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

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

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 www.haiweb.org/medicineprices TBS 2007

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

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

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

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

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

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

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, email, 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

Medicine prices surveys to inform policy changes Surveys carried out using WHO/HAI methodology in 11 countries in the WHO African Region - 2004/05 Cameroon, Chad, Ethiopia, Ghana, Kenya, Mali, Nigeria, Senegal, Tanzania, Uganda & Zimbabwe TBS 2007

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

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

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

Procurement prices – LPG public sector: by products TBS 2007

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

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

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

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

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

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

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

The components of medicine prices EU 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

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

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

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

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

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 http://mednet3.who.int/medprices/ TBS 2007

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