Expiry of patent protection on statins: effects on pharmaceutical expenditure in Australia

In reply: The main purpose of our recent article1 was to quantify estimates of pharmaceutical expenditure over the next decade using various assumptions regarding the price and use of generic statins. We report estimates of billions of dollars in potential savings associated with various scenarios that increase the current off-patent statin use in Australia from around 25% of prescriptions to between 50% and 100%. Simoens misinterprets our conclusions as recommending only using generic statins in Australia. We do not advocate any particular level of generic substitution, but argue that the optimal mix of patented and generic statins should be determined by using cost-effectiveness analysis.

Simoens questions whether our results would change if we had compared statin prices with a country other than England. To address this issue we have compiled a comparison of current or recent wholesale price of 40 mg simvastatin across 13 countries in the Organisation for Economic Co-operation and Development (Box). Although there is some variation between countries, the main difference is with Australia, which has the highest wholesale price — about five times greater than the average price across all comparator countries. This price ratio is similar to the one used in our original study.

Also, Simoens highlights several issues relating to alternative pricing arrangements for statins and other generic drugs in European countries. We agree that Australia may be able to learn from overseas experience when reforming its system of pricing generic pharmaceuticals.

The impact on expenditure of the tendering system for supply of generic pharmaceuticals may have been counteracted by changes in prescribing behaviour in Belgium, but it has been successfully used in the Netherlands to cut the price of simvastatin and other major generics by over 80%. This has been estimated to save around 310 million euros annually.2

However, tenders are not the only way to reduce the price of generic pharmaceuticals. In Canada, the Ontario Ministry of Health and Long-Term Care has recently introduced a policy which sets the subsidy for generics at 25% of the original price under patent. Generic 40 mg atorvastatin, whose patent in Canada recently expired, now costs just A$17 per month.3 In contrast, under the recent Memorandum of Understanding4 between the Australian Government and Medicines Australia, the current wholesale price of A$61 for 40 mg atorvastatin will decline by only 16% after the patent expires in Australia in 2012, and there will be no further downward adjustment until at least 2014.

Wholesale price of simvastatin 40 mg in 13 countries in the OECD*

OECD = Organisation for Economic Co-operation and Development. * Comparator prices were converted to Australian dollars using the average exchange rate over the past 3 years, and 1 month supply was assumed to be equivalent to 30 tablets.