The prices of medicines worldwide & how they are determined Margaret Ewen Health Action International Europe Co-ordinator WHO/HAI Project on Medicine Prices.

The prices of medicines worldwide & how they are

determined

Margaret EwenHealth Action International Europe

Co-ordinatorWHO/HAI Project on Medicine Prices

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

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

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

Brand vs generic prices in relation to international reference price (MSH 2003) 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

amoxicillin 250mg caps, private pharmacies

0 5 10 15 20 25 30

Morocco

Malaysia

Fiji

Kuwait

Mongolia

Kazakhstan

Maharashtra

Uganda

median price ratio

Innovator brand

Low est priced generic

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 3 examples show

1. Some huge differences within countries between innovator brand and generic prices: ”brand premiums”

Is this a problem for patients? YES where:– the generic equivalent is not available– the medicine is patented and faces no competition– the brand is sold to increase profits– medicine prescribed by brand name and

substitution not permitted

2. Some large differences within countries between brand & generic prices, and the international reference price

3. The wide variation in retail price for the same product across countries

Manufacturer’s selling price and add-on component costs - which has the greatest influence on the price the patient

pays?

Manufacturer’s selling price vs Add-on costs (cumulative) private sector

Karnataka, brand aciclovir

Manufacturer's price Add on costs

Karnataka, generic aciclovir

Manufacturer's price Add-on costs

Mongolia, brand ceftriaxone inj

CIF Add-on costs

Mongolia, generic omeprazole

CIF Add-on costs

Manufacturer’s price vs Add-ons – Morocco, private sectorfixed mark- ups: wholesale 10%, retail 30%

Ceftriaxone inj, generic, local

Manufacturer's price Add-ons

Beclometasone inh, generic, imported

CIF Add-ons

Amitriptyine, brand, imported

CIF Add-ons

Diclofenac, brand, imported

CIF Add-ons

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 tremendously both in type and quantity e.g. in some states in India <40%, in Peru > 100 %

• pharmacy profits largely based on mark-upsvariable range – 15% to 55%, in one African country approx. 100%

• governments in some countries are taxing the sick by applying high import taxes and adding VAT/GST

Peru - 12% import tax and 18% VAT are addedTajikistan - removing taxes & duties would reduce total additional costs from 82%

to 32%

• a small component cost applied early in the distribution chain can contribute significantly to the final price

• as most add-ons are applied as percentages, the higher the manufacturer’s price, the higher the price to the patient

Both manufacturers’ prices and add-on costs need to be lower to improve access to essential medcines

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

Affordability

• Not only is the innovator brand unaffordable in many countries, but sometimes also the generic

• Affordability could also be improved through:

- availability of generics in the public sector (in most but not all countries)

- therapeutic selection

Availability issues

• 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

Availability issues

• Some cases, based on facilities surveyed:- no generics found for newer medicines not under patent e.g. ciprofloxacin in Cameroon- no generics found for older products e.g. beclometasone inhaler in Philippines (2002 & 2005!)

valproic acid in Malaysia- some important medicines not found at alle.g. phenytoin in Tajikistan co-trimoxazole paediatric suspension in Shandong, China

• In many countries where medicines are free in the public sector, availability is extremely low

Possible options to lower prices

• Regional pooled procurement with open tenders• Governments to use the flexibilities of TRIPS Agreement to

introduce generics while patent is in force• Governments to facilitate quick penetration of generics when patent

is about to expire• Stop taxing essential medicines• Where there is little competition, goverments should consider

regulating prices - from manufacturers’ selling price to margins in wholesale and retail.

• Educate doctors and consumers on availability and acceptability of generics

• Prescribe by INN and have a generic substitution policy

Pharmacists: essential servicemargins can be excessiveprices are reducing access to medicinesbusiness or professional service?

Medicine Prices web-site:

www.haiweb.org/medicineprices