Medicines prices: measurement

and findings in countries

Richard Laing PSM - WHOGilles Forte TCM - WHOMargaret 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 productioncosts 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

www.haiweb.org/medicineprices

• 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

Core medicines Strength Form Category Basic patent expiry Amoxicillin 250 mg tab antibacterial before 1998

Ceftriaxone 1 g/vial inject antibacterial between 1998-2005 Ciprofloxacin 500 mg tab antibacterial Tablet: after 2005

Co-trimoxazole 8+40 mg/ml susp antibacterial before 1998 Phenytoin 100 mg tab antiepileptic before 1998

Carbamazepine 200 mg tab antiepileptic before 1998 Artesunate 100 mg tab antimalarial before 1998

Sulfadoxine + Pyrimethamine 25+500 mg tab antimalarial before 1998 Beclomethasone 0.05 mg/dose inhaler antiasthma before 1998

Salbutamol 0.1 mg/dose inhaler antiasthma before 1998 Aciclovir 200 mg tab antiviral before 1998 Atenolol 50 mg tab antihypertensive before 1998

Captopril 25 mg tab antihypertensive before 1998 Hydrochlorothiazide 25 mg tab antihypertensive before 1998

Nifedipine retard 20 mg retard tab antihypertensive before 1998 Losartan 50 mg tab antihypertensive after 2005

Lovastatin 20 mg tab lipid reducing between 1998-2005 Glibenclamide 5 mg tab antidiabetic before 1998

Metformin 500 mg tab antidiabetic before 1998 Omeprazole 20 mg tab ulcer-healing between 1998-2005

Ranitidine 150 mg tab ulcer-healing before 1998 Fluconazole 200 mg tab antifungal between 1998-2005

Nevirapine 200 mg tab antiviral after 2005 Zidovudine 100 mg tab antiviral between 1998-2005

Indinavir 400 mg tab antiviral after 2005 Diclofenac 25 mg tab antiinflammatory before 1998

Amitriptyline 25 mg tab antidepressant before 1998 Fluoxetine 20 mg tab antidepressant between 1998-2005 Diazepam 5 mg tab anxiolytic before 1998

Fluphenazine 25 mg/ml inject antipsychotic before 1998

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, email, 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 countriesNote – 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. Plan3. 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

% avail MPR % avail MPR

Enalapril 10mg 75% 20.3 34% 10.07

Amoxicillin 500mg +Clavulanic acid125mg

81% 3.18 44% 1.33

Prazosin 1mg 50% 12.11 25% 6.26

Ibuprofen 200mg 62% 20.77 44% 12.47

Brand vs generic prices in relation to international reference price for

ciprofloxacin 500mg tabs, private pharmacies

0 20 40 60 80 100 120 140

Morocco

Malaysia

Fiji

Kuwait

Mongolia

Kazakhstan

Maharashtra

Mali

median price ratio

Innovator brand

Lowest pricedgeneric

Brand vs generic prices in relation to international reference price for

captopril 25mg tabs, private pharmacies

0 5 10 15 20

Malaysia

Fiji

Kuwait

Mongolia

Kazakhstan

Maharashtra

Morocco

median price ratio

Innovator brand

Low est pricedgeneric

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, brand aciclovir

Manufacturer's price Add on costs

Mongolia, brand ceftriaxone inj

CIF Add-on costs

Mongolia, generic omeprazole

CIF Add-on costs

Karnataka, generic aciclovir

Manufacturer's price Add-on costs

Add-on component costsshown as actual costs, private sector

0 20 40 60 80 100 120

Mongolia import brand

Mongolia import generic

Karnataka brand obs. max

Karnataka generic obs. max

Chad import brand & generic

Kyrgyzstan import brand

Kyrgyzstan import generic

Kuwait

Lebanon import

Peru import generic obs. max

percentages

customs, fees,insurance, clearance import taximporters' mark-up wholesale mark-upretail mark-up VAT/other

Add-ons – do they matter?• add-ons vary both in type and quantity e.g. in Khyrgyztan <40%, in Peru > 100 %

• pharmacy profits largely based on mark-upsvariable range from 15% to 55% - in one African country

approx. 100%

• governments in some countries apply high import taxes and VATTajikistan - 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

0 5 10 15 20 25 30 35 40

Uganda

Malaysia

Fiji

Mongolia

Kazakhstan

Kuwait

Morocco

Maharashtra

day's wages

Innovator brand

Low est priced generic

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

0 5 10 15 20 25

Fiji

Malaysia

Maharashtra

Mongolia

Kazakhstan

Kuwait

Morocco

day's wages

Innovator brand

Lowest priced generic

Medicines surveys in 8 countries in Africa Medicines surveys in 8 countries in Africa

Ethiopia, Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda & Zimbabwe

Affordability for illustrative family for a month

24.8

8.6

8.7

6.9

17.3

4.9

1.1

6.6

0 10 20 30 40 50 60

A

B

C

F

G

H

Cou

ntry

number of days wages for lowest paid govenment worker to buy 1 months of medicines

Innovator brandLowest Price Generic

This family has the following medicines requirements each month- 1 salbutamol inhaler for a child with asthma- 70ml cotrimoxazole suspension for a child with a respiratory tract infection- 60 glibenclamide tablets 5mg for an adult with diabetes- 60 ranitidine tablets 150mg for 1 adult with peptic ulcer

107 days

71

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 lowestpaid government worker and hence these medicines are probablyunaffordable to the majority of the population in most thecountries.

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