The problem with branded generics

In recent months, members in England have been contacting the DDA for advice about Clinical Commissioning Group (CCG) formulary and prescribing incentive schemes which favour the prescribing of ‘branded generic’ drugs.  These are generic medicines which bear a brand name.   Branded versions of metformin MR, for example, are Bolamyn, Diagemet, Glucient, Metabet and Sukkarto.

The DDA understands that the Department of Health was informed by the OFT Market Study Report that there are no potential savings to the NHS of switching from a generic medicine to a branded generic,  even where the branded generic has a list price below the generic Drug Tariff reimbursement price.  Instead the OFT concluded that, in aggregate, these sales result in higher costs than otherwise would be the case.

The saving to the CCG’s drug bill through the lower reimbursement price does not match the lost margin to a practice, or pharmacy, and therefore increases the cost to the NHS.  This is because the discount that practices and, in particular, community pharmacies obtain is identified through the Margin Survey undertaken for the Community Pharmacy Contractual Framework (CPCF) negotiations.  This contributes to:

  • the discount clawback applied to community pharmacy reimbursement of products supplied against NHS prescriptions
  • the Medicine Margin that contributes to the CPCF funding, currently set at a target of £800 million per annum. It would mean that less margin will be found in the margin survey and the price of category M generic medicines or pharmacy fees and allowances will be higher than would otherwise be the case.

There are also other costs associated with dispensers having to obtain branded generics.

  • The products may not be easily available to practices and pharmacies through their usual wholesaler accounts. They may incur addition expenses obtaining them which are directly recharged back to the NHS, via the Out of Pocket Expenses claim, or in purchasing them from other suppliers means they will put fewer purchases through their main supplier account and potentially attract less discount, which in turn means less margin found in the Margin Survey and higher costs to the NHS
  • Dispensary and pharmacy staff may experience significant difficulties trying to source the products and spend time having to make extra phone calls and establish new accounts with different suppliers. This will be picked up in the CPCF annual funding negotiations as increased workload or ultimately identified in the Cost of Service Inquiry which underpins the CPCF funding
  • Where dispensaries and pharmacies have to split packs in order to fulfil a prescription and they do not use the remainder of the pack within 6 months, they are allowed to claim for residual stock. Use of branded generics is likely to increase these claims.

At present, prescribers need only prescribe by generic name, being assured that, in the main, competition in the generics market will drive prices down and dispensaries have the flexibility whether to dispense a brand or a generic depending on what is available at what price.

There are other reasons, in addition to cost, that the promotion of generics is encouraged:

  • Any large-scale move by prescribers to prescribe branded generics would undermine the generics market and could lead to difficulties in the supply chain leading to patients not receiving the medicines they need
  • Prescribing the generic provides dispensers and pharmacists with greater flexibility on the products they dispense to patients, so patients may obtain their medicines more quickly and less stock has to be held by the dispensary and pharmacy, which leads to savings for the NHS
  • Safer prescribing. Prescribing the generic also tends to give greater certainty amongst healthcare professionals treating a patient when, for example, patients move between care providers, for example, on discharge from hospital, as to the patient’s treatment regime.  Prescribing by generic name tends to remind clinicians of the therapeutic action of the drug so they are less likely to prescribe a drug of similar action unintentionally causing duplication or prescribe a second medicine which is incompatible with the first.

In conclusion, the DDA actively encourages the prescribing of medicines by generic name and urges all CCGs to avoid looking at short term gain by promoting certain Branded Generics in favour of driving overall NHS costs down.