How does the new regulation in Abu Dhabi enhance local healthcare?
Effective from 1 September 2018, the Department of Health (DoH) in Abu Dhabi has introduced a new mechanism to mandate dispensing of generic medicines. This move is aimed at enhancing patients’ access to effective medicines, encouraging the use of generic medications, and opening new gates for the local pharmaceutical industry. This new regulation has naturally raised a number of questions: What are the differences between generic and brand medicines? How does the mechanism work? Which parties can benefit from this policy? Today, our experts at Pacific Prime Dubai will shed light on the new mechanism and find the answers to these questions.
Generic vs brand medicines
Generic medications are pharmaceutical drugs that contain the same chemical substance as the originally-developed and patented drugs. They are allowed for sale after patents on the original drugs have expired. With the identical chemical components, generic medicine is known to be “bioequivalent” to its brand-name counterparts, despite possible differences in color, taste, formulation, and manufacturing process. Thus, it works in the same way and provides the same clinical benefits and outcomes when compared with usually pricier brand-name medications.
How does the mechanism work?
Under the new mechanism, the DoH has developed a reference price for all drug categories with an equivalent generic substitute, but drugs without generic substitute would not have reference prices listed. This new system expands the patients’ choices of medicines as they can select between brand-name and generic medicines. While insured patients can expect pharmacies to offer generic medicines as long as they have doctor’s prescription, those who wish to claim medications with a higher value will have to pay the difference between the reference price and the brand-name medicine’s price.
This move is seen to encourage the use of generic medicine over brand-medicine. In fact, Abu Dhabi is not the first city in the world to promote the use of generic medication. For example, in Germany, 80% of prescribed drugs are generic, and in the UK, 78%. Abu Dhabi’s new mechanism is just another vote of confidence for the efficacy of generic medications.
Which parties can benefit from this policy?
This new policy will boost the local pharmaceutical industry since it will very likely push up the demand for generic medicines, thereby creating new business opportunities for domestic production. For example, just before the implementation of the new mechanism, Pharmax Pharmaceuticals, an UAE-based pharmaceutical company has announced that it would begin manufacturing more ‘affordable generic medicines’ in its factory at Dubai Science Park. The company stated they would produce medications targeting chronic conditions common in the region including cardiovascular diseases and gastroenterological diseases.
Aside from the increased demand, the policy reform also allows more pharmaceutical companies to take part in manufacturing drugs. As opposed to branded drugs which can be manufactured only by the pharmaceutical company that owns the patent, generic products can be produced by more than one company.
Previously, some doctors might prescribe branded drugs only and thus raise the overall costs of healthcare. Insurers incurred with losses might be forced to increase the premium over time.
But now, thanks to the policy change, medical professionals can use generic products in health facilities, thereby cutting the outlay by insurance providers. According to estimated figures from Aster Pharmacy, in some of the most common drugs, generic medicines can be cheaper by as much as 60% than their brand-name counterparts. Some health insurance professionals have even estimated that healthcare providers could save $2.3 billion by prescribing drugs that are just as effective as branded pharmaceuticals.
As mentioned above, the new policy will help patients save more money without limiting the options available to them. They will be allowed access to more cost-effective generic treatments through their pharmacies.
Furthermore, the lowered costs in medications can not only benefit health insurers but also patients themselves. This is because in many cases patients have to co-pay a certain amount for their prescribed drugs so the cheaper generic drug will be a more wallet-friendly option.
Additionally, the DoH has struck a balance between encouraging the use of generic medicine and catering to the needs of patients by excluding single-source medicines and drugs with narrow therapeutic windows from the department’s list of mandated generics. Single source medicines are those that are still under patent and therefore available only from one company. And drugs with narrow therapeutic windows can become toxic or ineffective with small differences in concentration. Therefore, their generic variations are usually deemed unsafe.
The win-win situation of all parties
The new mechanism has changed the shape of local healthcare and pharmaceutical market and has maintained the healthcare system’s sustainability. While currently this policy is effective in Abu Dhabi only, it is believed that Dubai may follow suit in the near future. Stay tuned to our blog page for more news and features on health insurance.
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