportunity for the NHS to reap “windfall” savings, although there is increasing evidence that it is taking longer for the NHS price of generic drugs to fall by an amount significant enough to affect prescribing budgets.

The UK generic drug industry and its effect on the NHS
In order to understand this issue, it is necessary to discuss the UK generic drug industry’s relationship with the NHS in the recent past. When a prescription is written generically, the dispensing contractor can supply any version of the preparation that is licensed that meets the required specification. This allows generic medicines to compete on price at the point of dispensing. In this way, the generics market is essentially a commodity market, where prices rise or fall depending on supply and demand.

Dispensing contractors are reimbursed for the majority of generic prescriptions by means of the Drug Tariff system, administered by the Prescription Pricing Authority in England and Wales. In the past, when there were difficulties in supply of a generic product, it was classified as a Category D preparation, which allowed pharmacists to supply branded products against generic prescriptions and claim for the cost of the brand. Between September 1998 and November 1999, the number of Category D products increased from 30 to 192. Among them were many of the most common generic drugs. This increase had an enormous impact on NHS budgets, with generic drug costs rising by 45 per cent overall during 1999.2 The effect was exacerbated by the increased numbers of Category D items slowing processing of prescriptions at the PPA, with the effect that the full cost implications for primary care organisations only became known after several months.3

As part of the response to these problems, the Government commissioned a fundamental review of the generics market from Oxford Economic Research Associates (OXERA) in November 1999.2 As a result of its recommendations, the Government put in place a statutory maximum generics price scheme to protect the NHS from such price increases in the future and to stabilise the generics market.2 Since the introduction of the scheme, the supply of generics to dispensing contractors has remained stable. The Government has recently announced that through this market stability, it estimates the NHS has saved around £330m a year.

What are the factors affecting NHS generic drug prices?
The cost of manufacturing generic medicines depends on a number of factors, including the availability of raw materials and the complexity of the manufacturing process. Once manufactured, the cost to the NHS is based on a sample of prices from major suppliers assessed monthly by the Department of Health/PPA. These prices essentially depend on the level of competition in the UK market place.

The market price for generic prescription medicines is, however, a wholly different issue and one which must not be confused with the price to the NHS and the consequent impact on primary care prescribing budgets. Many generic drugs are available to dispensing contractors at a price significantly lower than that listed in the Drug Tariff. This is to some extent adjusted for by the discount clawback, effectively creating a balance which supports some of the activities of community pharmacy.

What does history tell us?
Over recent years, a number of branded drugs have seen their patents expire, including some of the blockbuster products like Prozac (fluoxetine) and Innovace (enalapril). The pattern with these drugs was that prices fell quite rapidly in the months following patent expiry and the subsequent launch of generics such that within around a year, the NHS price of the generic, as set in the Drug Tariff, had more or less stabilised at around half the price of the parent brand. The result was that the NHS inherited a significant saving within a relatively short period.

However a different situation has been seen with other drugs following the expiry of patents. One such is gliclazide, where today, many years after the patent expiry on Diamicron, the NHS price of the generic is only around 12 per cent less than the brand. For others, such as domperidone, the NHS price of the generic has actually remained slightly higher than that of Motilium, the original branded version.

Recent experiences
Last year more major pharmaceutical products came off patent than in any other recent year. Among the most notable were Losec (omeprazole), Cardura (doxazosin), Zestril (lisinopril), Ciproxin (ciprofloxacin) and Zirtek (cetirizine). In all cases, generic versions soon followed.

However, monitoring the trends in NHS prices through observation of the Drug Tariff for these products shows that the financial savings have, to date, been modest. It is therefore interesting to contemplate how long it will be before there are really significant price reductions and consequently savings for the NHS. Projections relating to this are shown in Table 1.

Table 1: Projected time for the NHS generic price of cetirizine, doxazosin and omeprazole to fall by 40 per cent


Price of branded equivalent (£)

Date ofgeneric launch

NHS generic price in July 2003 (£)

Projected time for NHS generic price to fall by 40% (years)

Omeprazole 20mg capsules


April 2002



Doxazosin 2mg tablets


April 2002



Cetirizine 10mg tablets


May 2002



At a time when primary care prescribing budgets are under intense pressure and increasingly performance managed, the potential savings from patent expiries are considered by some to be highly significant. Indeed, some primary care organisations build anticipated savings into their budget projections for the financial year; in some cases these have been based on the fluoxetine/enalapril model. Where this is the case, these PCOs are likely to be left facing a search for additional economies in order to deliver a balanced financial position as the year progresses.

