What are generic drugs?

Due to the registration qualifications, there are innovative and generic drugs as well as preparations with the so-called well established use. Companies producing innovative (original) drugs are of great importance in the development of new technologies. However, the pharmaceutical industry in Central and Eastern Europe is dominated by companies producing generic drugs (the so-called generics).
Generic drugs are equivalents of original products, the patent protection of which has already expired or has not been applied for. The original and generic medicine may differ in name, manufacturer and price. However, the active substance contained in them, which is responsible for the action of the drug, and its amount will always be the same.
Analysts say that the generic drugs market in 2008 was worth EUR 17.2 billion, and predict its further development. Also in Poland, generic companies have a large share in the pharmaceutical sector. Among many European countries, it is Poland that is the leader in terms of value and quantity of generic drugs sold. In terms of value, generic drugs constitute 88% of the drug market in our country, and in quantitative terms – approx. 66%, which is definitely more than in other countries.

Patent law regulations in UE

Generic drugs and biosimilars are manufactured and placed on the market after the period of protection of innovative drugs – in particular, patent protection and protection resulting from granting a given product the so-called Supplementary Protection Certification (“SPC”).
Currently, the legal act regulating the SPC is Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 on the supplementary protection certificate for medicinal products (the “SPC Regulation”).
According to it, the term of patent protection in the European Union is 20 years and may be extended for another 5 years. As a rule, medicinal products are protected by multiple patents – in some cases from 20 to 40 patents and sometimes even more. According to the data of the European Commission, there is a drug protected in the European Union by up to 1,300 different patents. Patent protection may apply to the product itself, the manufacturing process, use or formulation.
A separate element of patent protection is Data Exclusivity of an innovative medicine. Data exclusivity determines the period during which the company applying for registration of a generic medicine cannot refer to the results of clinical trials conducted by the manufacturer of the original drug. In such a case, the generic medicine may be placed on the market only after the period of data exclusivity has expired. When applying for registration of a generic drug, the same rules apply as in the case of introducing original drugs to the market. Drug registration is valid for 5 years. During this time, the manufacturer is required to assess the safety of its own product and all other drugs containing the same active substance. The registration can be renewed with a comprehensive safety report.
Companies producing innovative drugs try to use many mechanisms that may delay the introduction of generic drugs to the market. The most frequently introduced strategies of pharmaceutical companies include refreshing patents, increasing the number of patents for the same drug, bringing court cases against manufacturers of generic drugs, and applying for a generic sales ban until a court dispute is resolved.

SPC Manufacturing Waiver

It is worth paying attention to the recent changes in patent law, namely to the restriction of patent law introduced by the European Union. It turned out that strong regulations limited European generics producers to such an extent that they lost their competitiveness.
Previously, a manufacturer with plants outside this area could start the production of drug equivalents during the protection period (without being accused of infringement of exclusive rights). As a result, it was able to bring generics to the European market as soon as the SPC has expired.
On the other hand, entrepreneurs whose production centers were located within the European Union were in a much worse situation. Under the previous legislation, they could start production only after the expiry of the additional protection right. As a result, generic drugs manufactured by manufacturers from Europe appeared on the market a few months later than the goods of entrepreneurs operating outside the European Union. These few months could be crucial for building a competitive advantage.
For this reason, the European Union has granted manufacturers of generic drugs a special privilege called SPC Manufacturing Waiver. A production exception introduced by Regulation (EU) 2019/933 of the European Parliament and of the Council of May 20, 2019 amending the SPC Regulation (“SPC Waiver Regulation”) allows generic drug manufacturers to:
o manufacture, within the territory of the European Union, of medicinal products for the purpose of export to the markets of third countries, as well as any related operations necessary for such manufacture or for the export itself.
o production and storage of medicinal products in a Member State within 6 months prior to the expiry date of the SPC in order to enter the Member State’s market from the first day after the expiry of the SPC, as well as any related operations strictly necessary for such manufacturing or storage, provided that such related activities will take place no earlier than six months before the expiry of the SPC.
These activities are intended to help manufacturers of generic and biosimilar medicinal products to compete effectively on the markets of third countries and to provide support for manufacturers of generics and biosimilars to compete effectively in the territory of the Union from the first day after the expiry of the SPC protection.

