Medicines prices: measurement and findings in countries Richard Laing PSM - WHO Gilles Forte TCM - WHO Margaret Ewen HAI - Europe

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

WHO/HAI Project on Medicine Prices Developed a methodology for collecting and analysing the prices of medicines, affordability, availability and component costs in various sectors and regions in a country Data freely accessible on HAI’s web site so international price comparisons are possible A monthly monitoring tool, measuring prices and availability, is currently being developed to complement the survey tool

Survey tool – technical basis Systematic sampling of medicine outlets in at least 4 areas, minimum of 10 pharmacies per area Prices of 30 pre-selected commonly used medicines in at least public and private sectors Predetermined dose forms & strengths, & recommended pack sizes Supplementary lists encouraged, adapted to local needs Prices of innovator brand and lowest price generic are sampled All components of price from manufacturer to retailer identified Affordability assessed for ten pre-selected courses of treatment Excel workbook, for data entry and analysis, accompanies manual

Core list of medicines for price comparison

How prices are expressed Median price ratio – ratio of median unit price by an international reference price (converted to local currency) 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

Price components Identified by tracking actual prices back 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 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

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 eg telephone, fax, , post Medicines monitored – based on core list but adapted to local needs, only data for lowest priced product collected Price variations compared to basic consumer commodities eg dozen medium eggs

Surveys: underway or completed Middle East: Lebanon, Jordan, Kuwait, Syria, Sudan, Africa: Tunisia, Algeria, Morocco, Mali, Chad, Uganda, South Africa, Tanzania, Kenya, Ethiopia, Zimbabwe, Mozambique, Nigeria, Ghana, Cameroon, Senegal Asia/Pacific: Pakistan, Indonesia, Philippines, Malaysia, Fiji, China (Shandong), India - West Bengal, Haryana, Karnataka, Maharashtra (2), Chennai Central Asia: Mongolia, Kazakhstan,Tajikistan, Kyrgyzstan, Uzbekistan Other: Peru, Dominican Republic, Bosnia Herzegovina 41 surveys in 36 countries Note – some data in this presentation is preliminary

Support to carry out surveys: planning, data collection, cleaning, analysis, report writing, stakeholders workshops etc. 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 Collaboration with countries for implementation of key policy recommendations based on surveys findings Medicines prices survey process and use of evidence 2. Plan 3. Implement 1. Assess and Monitor

Information obtained Availability of medicines Price Comparisons: Innovator Brand and Lowest Priced Generics Price Components Affordability of medicines

Availability Many examples where the availability of expensive innovator brands was high while the availability of cheaper generics was low Malaysia, private pharmacies Innovator Brand Lowest priced generic % availMPR% availMPR Enalapril 10mg75%20.334%10.07 Amoxicillin 500mg + Clavulanic acid125mg 81%3.1844%1.33 Prazosin 1mg50% %6.26 Ibuprofen 200mg62% %12.47

Brand vs generic prices in relation to international reference price for ciprofloxacin 500mg tabs, private pharmacies

Brand vs generic prices in relation to international reference price for captopril 25mg tabs, private pharmacies

These examples show 1-Prices of originator brands are considerably higher than the prices of their lowest priced generic equivalents this is a problem for patients if: –the generic equivalent is not available –the medicine is patented and faces no competition –the medicine is prescribed by brand name and substitution is not permitted 2-In some countries lowest priced generics are as expensive or more expensive than originator brand

Manufacturer’s selling price vs Add-on costs (cumulative) in private sector Karnataka, generic aciclovir Manufacturer's priceAdd-on costs

Add-on component costs shown as actual costs, private sector

Add-ons – do they matter? add-ons vary both in type and quantity e.g. in Khyrgyztan 100 % pharmacy profits largely based on mark-ups variable range from 15% to 55% - in one African country approx. 100% governments in some countries apply high import taxes and VAT Tajikistan - removing taxes & duties would reduce total additional costs from 82% to 32% as most add-ons are applied as percentages, the higher the manufacturer’s price, the higher the price to the patient

Affordability – day’s wages, lowest paid unskilled govt. worker, needed to buy 30 days ulcer treatment with ranitidine 150mgx2/d

Affordability – day’s wages, lowest paid unskilled govt. worker, needed to buy 30 days ulcer treatment with omeprazole 20mg/d

Medicines surveys in 8 countries in Africa Ethiopia, Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda & Zimbabwe

Affordability Medicines were generally unaffordable for a large proportion of the population - particularly for chronic diseases Many family’s incomes are lower than that of the lowest paid government worker and hence these medicines are probably unaffordable to the majority of the population in most the countries.

Common recommendations from the countries Need to have a policy on the pricing of medicines which ensures price transparency, price control and enforcement Price transparency through ongoing monitoring and publication of pricing and availability information are important to reduce price variations as well as to monitor the effects of interventions Sharing of price information between countries is an important tool to influence policy change within a country as well as to be able negotiate better prices - especially within sub-regions

Increase consumer awareness and acceptance of good quality generic equivalents Develop and enforce regulations for generic substitution and incentives for generic prescribing and dispensing in all sectors; explore relevance of local production of generic medicines Public sector to focus on initiatives to improve availability including better quantification and demand driven supply systems Removal of all taxes and tariffs including VAT on medicines, especially essential medicines Governments to use the flexibilities of TRIPS Agreement to introduce generics while patent is in force