1 Policy options to address access to chronic disease medicines Dr. Richard Laing Ms. Alexandra Cameron Department of Essential Medicines and Pharmaceutical Policies World Health Organization 27 August 2008

2 Surveys of medicine prices and availability reveal that: Availability is often low, particularly in the public sector Prices of even the lowest- priced generics can be several times international prices Originator brands are more costly than generics Treatment of chronic diseases is often unaffordable, especially when combination therapies are used

3 High prices, low availability and poor affordability can have many causes Low public sector availability: –lack of resources or under-budgeting –inaccurate forecasting –inefficient procurement / distribution –low demand/slow-moving products High private sector prices: –high manufacturers selling price –high import costs –taxes and tariffs –high mark-ups

4 Many policy options exist Improve procurement efficiency (e.g. national pooled purchasing, procurement by generic name) Ensure adequate, equitable, and sustainable financing, e.g. –Health insurance systems that cover essential medicines –Schemes to make chronic disease medicines available in the private sector at public sector prices Prioritize drug budget, i.e. target widespread access to a reduced number of essential generic medicines, rather than attempting to supply a larger number of both originator brand and generic medicines. Promote generic use: –preferential registration procedures, e.g. fast-tracking, lower fees –ensure the quality of generic products –permit generic substitution and provide incentives for the dispensing of generics –educate doctors/consumers on availability and acceptability of generics

5 I DONT TAKE CHANCES I ONLY USE ORIGINALS

6 Separate prescribing and dispensing Control import, wholesale and/or retail mark-ups through regressive mark-up schemes Provide tax exemptions for medicines Where there is little competition, consider regulating prices Patented medicines –use the flexibilities of trade agreements to introduce generics while a patent is in force –differential pricing schemes whereby prices are adapted to the purchasing power of governments and households in poorer countries. Policy options (cont'd)

7 Must watch for unintended negative effects Price controls may lead to excessive prices when the price is not adjusted to consider changes in the market Setting prices too low can discourage production/stocking of a product Regulating mark-ups with percentages can provide incentive to sell higher-priced products Eliminating taxes can provide an opportunity for retailers to increase their margin (i.e. savings not passed on to patient)

8 Examples of policy changes following medicine price and availability surveys Tajikistan Elimination of 20% VAT on medicines in May Supply chain add-on costs should decrease from 122% to 85% for imported medicines. Lebanon Price reductions on >1000 imported medicines reduced prices by 20-30% Policy of fixed mark-ups irrespective of FOB price (cumulative 71.4%) to variable depending on FOB price; estimated retail price reductions of 3-15% Retail prices and pharmacy margins published on a public website

9 United Arab Emirates Government reduced prices by an average of 7–8% through modification of its procurement practices following price comparisons with other countries. Indonesia Pharmaceutical industry association announced that from 1 July 2006 it would reduce the price of 100 branded generic medicines, containing 34 active substances. Branded generics should not cost more than 3 times the price of true generics – has not happened for all products East African Community: 10% cut on import duties on medicines. Examples of policy changes (contd)

10 Constituency Building Presentations & posters at ~70 meetings Brochure & quarterly bulletin Monitor supplement & articles Synthesis reports WHA 2006 briefing & paper Publications: Bulletin, Lancet Analysis of MDG Target 8.E

11 BUT……Are these the best policies for improving access to affordable medicines??? Our current challenge: what are the most effective policy actions in different contexts? WHO/HAI and international pricing policy experts are developing guidelines on options for policies affecting medicine prices and their impact in various settings: - mapping current policies & interventions - commissioning policy review papers - drafting policy briefs - identifying research needs AND… What is the role of disease organizations in advocating for access to chronic disease medicines?