Statin prescribing
The fact that Zocor (simvastatin) came off patent in 2003 is potentially significant since the increase in statin prescribing has been one of the most dramatic ever seen for a group of drugs. Prescriptions for statins increased by 30 per cent in 2001, with 2.6 million more items in 2000–01 than in 1999–2000 and they now cost the NHS more than any other class of drug.4

National guidance has been the major factor that has driven growth in statin prescription volume across the UK. Prescribers are actively introducing a statin in patients with diagnosed CHD or a significant CHD risk, in order to reduce low-density lipoprotein cholesterol to 3.0mmol/L or by 30 per cent, whichever results in the lowest level.5,6 The recent publication of the Heart Protection Study (HPS)7 and the Anglo Scandinavian Cardiac Outcomes Trial (ASCOT) study,8 has highlighted that statin treatment may be justified in an even wider group of patients who are at risk of CHD, including people with stroke, those with diabetes, the elderly, women and those with baseline cholesterol levels which are currently considered below the threshold for treatment. Estimates have been made that almost eight million people in Britain could benefit from statin therapy. Even if national or local decisions are made that moderate these projections, it is likely that there will continue to be growth in statin prescribing for the foreseeable future. In the face of such massive predicted growth, it is obvious that PCOs need to manage the costs associated with statin prescribing carefully.

The UK lipid-lowering market is dominated by two statins: simvastatin and atorvastatin (Lipitor), which increased by 16.9 per cent to 4.3 million items and by 62.6 per cent to 3.2 million items, respectively, in 2000–01.9 The rise in cost parallels the rise in prescribing volume, such that in 2000–01, £151.4m was spent on simvastatin and £110.8m on atorvastatin.9 The question is, what is now the most cost-effective solution for PCOs faced with a confusing choice between branded and generic statins?

The capacity of atorvastatin 10mg to reduce LDL cholesterol lies between that of simvastatin 20mg and 40mg.10 However, at the time of writing, the NHS costs are quite different, with atorvastatin 10mg at £18.03 for 28 days, whereas simvastatin 20mg and 40mg cost £29.69 for 28 days. It follows that the NHS price of these strengths of generic simvastatin would need to fall by around 40 per cent from the current price of branded Zocor to match the cost of atorvastatin 10mg. Those interested in delivering, and budgeting for, cost-effective statin prescribing over the next few years are thus asking how long it might take for such a price reduction to be realised.

As we have seen, history gives us a variety of models on which to base such estimates. Optimists hope that the NHS price of generic simvastatin will follow the pattern seen with fluoxetine, whereas pessimists can cite examples of other widely used drugs, such as gliclazide.

With a product as valuable as simvastatin, there are already many generic companies in the market place and price competition at the point of dispensing is significant. Nonetheless, this situation is replicated with other recent major patent expiries, such as omeprazole and doxazosin. As these examples, in contrast with fluoxetine, post-date the turmoil in the UK generic drugs market, they give justification to the argument that significant price reductions for generic simvastatin may only be seen a number of years after patent expiry, as shown in Table 1.

Branded generics To add further to this complex area, there has recently been talk of branded generic simvastatin entering the market to “guarantee” PCOs lower prices. The case for such a product is based entirely around the argument that the NHS generic price will fall slowly after the patent expiry and it works by by-passing the Drug Tariff system. Such an option may at first glance appear appealing to those focused on budget control, but more detailed consideration highlights a number of far-reaching concerns that should to be taken into account.

Probably the biggest question mark is over the sustainable availability of a single branded generic product whose manufacture is out-sourced by the promoter. A second concern is the work required to switch prescriptions safely to the brand in order to achieve the savings, which, given the volume of statin prescribing, are not insignificant. Another concern is over the potential for confusion from such brand prescribing because this could have the detrimental effect of blurring the important message to prescribers that generic prescribing is still appropriate for the vast majority of drugs.

