Transcript T h e M i l l e n n i u m P r o j e c t

WHO Perspective on
Medicine Prices & Policies
Meeting of Drug Board on Medicine Pricing
Federal Ministry of Health
Government of Pakistan
Dr Zafar Mirza
Regional Adviser
Essential Medicines & Pharmaceutical Policies
Division of Health Systems & Services Development
East Mediterranean Regional Office
World Health Organization
14th November 2008
ISLAMABAD
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The Presentation
PART 1:
WHO Perspective on access to
medicines
PART 2:
Medicine prices and affordability in
EMR & in Pakistan
PART 3:
Medicine Pricing Policy considerations
PART 4:
Conclusions & Recommendations
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WHO Constitution
 “The enjoyment of the highest attainable
standard of health is one of the fundamental
rights of every human being without distinction
of race, religion, political belief, economic or
social condition.”
and
 “Governments have a responsibility for the
health of their peoples which can be fulfilled
only by the provision of adequate health and
social measures.
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WHO Health System Framework
- includes both public and private sectors
v
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WHO Medicines Strategy:
4 objectives, 7 components, 44 expected outcomes
Objectives
Components
 Policy
1. Implementation and monitoring of
national medicines policies
2. Traditional and complementary medicine
 Access
3. Fair financing and affordability
4. Medicines supply systems
 Quality &
 safety
5. Norms and standards
6. Regulations and quality assurance
systems (DRA)
 Rational use
7. Rational use by health professionals and
consumers
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Access to Medicines
 Access to essential medicines is a integral
component of:


right to health
Health care
 1/3rd of people in world do not have reliable
access to essential medicines.
 In some developing countries up to 50% of
the population lack this access.
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WHO Framework
Determinants of Access to Medicines
3. Sustainable
2. Affordable
prices
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4. Reliable
health and
supply
systems
selection
ACCESS
1. Rational
financing
WHO Framework
Determinants of Access to Medicines
1. Rational
selection and use
3. Sustainable
financing
ACCESS
2. Affordable
prices
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4. Reliable
health and supply
systems
Context
Medicine Prices – why regulation

In the public sector, typically, governments in
developing countries spend 30-40% of their
recurrent health budgets on buying medicines:


In the private sector, individuals and families spend a
very high proportion of their health budget on buying
medicines.


Largest category after salaries
In some countries it reaches up to 80-90% of household health
budget.
Hence, governments (MoH) directly or indirectly
regulate medicine prices all over the world in their
effort to expand health care coverage.

Approaches differ
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Expenditure on medicines
Pakistan
from 9 NHA studies in the Region
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Context
Medicine Prices – contesting field
 Challenging area of public policy – interface
of public health, commerce & industries and
law.
 Stakes are high for both public health as
well as for business community.
 Government has to strike a balance between
numerous stakeholders – with ultimate goal
of benefiting people.
 Primacy of public health.
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The Presentation
PART 1:
WHO Perspective on access to
medicines
PART 2:
Medicine prices and affordability in
EMR & in Pakistan
PART 3:
Medicine Pricing Policy considerations
PART 4:
Conclusions & Recommendations
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EMRO
National Surveys on Medicine Prices
 Through a standard methodology for:
 collection and analysis of prices of
essential medicines
 affordability
 availability
 component costs in various sectors and
regions in a country
 Surveys have taken place in 11 countries in
the East Mediterranean region and in around
50 countries world wide.
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EMRO
National Surveys on Medicine Prices
 In the national survey, prices of 30
medicines are collected from 20 public and
20 private pharmacies for both originator
brand and lowest priced generic equivalent.
 In case of Pakistan 29 medicines were
surveyed in 30 public and 48 private
pharmacies in all the four provinces Sept
2004.
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Survey Findings
Public sector procurement prices
International Reference Price
■
Generally, ministries of health were found to obtain
International Reference Prices (IRPs) for this
good procurement prices
compared
to asInternational
methodology
are selected
those of Management
for Health (MSH) which are published
Reference Prices (IRPs)Sciences
except
yearly in The International Drug Price Indicator
■ Morocco: 3.7 times the
IRPs
Guide
and which provide an indication of
pharmaceutical prices on the international market.
■
Pakistan came up well with its public procurement
prices when compared with International Reference
Prices.
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Availability of medicines in public sector
Yemen
16/35 medicines were not found in any facility
29/35 medicines were available only in 4 facilities
Pakistan
23/29 medicines were not found in more than 15
out of 30 facilities
Lebanon
only 15 of the 32 surveyed medicines were found at
20 public dispensaries
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Private sector Patient Prices in Pakistan
Overall, prices of originator brands were 3.36 times the
international ref price compared to 2.26 times for the
lowest priced generics
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Survey Findings
Affordability
Number of days’ income a lowest paid government servant has to
spend to buy pre-selected treatment regimes for 9 common diseases
in the private sector
Respiratory infection: 2.3 days’ income to buy a week’s
supply of originator branded amoxicillin in Jordan
Depressive illness: 7.7 days’ income to buy a month’s
supply of lowest priced generic fluoxetine in Pakistan;
36.4 days’ income to buy originator branded fluoxetine
Ulcer: One month’s treatment with lowest priced generic
omeprazole – 2.9 days’ income in Sudan and 7.7 days’
income in Jordan; with originator brand 10.6 days’
income in Morocco and 23.7 days’ income in Pakistan
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Affordability
No. of days wages to purchase treatments from the private sector
DIABETES
OB
LPG
Metformin
1.9
1.6
Glibenclamide
1.4
0.9
4.5
1.7
23.7
4.8
Ranitidine
8.5
6.5
Amitriptyline
1.4
--
36.4
7.7
ARTHRITIS
Diclofenac
PEPTIC ULCER
Omeprazole
DEPRESSION
Fluoxetine
RESPIRATORY TRACT INFECTION (adult)
Amoxicillin
Ciprofloxacin
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1.0
1.0
11.3
3.0
Affordability & Poverty
Figure 1
Income distribution curve 2004
Percentage of total income
100
100.00
90
80
70
60
Income distribution curve
2004
under US$ 1 a day
59.93
50
40
under US$2 a day
38.76
30
Lowest paid gov worker
22.37
20
10
0
9.39
0
0%
20%
40%
43%
41%
60%
Income Quintiles
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80%
86%
100%
Affordability of Atenolol:
CATASTROPHIC APPROACH
50mg/day LPG in private sector: at the cost of USD 0.04/day
not affordable for the poorest 80% of the population at the 2.5% income threshold.
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IMPOVERISHMENT APPROACH
Affordability of 4 selected medicines
Proportion of population becoming impoverished
because of medicine procurement
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The Presentation
PART 1:
WHO Perspective on access to
medicines
PART 2:
Medicine prices and affordability in
EMR & in Pakistan
PART 3:
Medicine Pricing Policy considerations
PART 4:
Conclusions & Recommendations
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Medicine Pricing Policies
 Pricing Policies for New Chemical Entities
(NME)





