OBJECTIVES: To compare price level of generic drugs in Finland and in Europe on average and to find out whether price level of generics decreases faster or slower in Finland compared to Europe. METHODS: Active substances that had over 2% market share of generic market in Finland in 2005 were included. Top 16 most sold substances fulfilled this criterion and accounted for 50.6% of the total generic market. To analyze the rate of price deflation the time from the launch date of the first generic product of each substance was used as an estimate of the time generic competition has prevailed. The same methods were used to compare Finnish prices to those of UK, Netherlands and Denmark on a country level. RESULTS: Finnish prices were below European average in 12 cases out of 16. The analysis of the rate of price decrease suggests that Finnish prices may decline faster after generic launch than in Europe. In the country specific comparison prices in Finland were lower than in UK, Netherlands and Denmark in 72%, 75% and 33% of packs included, respectively. Compared to Finland, prices seem to decrease more rapidly in Denmark but slower in Netherlands. In UK prices are at a higher level than in Finland at all times including the launch of generic competition. CONCLUSION: Prices of generic drugs appear to be lower in Finland than in Europe on average. This cross sectional analysis suggests that prices in Finland decline more rapidly after the generic launch than in other European countries on average. However, there is considerable variation in Europe in respect of generic price level and rate of price decrease, as our country specific examples show.