1 Policy options to address access to chronic disease medicines Dr. Richard Laing Ms. Alexandra Cameron Department of Essential Medicines and Pharmaceutical.

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Policy options to address access to chronic disease medicines

Dr. Richard Laing

Ms. Alexandra Cameron

Department of Essential Medicines and Pharmaceutical Policies World Health Organization

27 August 2008

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Surveys of medicine prices and

availability reveal that: • Availability is often low,

particularly in the public sector

• Prices of even the lowest-priced generics can be several times international prices

• Originator brands are more costly than generics

• Treatment of chronic diseases is often unaffordable, especially when combination therapies are used

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High prices, low availability and poor affordability can have many causes

• Low public sector availability: – lack of resources or under-budgeting– inaccurate forecasting– 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

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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

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I DON’T TAKE CHANCES I DON’T TAKE CHANCES I ONLY USE ORIGINALSI ONLY USE ORIGINALS

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• 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.

Policy options (cont'd)

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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 with percentages 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)

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Examples of policy changes following medicine price and availability surveys

Tajikistan• Elimination of 20% VAT on medicines in May 2006. Supply chain add-on costs should

decrease from 122% to 85% for imported medicines.

Lebanon • Price reductions on >1000 imported medicines reduced prices by 20-30%• Policy of fixed mark-ups irrespective of FOB price (cumulative 71.4%) to variable

depending on FOB price; estimated retail price reductions of 3-15%• Retail prices and pharmacy margins published on a public website

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United Arab Emirates• Government reduced prices by an average of 7–8% through

modification of its procurement practices following price comparisons with other countries.

Indonesia• Pharmaceutical industry association announced that from 1

July 2006 it would reduce the price of 100 branded generic medicines, containing 34 active substances.

• Branded generics should not cost more than 3 times the price of true generics – has not happened for all products

East African Community: • 10% cut on import duties on medicines.

Examples of policy changes (cont’d)

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Constituency Building• Presentations & posters at

~70 meetings• Brochure & quarterly bulletin• Monitor supplement & articles• Synthesis reports• WHA 2006 briefing & paper• Publications: Bulletin, Lancet• Analysis of MDG Target 8.E

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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 pricing policy experts are developing guidelines on options for policies affecting medicine prices and their impact in various settings:

- mapping current policies & interventions- commissioning policy review papers- drafting policy briefs- identifying research needs

AND… What is the role of disease organizations in advocating for access to chronic disease

medicines?