The prices of medicines worldwide & how they are determined Margaret Ewen Health Action International Europe Co-ordinator WHO/HAI Project on Medicine Prices
Feb 11, 2016
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 comparisonCore 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-ups
variable 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/GSTPeru - 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
InnovatorBrand
Lowest pricedgeneric
% 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