1 Medicine prices and availability, evidence for policy Technical Briefing Seminar, November 18 th 2009 Alexandra Cameron, Department of Essential Medicines and Pharmaceutical Policies, World Health Organization

2 Overview 1.International effort to improve medicine affordability and availability 2.Generating reliable evidence: how to measure medicine prices and availability 3.What have we learned about medicine prices, availability and affordability? 4.Evidence to policy: what can be done?

3 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 The WHO/Health Action International Project on Medicine Prices and Availability

4 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 WHO/HAI standard methodology for measuring medicine prices and availability

5 Over 70 medicine price and availability surveys to date using WHO/HAI methodology Survey tools, data, reports & more:

6 Overview 1.International effort to improve medicine affordability and availability 2.Generating reliable evidence: how to measure medicine prices and availability 3.What have we learned about medicine prices, availability and affordability? 4.Evidence to policy: what can be done?

7 How are data collected?  Data on the price and availability of medicines are obtained by data collectors during visits to "medicine outlets"  Medicine outlets are places where medicines are dispensed to patients (e.g. pharmacies, health centres)  Data on government procurement prices are also collected  During medicine outlet visits, data are recorded on hard copy Medicine Prices Data Collection forms  Medicine price components are also identified by tracking medicines through the supply chain and identifying add-on costs  At the end of fieldwork, all completed forms are entered into the electronic survey Workbook by data entry personnel  Data are entered twice and checked for errors  The Workbook automatically generates analyses of the survey data

8 Where is data collected? Data is collected in 6 regions of the country ("survey areas") –Area 1 = capital city –5 other regions within 1 days’ travel of capital, randomly selected 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) Plus, government procurement data (collected centrally)

9 What medicines are surveyed? 50 medicines –30 pre-determined by WHO/HAI to enable international comparisons (14 global medicines and 16 regional medicines) –20 selected nationally for local importance Predetermined dose forms & strengths, & recommended pack sizes For each medicine, two products are surveyed: 1.Originator brand – original pharmaceutical product that was first authorized for marketing, normally as a patented product Always has a brand name Identified centrally before data collection, does not vary from outlet to outlet 2.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

10 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 high quality multi- source medicines recently offered to developing and middle-income countries by different suppliers. –Medicine must be found in at least 4 outlets for MPR to be calculated  Price comparisons: originator brand and lowest priced generics; public, private and other (e.g. mission) sectors; districts/states/provinces; countries  Affordability: how many days wages would the lowest paid government worker need to spend to pay for treatment? Based on the median local price of a medicine prescribed at a standard dose

11 Price Components The add-on costs that are applied to medicines as they move through the supply chain, from manufacturer to patient Crucial to understanding why prices are high and what policy options can be considered Identified by tracking 5-7 tracer medicines backwards through the supply chain, from the patient price to the manufacturer’s selling price/CIF price Method also involves interviews with pharmacists, wholesalers, importers, Ministry of Health, Ministry of Trade, Customs office, local manufacturers…. Price components are analysed by cumulative per cent mark-up and per cent contribution to the final price

12 Overview 1.International effort to improve medicine affordability and availability 2.Generating reliable evidence: how to measure medicine prices and availability 3.What have we learned about medicine prices, availability and affordability? 4.Evidence to policy: what can be done?

13 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

14 Median government procurement prices, lowest priced generics

15 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

16 Median patient prices, private sector Originator brandsLowest priced generics Adjusted CPI & PPP

17 Differences between originator brands & lowest priced generics, matched pairs, private sector

18 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=7 n=1 n=7 n=11 n=1 n=4 n=8 n=3 n=4

19 Cumulative percentage mark-ups between manufacturer's selling price and final patient price, private sector CountryTotal cumulative % mark-up China (Shandong)11-33% El Salvador % Ethiopia76-148% India29-694% Malaysia65-149% Mali87-118% Mongolia68-98% Morocco53-93% Uganda % Tanzania56% Pakistan25-35%

20 Overview 1.International effort to improve medicine affordability and availability 2.Generating reliable evidence: how to measure medicine prices and availability 3.What have we learned about medicine prices, availability and affordability? 4.Evidence to policy: what can be done?

21 General observations One finding can have many causes: Low public sector availability: lack of resources or under- budgeting; inefficient procurement / distribution, low demand/slow-moving products High private sector prices: high manufacturer’s selling price, high import costs, taxes and tariffs, high mark-ups Mix of policies needed to improve availability and affordability; evolutionary Need to be part of the National Medicines Policy (National Health Policy and Constitution)

22 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

23 I DON’T TAKE CHANCES I ONLY USE ORIGINALS

24 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. Many policy options exist

25 Kenya: increased financing and differential pricing have increased the availability of Artemether/lumefantrine 20/120 mg

26 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)

27 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: 6 will be published by mid-2010, more to follow - policy briefs & electronic policy analysis tool - identify research needs