Launching a generic drug to the market

Thanks to the guarantee of equally high production standards and constant monitoring of safety and effectiveness, patients can freely choose the product that best suits them in the pharmacy. The manufacturing process of generic drugs must follow the principles of Good Manufacturing Practice (GMP). Compliance with the GMP rules allows for the provision of good quality medical devices.
A drug must also undergo the appropriate amount of tests and studies. The drug must contain the same composition (quantitative and qualitative) of active substances as the original (reference) medicinal product, must be at the same form (tablets, syrup, inhaler, etc.) as the original and it has to prove that its operation is consistent with the reference medicinal product (bioequivalence and bioavailability studies).
The highest quality standard in Europe is The Certificate of Suitability (CoS) awarded by the European Directorate for the Quality of Medicines (EDQM). It confirms that the active substances meet the requirements of the European Pharmacopoeia standards.
After approval of a generic drug, it is subject to further “observation”, similarly to innovative drugs. Regardless of the type of drug manufactured, all pharmaceutical companies are required to monitor the use and safety of a given product. Due to the fact that generic drugs are introduced to the market many years after the appearance of the original drug, the effects of the active substance contained in them are already well known. For this reason, the occurrence of unpredictable side effects is very rarely observed. However, this does not release the company from supervision over the safety of a specific medicinal product (pharmacovigilance). Such procedures are to confirm that effective and safe medicinal products are available on the market.
The marketing of a generic drug is simpler than the registration of an innovative drug, as the applicant may rely on the clinical and preclinical studies of the prototype. He is obliged to provide evidence that the quality, effectiveness and safety requirements have been met. The registration process of a generic drug itself takes from 1 to 2 years, sometimes it may be extended.

Polish law and the problem with the obligatory reduction of drug prices

In Poland, generic drugs are regulated in the Pharmaceutical Law Act of September 6, 2001. It guarantees the Polish patient the possibility of replacing the original drug with a cheaper equivalent – the pharmacist, at the patient’s request, may issue a drug other than the drug prescribed on the prescription, with the same international name, dose, pharmaceutical form or similar pharmaceutical form, which does not cause therapeutic differences, and about this the therapeutic indication itself, the price of which is lower than the price of the drug prescribed on the prescription. This process is called “generic substitution”.
In Poland, however, generics are one of the cheapest in Europe and, contrary to appearances, it is not a positive fact at all. According to the report of the Polish Association of Pharmaceutical Industry Employers, the average cost of one tablet of a generic drug sold in hospital and pharmacy channels is 10 cents. It is less than in another 19 EU countries, with which Poland was compared. It is still so cheap in the Netherlands and Romania. In other EU countries, one generic tablet is more expensive.
In Poland, according to the applicable reimbursement act, the first generic drug to enter the reimbursement list must be 25 percent cheaper than a drug that has expired. If more generics appear on the market, the price drops even more. Despite the fact that this is the case – the Ministry of Health, during the negotiations, forces producers to reduce the prices of the same products every three years – as a result, Poland has reached the lowest level in the EU.

Further price reductions will inhibit the development of the domestic industry for which the Polish market is a priority, as assessed by the Polish Association of Pharmaceutical Industry Employers. A significant drop in the profitability of the production of pharmaceutical products in Poland results in a reduction in investment outlays. The large difference in prices between Poland and other EU countries is conducive to the illegal export of drugs abroad. It also threatens to give up sales on the Polish market, because lowering prices in one country generates similar price expectations in other markets. As a result, Polish patients may be left without therapy.