1. Medicines prices: measurement and findings in countries
Richard Laing PSM - WHO
Gilles Forte TCM - WHO
Alexandra Cameron PSM - WHO
TBS 2007

2. 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
TBS 2007

3. www.haiweb.org/medicineprices Medicine Prices
a new approach to measurement
WHO/HAI methodology
Launched at WHA 2003
Measures medicine
prices
availability
affordability
component costs
50+ surveys to date
Intended to empower NGOs
New manual coming soon
TBS 2007

4. Survey tool – data collection
Systematic sampling of 5 public and 5 private medicine outlets in at least 4 (6) regions/areas
Prices of 14 global core + 16 regional core pre-selected commonly used medicines
Predetermined dose forms & strengths, & recommended pack sizes
Supplementary medicine lists are encouraged, adapted to local needs
Prices of innovator brand and lowest price generic are collected
Components of price, from manufacturer to retailer, are identified
TBS 2007

5. Survey tool – analysis
Price calculated as Median Price Ratio (MPR): actual price compared to MSH International reference price (world market generic procurement price)
Availability calculated as number of facilities having that product at time of survey, reported as a percentage
Affordability assessed for 12 pre-selected courses of treatment compared to daily wage of lowest paid government worker
New Excel workbook, for data entry (double entry, with error checking) and analysis, accompanies manual
TBS 2007

6. How prices are expressed
Median price ratio (MPR)
ratio of median unit price to an international reference price (converted to local currency)
medicine must be found in at least 4 outlets for MPR to be calculated
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
TBS 2007

7. Price components
Identified by tracking final prices backwards through the supply chain, from the patient price to the manufacturer’s selling price/CIF price
Method involves interviews with pharmacists, wholesalers, importers, Ministry of Health, Ministry of Trade, Customs office, local manufacturers…. Note - companies are rarely willing to divulge their selling prices
Types of charges can include: insurance & freight costs, port & inspection charges, handling charges, import duties, import, wholesale & retail mark-ups, VAT/GST, dispensing fees
The amount of charge is often variable depending on whether the medicine is:
Imported or locally manufactured
Innovator brand or generic
Sold in the public or private sector
TBS 2007

8. Price components are analysed by stage of the supply chain
TBS 2007

9. Surveys: underway or completed
Middle East: Lebanon, Jordan, Kuwait, Syria, Sudan, Yemen, UAE
Africa: Tunisia, Algeria, Morocco, Mali, Chad, Uganda, South Africa, Tanzania, Kenya, Ethiopia, Zimbabwe, Mozambique, Nigeria, Ghana, Cameroon, Senegal, Burundi, Niger, Congo, DRC
Asia/Pacific: Sri Lanka, Pakistan, Indonesia, Philippines, Malaysia, Fiji, China (Shandong, Shanghai), India (West Bengal, Haryana, Karnataka, Maharashtra (2), Chennai), Vietnam, Cook Islands
Central Asia: Mongolia, Kazakhstan, Tajikistan, Kyrgyzstan, Uzbekistan
Europe: Bosnia Herzegovina, Kosovo
Latin America/Caribbean: Peru, Brazil, Dominican Republic, El Salvador
54 surveys in 46 countries
Note – some data in this presentation is preliminary
TBS 2007

10. Tool for routine monitoring of price & availability
Simple, inexpensive, standardised method to inform consumers & purchasers about current prices, availability and patterns of price changes
Data collected for 10 medicines each month, on a 3 month rotation, in sentinel public and private sector pharmacies (40 of each)
Simple and sustainable method of data collection, e.g. telephone, fax, , post
Medicines monitored – based on core list but adapted to local needs, only data for lowest priced product is collected
Price variations compared to basic consumer commodities, e.g. a dozen medium eggs
TBS 2007

11. Medicine prices surveys to inform policy changes
Surveys carried out using WHO/HAI methodology in 11 countries in the WHO African Region /05
Cameroon, Chad, Ethiopia, Ghana, Kenya, Mali, Nigeria, Senegal, Tanzania, Uganda & Zimbabwe
TBS 2007

12. Medicine prices survey process and use of evidence
Surveys carried out by countries to inform policy decisions & change for enhanced availability and affordability
WHO Support to carry out surveys: data collection, cleaning, analysis, report writing, priority setting and planning.
Pre- and post- survey workshops held for key survey personnel in the Middle East, Central Asia, Africa (Francophone & Anglophone), Asia Pacific and India
Next phase – Caribbean and Latin America
2. Plan
3. Implement
1. Assess and Monitor
TBS 2007

13. Parameters and sectors surveyed
Public sector
Private
Sector
NGO sector
Procurement price √
Patient price
Availability
Affordability
Price components
Public sector patient prices were not collected in Uganda as medicines in this sector are dispensed free of charge.
Dispensing doctors
TBS 2007

14. Procurement prices – public sector Lowest Priced Generic
Procurement prices – public sector of Lowest Priced Generic
TBS 2007

