Presentation on theme: "National experiences of regular price monitoring Klara Tisocki, WHO/HAI medicine price project Towards equitable and affordable medicine prices policy."— Presentation transcript:
National experiences of regular price monitoring Klara Tisocki, WHO/HAI medicine price project Towards equitable and affordable medicine prices policy in Jordan, Dead Sea, Jordan, December 2007
Outline Why monitor medicine prices Practical approach to price monitoring National price monitoring - Results from Malaysia and Kenya Lesson learnt Critical elements for MPS
Failings of free markets for medicines A perfect free market (where supply - demand set prices) requires perfect information, direct interchange between buyer and seller, no barriers to going into business. Pharmaceutical markets are imperfect - they fail because: - information asymmetry: companies > doctors > patients - competition failure: market power due to patents, brand loyalty, etc. - externalities: treating your tuberculosis also helps me Often essential state interventions are needed for pharmaceuticals because failings of free markets
Examples of interventions to correct free market failings for medicines
Need for price monitoring Regulatory frameworks a) Supporting evidence informed decision/policy making to achieve national health goals b) Monitoring adherence to price regulations, if exist c) Measuring impact of policy changes Supply chain management d) Creating price transparency to increase competition/ negotiation power and procurement efficiency Consumer protection e) Protection from excessive prices f) Increasing public access to price information – Correcting price information asymmetry g) Providing evidence for advocacy
Increasing price transparency along the supply chain Ex–factory or Ex-Manufacturer price Wholesale prices (private distribution - Catalogue/List price vs. discounted price/ rebates/ free goods) Procurement price (public procurement centralized vs. local) Contract prices with purchaser i.e. insurer social health/ private health insurance) Reimbursement prices claims/ co-payments Public health facility patient prices Pharmacy Retail price / Dispensing doctor price Not-for-profit access point price (non-governmental, or faith- based not-for-profit health facilities)
How to get all these price information? Massive amount of data is required to fully understand price structures/ changes Objective of price monitoring system must be clear on priorities of what need to be monitored Developing countries - patients often pay full cost out of pocket, - the final patient price - main target
Practical approach to price monitoring WHO/HAI medicine price surveys – post survey recommendation: need for price monitoring Need for simple, low cost, low tech, sustainable methodology to monitor prices
The WHO/HAI Medicine Price Monitoring Method Design: longitudinal study Facilities: Systematic sampling of - 40 (20 private + 20 public) facilities in urban and - 40 (20 private + 20 public) facilities in rural areas Indicator medicines: 30 locally commonly used medicines in specified dosage form and strength, recommended (or other) package size Price of lowest cost product physically available at the facility is collected Data collected in every 3 months, 4 data point/year Data analysis: Pre-programmed Excel workbook, for data entry and analysis Output: Regular Price report containing Median Unit Price, Max. Min, price variations over time, availability and affordability
Results from pilot countries KENYA UGANDAMALAYSIA
KENYA - method Geographical Areas, 4 regions 96 facilities surveyed in the 4 regions. 8 facilities from each sector (Public, Private, Mission) in each region Private pharmacies and mission facilities are 10km from the public facilities 34 medicines monitored – patient prices only Data collection quarterly Data collectors-Pharmacists/Pharmacy technicians/consumers based at the regional levels
Kenya results Overall private sector medicines prices were 36% higher than prices in the public health facilities, Overall mission sector prices were 31% higher than those in the public sector. Urban vs. rural comparisons revealed the following: a) Prices in urban mission facilities were 50% higher than those in rural mission facilities b) Prices in rural private pharmacies were 35% higher than those in rural mission facilities
Malaysia -method Medicine selection Group medicines Commonly used medicines for the treatment of prevalent conditions (except psychotropics) included in either MOH formulary or WHO/HAI core monitoring list Group 2 – 28 medicines Newly registered patented medicines before & after inclusion into MOH Drug Formulary Group 3 – 10 medicines Specialized single source products that are usually expensive & used in government hospitals with specialists, university & private hospitals Patient and procurement prices collected
Malaysia – results Availability of commonly used medicines High availability of commonly used medicines in both sectors Public sector- 92% Private sector- 83% Public sector stocks only few original products (33%) and relies mainly on generics (82%) Private pharmacies stock both original products and generics with good availability in both West (66%) and East (66%) Malaysia Gross retail prices of selected commonly used medicines in the private sector were found to be generally high at the median of 4 times higher than IRP11 while in the public sector, medicine prices were reasonable at the median of 1.3 times higher than IRP.
