The Portuguese government has introduced a number of measures to reform the country's EUR300mn (US$357mn) generics market, which has expanded rapidly in recent years. The health ministry has now removed the 10% level of state reimbursement for generics introduced in 2000, with consumers and the pharmaceuticals industry expected to share the added costs.

Officials expect the move, which should save the government EUR30mn (US$35.7mn) per year, to cut pharmaceutical company margins from 20% to 19.1%. The reimbursement cut will apply to all generic medicines carrying co-payments in Portugal's SNS state healthcare system.

However, industry sources have criticised the plan, as a number of chronically ill patients will now have to pay towards the cost of drug treatment. One company estimates that average co-payments will increase by as much as 30%. Nevertheless, the Portuguese government recently lowered the maximum reimbursement rate -- which is available for life-saving drugs -- from 100% to 95%. In recent months, other controversial changes have included liberalising the non-pharmacy OTC market and an increase in the number of therapeutic groups to 39.

The Portuguese drug market is worth an estimated EUR2.2bn (US$2.6bn), and the country has one of the highest per capita drug spending levels in the OECD. The reimbursement reforms are the latest in a series of measures aiming to enhance the market's diversity and boost competition, and greater use of generics is a key cost control policy. In Portugal, generics must be priced 35% below innovator products, and the government uses a reference system for all drugs with generic competitors. Doctors and pharmacists may also prescribe and dispense generically.