15. Procurement prices – LPG public sector: by products
TBS 2007

16. Patient prices vs. procurement price (LPG) – public sector
TBS 2007

17. Patient price of ciprofloxacin tablets in public sector – (LPG)
TBS 2007

18. Patient price in the public and private sector (LPG) matched pairs of same medicines
TBS 2007

19. Patient prices of OB and generic version in private sector – matched pairs of the same medicines
TBS 2007

20. Affordability of medicines in the private sector for a family
Affordability of medicines in the private sector for a family* : Innovator Brand
Ethiopia: 71 days
Kenya: 24 days
Nigeria: 30 days
Ghana: 107 days
South Africa: 9 days
It would take more than 2 weeks wages in 6 out of 7 countries for a month treatment (where innovator brands were found)
Senegal: 18 days
Cameroon 47 days
* an asthmatic child with a respiratory infection, an adult with diabetes and hypertension and another adult with a peptic ulcer
TBS 2007

21. Affordability of medicines in the private sector- for lowest priced generics
Ethiopia: 8 days
Kenya: 7 days
Tanzania: 5 days
Uganda:
6 days
Nigeria: 13 days
Ghana: 17 days
Zimbabwe: 8 days
South Africa: 1 day
in 9 of the 10 countries, it would take 5 or more days salary to pay for the medicines every month
Senegal: 6 days
Cameroon: 39 days
TBS 2007

22. Structure of drug prices in Europe
TBS 2007
Kanavos P, 2004

23. The components of medicine pricesEU
Kenya*
Uganda**
Manufacturer’s selling price (MSP)
48-78%
43-59%
24-77%
Landed costs
usually calculated in MSP
2-4%
5-14%
Wholesale
2,4-11%
1-43%
3-23%
Retail
10-33%
17-50%
0-68%
Dispensed (final) price: VAT, GST
0-20% 0%
Price components and essential medicines in Kenya. WHO 2006
**Levison L. Investigating price components, WHO 2006
TBS 2007

24. Recommendations in the EAC countries Nairobi 17 to 19 September 2007
To regulate prices of all registered medicines and vaccines
To regulate the stage 3 (wholesalers’ margin) and stage 4 (retailers’ margin)
To publish recommended prices (print recommended prices on packs of medicines)
To set a maximum mark-ups for wholesalers and for pharmacies
Regulation process should be transparent & fair to all stakeholders
To promote generic prescribing and dispensing
To mandate pharmacists to practice compulsory generic substitution
To build and/or to expand health insurance schemes for essential medicines and treatments to the whole population
The countries with health insurance scheme are recommended to implement a reference pricing system for therapeutic clusters of medicines
TBS 2007

25. Common recommendations emerging from surveyed countries
Pricing:
Introduce and enforce pricing policy and regulations to enhance affordability
Ongoing monitoring of medicine prices to:
Increase price transparency
Reduce in-country price variation
Monitor impact of policy and regulations
Generics:
Develop and enforce regulations for generic substitution - promote and provide incentives for generic prescribing and dispensing in all sectors.
Increase awareness and acceptance of generic equivalents among prescribers, dispensers and the general public.
Advocacy and price transparency: involvement of CSOs and enhance information sharing and empower consumers
TBS 2007

26. Common recommendations emerging from surveyed countries
Procurement:
Establish efficient public sector procurement and supply systems to improve availability of essential medicines in the public sector
Regulation of price components:
Regulation possible on one or more mark ups levels: wholesalers, retailers Consider regressive schemes (i.e. higher mark-ups on lower-priced products) that encourage the sale of lower-priced medicines
Reduce or remove taxes and tariffs including VAT on medicines, especially essential medicines.
Sustainable Financing:
Explore feasibility of alternatives to out-of-pocket expenditure on medicines including prepayment health insurance schemes.
TBS 2007

27. Collecting evidence on impact of price surveys
East African Community:
10% cut on import duties on medicines. Quarterly price monitoring carried out.
Mali:
adoption of new regulations for enforcement of a fixed mark-up for approximately 100 essential medicines in the private sector.
A pricing monitoring system has been set up by the Ministry of Health for private pharmacies.
Nigeria:
Director of Pharmaceutical services in Lagos State, has mandated responsible officers for drug procurement to ensure reduction in medicines prices – a medicine prices policy is being developed.
Lebanon:
Ministry of Health reduced medicine prices by 3–15% after undertaking a price survey
United Arab Emirates:
Government decided to reduce prices by an average of 7–8% through modification of its procurement practices following price comparisons with other countries.
Regional workshop on priority setting and planning for policy and advocacy
TBS 2007

28. Price, availability and affordability analysis for chronic diseases
14 chronic disease medicines
30 surveys
Public sector procurement prices and patient prices in the public and private sector
Affordability: Number of days the lowest paid government employee must work to purchase 30 days treatment
TBS 2007

29. Recent Work / Work Underway by WHO Interns
Lixanne Gemerts – analysis of national pharmaceutical financing in EMRO countries
Ziyan Wang – analysis of pharmaceutical pricing policies in China
TBS 2007