The UK pharmaceutical industry, and in particular the generic medicines segment within it, has grown significantly in recent years. For example, the use of generic medicines doubled between 2005 and 2017 to reach 75% of total prescriptions while accounting for 28% of NHS spending on drugs valued at reimbursement prices. These developments have been, to a large extent, driven by the increased focus of regulators and policymakers in the UK on reducing overall healthcare costs. At the same time, there has been a high level of scrutiny of the pricing of medicines and associated business practices of the pharmaceutical industry, including the generic medicines segment.

In this context, the British Generic Manufacturers Association (BGMA) commissioned Oxera to undertake a study to assess whether the existing market and regulatory mechanisms in place for the supply of generic medicines in the UK within the primary care environment are delivering benefits for patients and the government, and whether they are appropriate in the current context.

To address these questions, we conducted a range of qualitative and quantitative assessments. These included structured interviews with generic manufacturers, which provided the economic context within which manufacturers take strategic decisions such as those regarding entry, exit and pricing. This was complemented with an analysis of the actual selling prices charged by generic manufacturers to wholesalers, including comparisons with the branded product price before generic entry in the UK and with generic prices in selected other European countries. The study also looked at instances of price increases to investigate whether such increases are sustained or reversed over time. Overall, our assessment indicated that the existing market and regulatory mechanisms in the supply of generic medicines in the UK are working well in general, with generic medicines delivering significant benefits to patients and the NHS. The study also commented on the economic and regulatory principles, and other key considerations, relevant for any intervention in specific cases, should this be warranted.