17 Price Variation between East and West Malaysia Medicine Prices are slightly higher in East than West Malaysia 1 % higher for public sector 9% higher for private sector Sector Median Price Ratio (MPR) Between East and West Malaysia MinimumMedianMaximum Public (Wholesale) Private (Retail)
18 Wholesale Price Variation between Public and Private: LP, APPL & Tender Local Purchase (LP) prices in public sector are generally 63% cheaper than wholesale price in private sector APPL & Tender prices in public sector are generally 60% cheaper than wholesale price in private sector Medicines bought by LP Median Price Ratio (MPR) Between Public (Wholesale) and Private (Wholesale) MinimumMedianMaximum Overall Original Brand Generics APPL & Tender Median Price Ratio (MPR) Between Public (Wholesale) and Private (Wholesale) MinimumMedianMaximum Overall Original Brand Generics
Lessons learnt Setting up a national price monitoring system requires high degree of customization – no uniform method to fit all Setting objectives clearly is a critical step Sampling strategy of medicines and data collection method will highly depend on settings + objectives Operationalizing data collection into routine work can help with sustainability
Where to start? What are your specific objectives and desired outputs? Is there a policy/ regulation in place mandating specific price monitoring activities, giving authority/responsibilities? What resources are available to sustain on long term a national MPMS? What capacity to collect and analyse medicine prices and provide accurate, reliable price statistics is already in place in your country? If no previous analysis has been done what data is available, how can it be accessed what resources needed for correct collection and analysis?
Product selection Main principle: Prices of a fixed representative basket of medicines monitored Sampling: non-probability sampling with selection criteria public health importance/therapeutic value, best-sellers or high consumption items, highest value (expenditure/ procurement value) based on ABC analysis, prescription or non-prescription status, innovator brands or generic, Sample size: may depend on type of basket Product description elements, INN name, brand name, strength, dosage form, type, package size, manufacturers name etc.
Data sources selection and sampling Central data sources: i.e. manufacturer importation or release price, procurement price, wholesale prices, health insurance claim database Outlet-based i.e. point of purchase data collection in retail pharmacies, government health facilities, dispensing doctors surgery, mission hospitals etc. Data source sampling: Probability sampling is recommended Should consider urban rural geography, regions Use relevant sampling frames like registry of private retail pharmacies, list of government health facilities, registry of dispensing doctors, etc.
What prices to monitor? Ex –factory or Ex-Manufacturer price Procurement price Wholesale price Reimbursement prices Pharmacy Retail price Prices paid by patients at other access points (not for profit access).
Price collection method Frequency: monthly annually Collection procedure: - central data collection: from manufacturers, procurement agencies, data submitted in pre-formatted spreadsheets, by fax, letters, by or online automated systems. - outlets based data collection: trained price collectors and physical check of price tags or invoices/receipts is the most accurate way of recording actual prices paid by patients. - alternative techniques: price collection by letter, over the phone, by , fax, and sms text messages, submitted by outlets on-line via secure website, from controlled national retail price lists or price list issued for government facilities - Must be verified by random visits to actual pharmacy or medical outlets.
Data analysis and construction of a price index, when trends analyzed Input of qualified price index statistician needed Different mathematical formulae can be employed in construction of price index calculations. Lowe indices Laspeyres index Paasche index Young index, etc.
Publishing and information dissemination on medicine price changes What results to report (level of details) Who are the audiences Which presentation format to use What dissemination techniques to use (media, electronic internet, free bulletin, restricted reports etc.) Timeliness Access to data by different stakeholders (confidentiality) Medicine Price Index can attract high publicity if it has credibility and regularly available
Summary National price monitoring system Should be placed in a regulatory/policy framework (operationalized for sustainability i.e. mandate, authority to collect prices, budget to support) Should have clear objectives and desired outputs If possible, should be based on analysis of existing data (central data collection/automation) Should have a well designed, robust method for data collection and analysis that can provide reliable information in a consistent manner