Looking ahead, a concern for many is the likelihood that competition in the generic simvastatin market will eventually see the price of the branded generic undercut. Although there is talk of branded generic prices being renegotiable should this situation arise, some see the spectre of switches being reversed, introducing yet more potential confusion for prescribers and patients. In addition to these factors is a potentially significant negative financial impact on dispensing contractors. This is particularly concerning at a time when community pharmacy, which has so much to offer in terms of enhancing medicines management, already faces uncertainty about its future.

In summary, history has seen this type of approach before and in such cases the benefits tended to be short lived and had a residual effect which caused many to regret their initial enthusiasm.

PCO policy decisions
Mindful of the long-term nature of statin prescribing and the foreseeable growth, many PCOs are now taking a long, hard look at their first-line choice for statin therapy. In many PCOs, atorvastatin has been a drug that has been advocated for a number of years based on its ability, at a 10mg daily dose, to deliver cholesterol reductions in line with current national guidance in a single step for many patients. The availability of generic simvastatin has already led some of these organisations to consider a change in these long-standing recommendations. However, it is clear that many factors need to be considered and those looking to make a quick saving may find the reality in the longer-term different from their current hopes.

The UK generics market has seen significant upheaval in the past few years and whereas in the past events following patent expiries could have been predicted with confidence, outcomes are now far less certain.

With the current plethora of major patent expiries, some PCOs are considering changing their current formulary choices to recommend drugs that have, or are about to, become available generically, with the expectation of reaping significant savings. Although history provides us with examples where savings have been made soon after patent expiry, more recent trends suggest that such savings may not materialise so quickly in the future.

Changes in the statin market, will without doubt be significant. However, a knee-jerk reaction to recommend switching patients, to either generic or branded generic versions of simvastatin, carries significant risks that over-stretched PCOs would do well to avoid. In contrast, a policy of watchful waiting has a great deal to commend it.

Stop press
Since this article was written (July 2003) the Department of Health has published proposals to change the way in which community pharmacies are reimbursed for purchasing generic medicines. These may affect the conclusions drawn in the article.

From the proposals, the current gap between what contractors pay for generics and the Drug Tariff price will be narrowed. This may mean that the NHS price of generics may fall sharply or it may mean that manufacturers will be less keen to discount so heavily to maintain their margins within the boundaries of the scheme. The former would make “new generics” like simvastatin more financially attractive to the NHS, but the latter would not.

In addition, the DoH has only this month proposed a maximum NHS price for generic simvastatin to come into effect from 1 December 2003 (see PJ, 18 October, p533).


1. Liu JLY, Maniadakis N, Gray A, Rayner M. The economic burden of coronary heart disease in the UK. Heart .

2. Department of Health. Options for the future supply and reimbursement of generic medicines for the NHS. A discussion paper. Available as a file (230K) (accessed 20 March 2003).

3. House of Commons Select Committee on Health. First report: The cost and availability of generic drugs to the NHS. The impact. Available (accessed 20 March 2003).

4. House of Commons Select Committee on Health. First report: The cost and availability of generic drugs to the NHS. 1999 Available (accessed 20 March 2003).

5. Department of Health. National Service Framework for Coronary Heart Disease. 2000. Available (accessed 20 March 2003).

6. Boyle R. DoH explains thinking behind national service framework for coronary heart disease. BMJ .

7. Heart Protection Study Collaborative Group. MRC/BHF Heart Protection Study of cholesterol lowering with simvastatin in 20,536 high-risk individuals: a randomised placebo-controlled trial. 2002;360:7–22.

8. Sever PS, Dahlof B, Poulter NR, Wedel H, Beevers G, Caulfield M et al for the ASCOT investigators. Prevention of coronary and stroke events with atorvastatin in hypertensive patients who have average or lower-than-average cholesterol concentrations, in the Anglo-Scandinavian Cardiac Outcomes Trial — lipid lowering arm (ASCOT-LLA): a multicentre randomised controlled trial. 2003;361: 1149–58.

9. Prescription Pricing Authority. Growth in prescription volume and cost report. 2001. Available as a file (130K) (accessed 20 March 2003).

10. Jones P, Kafonek S, Laurora I, Hunninghake D, for the CURVES investigators. Comparative dose efficacy study of atorvastatin versus simvastatin, pravastatin, lovastatin, and fluvastatin in patients with hypercholesterolemia (the CURVES study). Am J Cardiol (erratum in Am J Cardiol 1998;82:128).

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