1. Amanullah Saif Cost Accountant, Drug Control Administration Government of Pakistan Relationship between Tariffs, Prices and Consumption of Interferon

2. Abstract of Contribution 624 Economics, Financing, and Insurance Systems Keywords: Access to medicines, Relationship Between Tariffs, Prices, and Consumption of Interferon Problem statement: Patients suffering from hepatitis-C confronted with high cost of medications and lack of supplies in government health care facilities. Objectives: Increase usage of interferon to treat patients suffering from hepatitis-C. Setting and population: Study was conducted at the national level. Usage of interferon in the private sector was measured from sales data compiled by Information Medical Statistics (IMS) over a period of 6 years (July 2004–June 2005 and July 2009– June 2010). In the public sector, the procurement data and prices were obtained from programs for hepatitis control and prevention at federal and 3 provincial government levels. Intervention(s)/policy(ies): (1) Reduction in tariffs (custom duty) on import of interferon from 10% to 0 in July 2006 to increase usage of interferon; (2) regulatory intervention in July 2007 to reduce prices of originator brand from Rs. 1,074.16 to Rs. 980.00 (10%) and of the top selling brand from Rs. 979.00 to Rs. 879.00 (11%). Other factorsincreased budgetory allocations in the public sector and growing awareness among patients for treatment of disease. Outcome measures(s): (1) Number of units sold in the private market; (2) number of units purchased by the public sector; (3) total number of units consumed in the country Results: (1) Despite 10% reduction in the tariffs, the private sector did not reduce prices of interferon until regulatory intervention. (2) In private sector, sales increased by 40% in 2007-08 (1,515,175 vials) compared to 2006-07 (1,029,251 vials) after a decrease in prices. (3) Increase in sales and decrease in prices in the private sector helped decrease prices for public sector procurement by 28% in Pak Rupee and 89% in USD (Pak Rupee devalued by 40%) over a period of 3 years (2009-10 vs. 2006-07) despite the fact that 100% requirement was met through imports during these years. Reduction in price further led to increased procurement in public sector (337,816 vials in 2006-07 vs. 3,766,120 vials in 2009-10). (4) Total consumption of interferon in the country increased by 280% from 1,367,067 vials in 2006-07 to 5,195,196 vials in 2009-10. Increased availability (by 1000% in 2009-10 from 2006-07) in the public sector reduced out of pocket purchase by the patients by 6% (1,429,076 vials in 2009-10 as compared to 1,515,175 vials in 2007-08). Conclusions: Usage of expensive medications can be increased by reducing tariffs and regulatory intervention of reduction in prices. Decrease in prices helps increase usage of the medicines in the private sector. Decrease in prices and increased volumes in the private sector further helps decrease prices in public sector procurement. Funding source(s): No funding for the study. Author conducted the study to evaluate the impact of policy and regulatory interventions on usage of interferon.

3. Introduction 5% of population is infected with Hepatitis C and 2.5% with Hepatitis B in Pakistan*. Most of the patients remains untreated: a)High cost of treatment. b)Lack of supplies of medicines in public health care facilities. * Hepatitis B & C prevalence in Pakistan, Pakistan Medical Research Council; survey 2008

4. Objectives Reduction in prices of medicines for treatment of hepatitis in the market. To Improve supply chain of medicines. Increase availability of medicines in public health care facilities.

5. Interventions Reduction in custom duty in July 2006 from 10% to 0% on import of medicines for treatment of hepatitis. Regulatory intervention in July 2007 to reduce prices of originator brand from Rs.1074.16 to Rs.980.00 (10%) and of the most selling brand from Rs.979.00 to Rs.879.00 (11%). Increased budgetary allocations in the public sector for treatment of disease and awareness campaign among masses.

6. Study Design Study was conducted at the national level to evaluate the impact of reduction in tariffs (along with other factors) on prices and usage of Interferon. Data of prices, sales and procurement of Interferon over a period of 6 years (July 2004-June2005 through July2009- June2010) was obtained from: a)Sales and price data in market complied by Information Medical Statistics (IMS) b)Procurement data and prices from programs for hepatitis control and prevention by Federal and 3 provincial governments. Data was analyzed to evaluate the trends in pricing, sales and consumption of Interferon before and after reduction in tariffs.

7. Outcome Measures Prices of originator and most selling brands in the private market Number of units sold in the private market Number of units purchased by the public sector Procurement prices in the public sector Total number of units consumed in the country

8. Consumption pattern before and after interventions

9. Results 1.Despite 10% reduction in the tariffs, the private sector did not reduce prices of interferon until regulatory intervention. 2.In private sector, sales increased by 40% in 2007-08 (1,515,175 vials) compared to 2006-07 (1,029,251 vials) after a decrease in prices. 3.Increase in unit sales and decrease in prices in the private sector helped decrease prices for public sector procurement by 28% in Pak Rupee and 89% in USD (Pak Rupee devalued by 40%) over a period of 3 years (2009-10 vs. 2006-07) despite the fact that 100% requirement was met through imports during these years.

10. Results Conti… 4.Reduction in price further led to increased procurement in public sector (337,816 vials in 2006-07 vs. 3,766,120 vials in 2009-10). 5.Total consumption of interferon in the country increased by 280% from 1,367,067 vials in 2006-07 to 5,195,196 vials in 2009-10. 6.Increased availability (by 591% in 2009-10 from 2007-08) in the public sector reduced out of pocket purchase by the patients by 6% (1,429,076 vials in 2009-10 as compared to 1,515,175 vials in 2007-08).

11. Conclusions Usage of expensive medications can be increased by: a)Reduction in tariffs b)Regulatory interventions of reduction in prices, if needed c)Increased availability in the public sector d)Awareness among patients Decrease in prices helps increase usage in the private sector.

12. Conclusions Conti…. Decrease in prices and increased volumes in the private sector helps decrease in prices for public sector procurement. Increased availability of medicines at public sector facilities reduce out of pocket purchases in the private market. Awareness of disease plays important role in increasing its treatment.