Patent protection & access to medicines
TRIPS and public health safeguards
Data protection
Differential pricing
Cost-effectiveness analysis
 Pricing Policies of Generics
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Pricing Policies for Generics
General Considerations
 Lifeline of local pharmaceutical industry in
developing countries.
 Expiry of patents and introduction of
generics is known to bring prices down in
first year up to 40%.
 Pricing policies need to be developed within
the context of each country.
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Paradox of Pharmaceutical Industrial
Development in Developing Countries
 The Case of India

Claims to be the 4th largest producer of medicines in the
world

Exports to almost every country in the world – 70% of
medicines in Africa are exported from India

And yet 50 to 80% of people within India do not have
reliable access to needed medicines

Proportion of out-of-pocket expenditure on health is
highest in the world i.e. 84%

A World Bank study suggests OOP medical costs alone
may push 2.2% of the population below the poverty line
in one year.
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Contextual Factors Guiding Pricing
Policies for Generics
 National vision
 Level of public health care coverage
 Level of social protection
 Existence and capacity of local
pharmaceutical industry
 Regulatory capacity and effectiveness
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Globalization
National
Constitution
National
Development
Objectives
National Health
Policy
National
Medicine
Policy
Access to
Medicines
Medicine
Prices
Five sets of policy tools for Generics
for better availability, improved quality & affordable prices
1. Policies aimed at early introduction of
generics.
2. Encouraging generic production and
competition in the market
3. Promoting generic medicine use in public and
private sectors.
4. Controlling / regulating prices of generic
medicines
5. Effective quality control
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Five sets of policy tools for Generics
for better availability, improved quality & affordable prices
1. Policies aimed at early introduction of
generics.
2. Encouraging generic production and
competition in the market
3. Promoting generic medicine use in public and
private sectors.
4. Controlling / regulating prices of generic
medicines
5. Effective Quality control
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Price Regulation of Generic Medicines
common policy tools

Price controls or price fixing

Cost plus formula
 India; Bangladesh; Egypt; Syria…
 Gradual movement towards decontrol



Pakistan post 1993 experience
Experience from Latin American countries
Maximum prices or leader price ceiling

Can be a good policy in evolutionary process for decontrolled medicines with strong monitoring system in
place

Price negotiations

Reference pricing


Internal reference pricing
External reference pricing
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The Presentation
PART 1:
WHO Perspective on access to
medicines
PART 2:
Medicine prices and affordability in
EMR & in Pakistan
PART 3:
Medicine Pricing Policy considerations
PART 4:
Conclusions & Recommendations
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Conclusions & Recommendations

Fixing medicines prices alone cannot improve the overall
access situation

A comprehensive NMP-based approach is required along with
major institutional reforms. DRA development has become
imperative.

Unavailability of medicines in public sector facilities requires
urgent attention in terms of improving financing and medicine
supply systems.

Affordability analyses must be part of medicine pricing
discussions and decisions.

A health system approach is needed for equitable financing and
social protection in the face of rising inflation and poverty.
Accessibility to essential medicines should be a part of such
reform package.
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Conclusions & Recommendations

The socio-economic situation, local pharmaceutical industry
needs and aspirations and lessons learnt from June 1993 partial
medicine prices de-regulation policy must set the context for a
review of the existing medicine price policy and practice.

A major institutional development is needed for medicine
pricing regulation and monitoring. Indian National
Pharmaceutical Pricing Authority is a good example.

Prices of NCE must be negotiated in line with regional prices
and those in Australia.

Policies must be adopted whereby generic entry into the market
is facilitated as quickly as possible after the expiry of patents.
Patent protection and market authorization must not be linked.
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Conclusions & Recommendations

A clear criteria needs to be developed for the selection of
medicines for the controlled category i.e. public health
significance of medicines and the level of competition in the
market. The prices of these medicines must be controlled so
they are affordable for the poor. Appropriate Cost-plus formula
can be developed for controlling the prices of these medicines.

The decontrolled category must also be provided a ceiling and
these should be closely monitored.

The non-availability of important low priced essential generic
medicines because of lack of profitability must be reviewed and
appropriate price increases must be awarded.

Once agreed, the medicine pricing policy must be drafted,
notified and implemented in letter and spirit.
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Thank you
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