Presentation on theme: "The prices of medicines worldwide & how they are determined Margaret Ewen Health Action International Europe Co-ordinator WHO/HAI Project on Medicine Prices."— Presentation transcript:
The prices of medicines worldwide & how they are determined Margaret Ewen Health Action International Europe Co-ordinator WHO/HAI Project on Medicine Prices
Wider problems of medicine prices Medicines have variable and often high prices, and are unaffordable for large sectors of the global population and a major burden on government budgets Burden falls directly on most patients in developing countries – but little is known about the prices people pay and how these prices are set, from the manufacturers selling price to the patient price Trade agreements can severely affect the price and availability of medicines Many developing countries do not have pricing policies But, the prices of medicines are well above their production costs so there is great scope for reductions
WHO/HAI Project on Medicine Prices Developed a methodology for collecting and analysing the prices of medicines, affordability, availability and component costs in various sectors and regions in a country Data freely accessible on HAIs web site so international price comparisons are possible www.haiweb.org/medicineprices A monthly monitoring tool, measuring prices and availability, is currently being developed to complement the survey tool
Survey tool – technical basis Systematic sampling of medicine outlets in at least 4 areas, minimum of 10 pharmacies per area Prices of 30 pre-selected commonly used medicines in at least public and private sectors Predetermined dose forms & strengths, & recommended pack sizes Supplementary lists encouraged, adapted to local needs Prices of innovator brand and lowest price generic are sampled All components of price from manufacturer to retailer identified Affordability assessed for ten pre-selected courses of treatment Excel workbook, for data entry and analysis, accompanies manual
Surveys: underway or completed Middle East: Lebanon, Jordan, Kuwait, Syria, Sudan, Africa: Tunisia, Algeria, Morocco, Mali, Chad, Uganda, South Africa, Tanzania, Kenya, Ethiopia, Zimbabwe, Mozambique, Nigeria, Ghana, Cameroon, Senegal Asia/Pacific: Pakistan, Indonesia, Philippines, Malaysia, Fiji, China (Shandong), India - West Bengal, Haryana, Karnataka, Maharashtra (2), Chennai Central Asia: Mongolia, Kazakhstan,Tajikistan, Kyrgyzstan, Uzbekistan Other: Peru, Dominican Republic, Bosnia Herzegovina 41 surveys in 36 countries Note – some data in this presentation is preliminary
How prices are expressed Median price ratio – ratio of median unit price by an international reference price (converted to local currency) International reference price -external standard for evaluation of local prices -recommend using Management Sciences for Health (MSH) International Drug Price Indicator Guide -recent procurement prices offered predominantly by not-for-profit suppliers to developing countries for multi-source generic equivalent products. Median unit price is used. -Web-based, prices relatively stable, updated annually -can select another source such as Australian PBS
Brand vs generic prices in relation to international reference price (MSH 2003) for ciprofloxacin 500mg tabs, private pharmacies
Brand vs generic prices in relation to international reference price for amoxicillin 250mg caps, private pharmacies
Brand vs generic prices in relation to international reference price for captopril 25mg tabs, private pharmacies
These 3 examples show 1.Some huge differences within countries between innovator brand and generic prices: brand premiums Is this a problem for patients? YES where: –the generic equivalent is not available –the medicine is patented and faces no competition –the brand is sold to increase profits –medicine prescribed by brand name and substitution not permitted
2. Some large differences within countries between brand & generic prices, and the international reference price 3. The wide variation in retail price for the same product across countries Manufacturers selling price and add-on component costs - which has the greatest influence on the price the patient pays?
Manufacturers selling price vs Add-on costs (cumulative) private sector
Add-on component costs shown as actual costs, private sector
Add-ons – do they matter? add-ons vary tremendously both in type and quantity e.g. in some states in India 100 % pharmacy profits largely based on mark-ups variable range – 15% to 55%, in one African country approx. 100% governments in some countries are taxing the sick by applying high import taxes and adding VAT/GST Peru - 12% import tax and 18% VAT are added Tajikistan - removing taxes & duties would reduce total additional costs from 82% to 32% a small component cost applied early in the distribution chain can contribute significantly to the final price as most add-ons are applied as percentages, the higher the manufacturers price, the higher the price to the patient Both manufacturers prices and add-on costs need to be lower to improve access to essential medcines
Affordability – days wages, lowest paid unskilled govt. worker, needed to buy 30 days ulcer treatment with ranitidine 150mgx2/d
Affordability – days wages, lowest paid unskilled govt. worker, needed to buy 30 days ulcer treatment with omeprazole 20mg/d
Affordability Not only is the innovator brand unaffordable in many countries, but sometimes also the generic Affordability could also be improved through: -availability of generics in the public sector (in most but not all countries) -therapeutic selection
Availability issues Many examples where the availability of expensive innovator brands was high while the availability of cheaper generics was low Malaysia, private pharmacies Innovator Brand Lowest priced generic % availMPR% availMPR Enalapril 10mg75%20.334%10.07 Amoxicillin 500mg + Clavulanic acid125mg 81%3.1844%1.33 Prazosin 1mg50%12.1125%6.26 Ibuprofen 200mg62%20.7744%12.47
Availability issues Some cases, based on facilities surveyed: - no generics found for newer medicines not under patent e.g. ciprofloxacin in Cameroon - no generics found for older products e.g. beclometasone inhaler in Philippines (2002 & 2005!) valproic acid in Malaysia - some important medicines not found at all e.g. phenytoin in Tajikistan co-trimoxazole paediatric suspension in Shandong, China In many countries where medicines are free in the public sector, availability is extremely low
Possible options to lower prices Regional pooled procurement with open tenders Governments to use the flexibilities of TRIPS Agreement to introduce generics while patent is in force Governments to facilitate quick penetration of generics when patent is about to expire Stop taxing essential medicines Where there is little competition, goverments should consider regulating prices - from manufacturers selling price to margins in wholesale and retail. Educate doctors and consumers on availability and acceptability of generics Prescribe by INN and have a generic substitution policy Pharmacists:essential service margins can be excessive prices are reducing access to medicines business or professional service?
Medicine Prices web-site: www.haiweb.org/medicineprices
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