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Pharmaceutical Pricing –Availability, Affordability and

Price Components in developing andtransitional countries

Richard LaingRichard LaingWorld Health OrganizationWorld Health Organization

GenevaGeneva

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• WHO/HAI methodology

• Launched WHA 2003

• Measures medicine� prices� availability� affordability� component costs

• 40+ surveys to date in allWHO regions

Medicine PricesMedicine Pricesa new approach to measurementa new approach to measurement

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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

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Strong relationship between WHO/HAI price survey& IMS for original brands in private pharmacy Peru

y = 1.1391xR2 = 0.9927

0

10

20

30

40

50

60

70

- 10 20 30 40 50 60 70

IMS weighted pharmacy invoiced price (PERU, n=20)

Med

ian

WH

O/H

AI p

ublic

pric

e

Source Peter Stephens IMS

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• 14 chronic disease medicines• 5 conditions: asthma, diabetes,

epilepsy, hypertension, psychiatricdisorders

• 30 surveys

• Public sector procurementprices and patient prices in thepublic and private sector

• Affordability: Number of days thelowest paid unskilled governmentemployee must work to purchase30 days treatment

Price, availability and affordability analysisPrice, availability and affordability analysis

www.www.haiwebhaiweb.org/.org/medicinepricesmedicineprices

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Median price ratiosMedian price ratios

Median price ratioratio of median price across the facilities surveyed by aninternational reference price

International reference priceManagement Sciences for Health (MSH) International DrugPrice Indicator Guide

Recent procurement prices offered predominantly bynot-for-profit suppliers to developing countries for multi-sourcegeneric products.

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captopril 25mg tab

glibenclamide 5mg tab21.46-2.19-Indonesia (2004)

phenytoin 100mg cap2.89-1.58-Mongolia (2004)0.23-0.33-China/Shandong (2004)

-

21.80

free

Originator

Patient price

4.49

1.69

free

Generic

1.29-Chad (2004)

1.35-Indonesia (2004)12.8037.65Morocco (2004)

4.1712Kenya (2001)

GenericOriginator

Procurement price

Median price ratios, public sectorMedian price ratios, public sector

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Lowest Price Generic and “Brand Premium”in Private Retail Outlets by Country Income

0

5

10

15

20

25

30

India(n=7)

Low(n=7)

Lower Mid(n=10)

UpperMid-High

(n=3)

World Bank Income Group

Med

ian

MP

R f

or C

ore

Med

icin

es F

ound

MinMaxAverage

Low Price Generic

10%

300%

218% 126%

Brand

* MPR = Median price of core medicines found in 4+ outlets as ratio of MSH genericprocurement priceNote: Surveys with 8+ medicines on WHO-HAI core list found in both brand and LPG

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Median price ratios, atenolol 50mg tab,Median price ratios, atenolol 50mg tab,private retail pharmaciesprivate retail pharmacies

0 20 40 60 80

Uganda (2004)

Kuwait (2004)

Lebanon (2004)

India/Chennai (2004)

Indonesia (2004)

Median Price Ratio

Lowest Priced GenericOriginator Brand

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Median Price Ratio, fluoxetine 20mg cap,Median Price Ratio, fluoxetine 20mg cap,private retail pharmaciesprivate retail pharmacies

0 20 40 60 80 100

Kenya (2001)

Peru (2002)

Morocco (2004)

Armenia (2001)

Shandong (2004)

Malaysia (2004)

Median Price Ratio

Lowest Priced GenericOriginator Brand

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Availability of Medicines in Private RetailOutlets by Country Income Group

0%

20%

40%

60%

80%

100%

India(n=7)

Low(n=12)

Lower Mid(n=15)

UpperMid-High

(n=3)

World Bank Income Group

Ava

ilabi

lity

of C

ore

Med

icin

es

MinMaxAverage

Brand Low Price Generic

* MPR = Median price of core medicines found in 4+ outlets as ratio of MSH genericprocurement priceNote: Restricted to surveys with 5+ medicines on WHO-HAI core list found

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100%100%100%0%Morocco (2004)98%100%10%0%Lebanon (2004)45%55%5%0%Mali (2004)5%0%5%0%Shandong (2004)

