Medicine prices and availability, evidence for policy Technical Briefing Seminar, November 2nd 2011 Richard Laing with materials provided by Alexandra Cameron, Department of Essential Medicines and Pharmaceutical Policies, World Health Organization

Overview International effort to improve medicine affordability and availability: WHO/HAI Project Generating reliable evidence: how to measure medicine prices and availability What have we learned about medicine prices, availability and affordability? Evidence to policy: what can be done?

The WHO/Health Action International Project on Medicine Prices and Availability Outcome of the WHO/public interest NGOs Roundtable on Pharmaceuticals Objectives To develop and apply a reliable methodology for collecting and analysing price and availability data across healthcare sectors and regions in a country To promote price transparency: survey data is made freely accessible on the HAI website, allowing international comparisons To provide guidance on pricing policy options and monitor their impact Highlight that the focus of the project is primarily aimed at increasing the availability and affordability of multi-source products, it is our niche However, we recognize that a total market approach is required, with specific strategies to address multi-source and single-source medicines including both patented medicines as well as specialized, high-cost products.

WHO/HAI standard methodology for measuring medicine prices and availability Facility-based survey that measures: medicine prices medicine availability affordability of treatments components in the supply chain Launched at the World Health Assembly 2003 Survey data publicly available on HAI web site Second edition published 2008 includes: adjustments to methodology practical advice based on prior surveys and additional tools and resources new guidance on international comparisons, policy options, advocacy and regular monitoring

Survey tools, data, reports & more: Over 70 medicine price and availability surveys to date using WHO/HAI methodology Columbia, Ecuador, Nicaragua, Bolivia El Salvador, Brazil, Peru Survey tools, data, reports & more: www.haiweb.org/medicineprices

Overview International effort to improve medicine affordability and availability Generating reliable evidence: how to measure medicine prices and availability What have we learned about medicine prices, availability and affordability? Evidence to policy: what can be done?

Data on government procurement prices are also collected How are data collected? Data on the price and availability of medicines are obtained by data collectors during visits to "medicine outlets" Data is collected in 6 regions of the country ("survey areas") In each survey area, data is collected from a sample of medicine outlets in up to 4 sectors: public sector (e.g. hospitals, health centres) private sector (e.g. licensed pharmacies, licensed drug stores) up to 2 "other" sectors (e.g. mission hospitals) Data on government procurement prices are also collected Medicine price components are also identified by tracking 5-7 medicines through the supply chain and identifying add-on costs

What medicines are surveyed? 50 medicines with specific dosage forms and strengths 30 pre-determined to enable international comparisons 20 selected nationally for local importance For each medicine, two products are surveyed: Originator brand – original pharmaceutical product that was first authorized for marketing, normally as a patented product Identified centrally before data collection, does not vary from outlet to outlet Lowest-priced generic (LPG) – products other that the originator brand that contain the same active ingredient (substance), whether marketed under another brand name or the generic name generic with the lowest price found at each medicine outlet LPG product will therefore vary from outlet to outlet Innovator brand - original pharmaceutical product that was first authorized for marketing. The innovator brand always has a brand name, however this may vary between countries.

How are data analyzed? Availability: % of outlets where medicine was found on the day of data collection Price: median local prices expressed as ratios to international reference prices Medicine Price Ratio (MPR) = median local unit price International reference unit price e.g. MPR = 2 means that the local medicine price is 2x the international reference price MSH international reference prices used: median prices of multi-source medicines offered to developing and middle-income countries by different suppliers. Affordability: how many days wages would the lowest paid government worker need to spend to pay for treatment? Based on median local medicine price prescribed at a standard dose. Price components: cumulative % mark-up and % contribution to final price.

Overview International effort to improve medicine affordability and availability Generating reliable evidence: how to measure medicine prices and availability What have we learned about medicine prices, availability and affordability? Evidence to policy: what can be done?

Median % availability by World Bank income group A Cameron, M Ewen et al, The Lancet online 1 Dec2008 public sector generics private sector generics private sector originator brands

Median government procurement prices, lowest priced generics Yemen medMPR 0.54 but based on only 3 meds

Public sector patient prices In many countries medicines are free but availability is often very poor Where patients pay, even cheapest generics can be expensive e.g. in the Western Pacific Region the median price was about 12x international reference prices Good procurement prices are not always passed on to patients In some countries, public sector prices are similar to private sector prices, e.g. China, Shanghai

Median patient prices, private sector Adjusted CPI & PPP 141 40.9 35.9 29.4 13.8 12.6 10.5 11 9.6 Originator brands Lowest priced generics

Differences between originator brands & lowest priced generics, matched pairs, private sector Yemen had 11 matched pairs (of 15 meds in study). Difference was 300%. Across all medicines surveyed 390%

Affordability: mean number of days wages of the lowest paid unskilled govt. worker needed to buy 60 glibenclamide 5mg tabs, for diabetes, in the private sector (by WHO region) n=4 n=3 n=8 n=8 n=4 n=1 n=11 n=7 n=1 n=7 n=7

Cumulative percentage mark-ups between manufacturer's selling price and final patient price, private sector Country Total cumulative % mark-up China (Shandong) 11-33% El Salvador 165-6894% Ethiopia 76-148% India 29-694% Malaysia 65-149% Mali 87-118% Mongolia 68-98% Morocco 53-93% Uganda 100-358% Tanzania 56% Pakistan 25-35%

Overview International effort to improve medicine affordability and availability Generating reliable evidence: how to measure medicine prices and availability What have we learned about medicine prices, availability and affordability? Evidence to policy: what can be done?

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

I DON’T TAKE CHANCES I ONLY USE ORIGINALS Efficacy of generics put into question Fear Mongering Promotion of non cost effective treatment

Many policy options exist 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.

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 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)

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 price policy experts are developing guidance on options for policies affecting medicine prices and their impact in various settings: developed a policy ‘landscape’ commissioned a series of policy review papers policy briefs & electronic policy analysis tool identify research needs

WHO / HAI Reviews of pricing policies and interventions now published Substantial opportunities exist to increase medicine availability, reduce prices, and improve the affordability of medicines in all regions of the world and at all levels of economic development. However, it can be challenging to identify and prepare suitable lines of response. To assist policy-makers and others, WHO and HAI are developing a series of reviews on pharmaceutical pricing policies and interventions, with a focus on low- and middle-income countries. Five reviews have now been published on: External Reference Pricing The Role of Health Insurance in the Cost-Effective Use of Medicines The Regulation of Mark-ups in the Pharmaceutical Supply Chain Competition Policy Sales Taxes on Medicines Another four reviews are in development, including a review on promoting the use of generic medicines. http://www.haiweb.org/medicineprices/policy/index.html