Anti-competitive practice of pseudo-generics continue to drive up SA medicine prices
South African consumers continue to pay more for medication long past the expiry of a patent, as a result of the increasing occurrence of pseudo-generics in the South African pharma market. These drugs are ‘clones’ of the branded products, but are marketed by the brand name company under a different name.
This is according to Erik Roos, CEO of Pharma Dynamics – a leading generic pharmaceutical company, who says that pseudo-generics are often identical in all aspects to a branded product, but carries a different name and is sold at a slightly lower cost, thereby fooling consumers into thinking it is a true generic.
“The difference in cost between a pseudo-generic and true generic product can be up to 40%, but because patent medicine producers have a first-mover advantage by launching these pseudo-generics before the patent has expired, they maintain market domination. This crowds out natural competition as generics struggle to infiltrate the market and ultimately this practice unnecessarily delays the cost reduction of medicine.”
Pseudo-generics are common across medication categories and their presence has increased substantially of late.
Roos notes that the National Department of Health (NDoH) does have a rule against one company selling the same medicine at a different price, but that some companies have found a loophole in the system. “In many cases the brand name company will register a subsidiary with a different trade name to bypass this rule.”
He adds that it is a practice adopted by most originator companies abroad and in South Africa, but in recent years, various international reports confirm the uncompetitive nature of such practices which have been proven to lead to higher long-term medicine prices.
“It is important to keep in mind that generic companies also incur costs for laboratory testing as well as approval from the South African Health Products Regulatory Authority (SAHPRA) long before the patent expires on a product. This comes at a huge cost to the industry and further impacts on the extent to which medication can be discounted.”
According to research, an originator’s profit drops by about 30% – 40% once a true generic version of a product is introduced, while market share diminishes by up to 80%. This is why most originator companies release pseudo-generics or clones to ensure a continued price advantage.
Roos adds that the debate over affordable medication is hugely emotive in our country where 12 million people live under the breadline and where the poor often have to forego potential life-saving treatment because of the high price tag on medication.
“South Africans can no longer afford to pay unnecessary high prices for medicines because of uncompetitive practices which keep more affordable generics off the market and benefit only the big pharmaceutical companies.”
How can consumers distinguish between a pseudo-generic and a true generic?
The best way is to ask your doctor or pharmacist before making the purchase, advises Roos.
“To the average consumer, these products all look the same, but doctors and pharmacists understand a drug’s makeup and life-cycle, and will be able to point you to the true generic equivalent for maximum savings.”