Generic drugs: international trends and policy developments in Australia

Abstract

Public and private third-party payers in many countries encourage or mandate the use of generic drugs. This articleexamines the development of generics policy in Australia, against the background of a description of internationaltrends in this area, and related experiences of reference pricing programs. The Australian generics market remainsunderdeveloped due to a historical legacy of small Pharmaceutical Benefits Scheme price differentials betweenoriginator brands and generics. It is argued that policy measures open to the Australian government can be conceivedas clustering around two different approaches: incremental changes within the existing regulatory framework, or a shifttowards a high volume/low price role of generics which would speed up the delivery of substantial cost savings, andcould provide enhanced scope for the financing of new, patented drugs.