1. 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

2. 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?

3. 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.

4. 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

5. 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:

6. 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?

7. 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

8. 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.

9. 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.

10. 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?

11. 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

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

13. 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

14. 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

15. 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%

16. 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

17. 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 %
Ethiopia
76-148%
India
29-694%
Malaysia
65-149%
Mali
87-118%
Mongolia
68-98%
Morocco
53-93%
Uganda %
Tanzania
56%
Pakistan
25-35%

18. 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?

19. 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

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

21. 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.

22. 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)

23. 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

24. 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.