GenericOriginatorGenericOriginator

Private sectorPublic sector

Availability: glibenclamide 5mg tabAvailability: glibenclamide 5mg tab

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0%2%0%0%Indonesia (2004)50%5%65%25%Morocco (2004)

1%9%0%15%Philippines (2002)4%0%0%0%Mongolia (2004)10%0%0%0%Maharashtra (2005)0%18%0%4%Chad (2004)

GenericOriginatorGenericOriginator

Private sectorPublic sector

Availability: beclometasone inhaler 50mcg/doseAvailability: beclometasone inhaler 50mcg/dose

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Affordability* of Diabetes Treatment inPrivate Retail Outlets by Country

Income Group

0.01.02.03.04.05.06.07.0

India(n=7)

Low(n=15)

Lower Mid(n=11)

Upper Mid-High

(n=3)

World Bank Income Group

Ave

rage

Day

s' W

ages

Nee

ded

to P

ay f

or T

reat

men

t

LPGBrand

* # of days’ wages of lowest paid government worker needed to pay for monthly treatmentIn many countries, 50%-80% of population earn less than this wage.

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0 10 20 30 40 50 60

Uganda

Peru

Jordan

Indonesia

China: Shandong

Armenia

Number of Days' Wages

Lowest Priced Generic

Originator Brand

Affordability: fluoxetine 40mg tab/dayAffordability: fluoxetine 40mg tab/day30 days treatment, private retail pharmacies30 days treatment, private retail pharmacies

96»

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0%13%noIndonesia (2004)0%0%yesMali (2004)0%0%yesUganda (2004)

GenericOriginator

AvailabilityPublic sector

facilitiesEML

-4.1 days2.7 days4.2 days2.0 days5.6 daysGenericOriginator

AffordabilityPrivate retailpharmacies

salbutamol inhaler 0.1mg/dose:salbutamol inhaler 0.1mg/dose:availabilityavailability vsvs affordabilityaffordability

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Taxes on MedicinesTaxes on Medicines

Tajikistan (private sector, imported medicines)VAT 20% Customs duty 5% Tax 1-5%+ transport charges, wholesale & retail mark-ups

Eliminate taxes: cumulative mark-up 123% → 74%

Mongolia (private sector, imported generic)Customs duty 5% stamp duty 1% VAT 15%+ wholesale & retail mark-ups

Eliminate taxes: cumulative mark-up 98% → 63%

Peru (imported generic)Import tax 12% VAT 18%

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Generic (patient price: 24 RM)

4: Retail 50%

3: Wholesale3%

2: Landed 7%

1: MSP, CIF40%

Originator (patient price: 72 RM)

1: MSP, CIF56%

2: Landed 11%

3: Wholesale13%

4: Retail 20%

Malaysia: atenolol 50mg tabMalaysia: atenolol 50mg tabprivate retail pharmaciesprivate retail pharmacies

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1: MSP,CIF43%

2: Landed 7%3: Distributor6%

4: Doctor 44%

Malaysia: atenolol 50mg tabMalaysia: atenolol 50mg tabdispensing doctorsdispensing doctors

1: MSP,CIF30%

2: Landed5%

3: Distributor5%

4: Doctor60%

Generic (patient price 32 RM)

Originator (patient price 94.29 RM)

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Public sector component costs: ChadPublic sector component costs: Chad

Official rates for generics:

• Statistics tax 2%• Central Medical Store mark-up 16%• Regional Medical Store mark-up 25%• Health facility mark-up 30%

Cumulative mark-up: 92%

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Many policy options 1Many policy options 1

• Purchase low priced quality generics for off-patentmedicines, permit generic substitution and createincentives for their dispensing in the private sector

• Patented medicines – equitable prices, use theflexibilities of trade agreements to introducegenerics while a patent is in force

• Aid generic competition eg fast-tracking, waiveregistration fees

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Many policy options 2Many policy options 2

• Stop taxing essential medicines and control pharmacistsremuneration – linked to service not value of medicine

• Where there is little competition, consider regulatingprices - from manufacturers’ selling price to margins inwholesale and retail.

• Educate doctors and consumers on availability andacceptability of generics, and publicise the price ofgenerics

• Separate prescribing and dispensing

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Medicine prices and availabilityMedicine prices and availabilityare too important to ignoreare too important to ignore

Need for countries to:

- undertake price surveys- improve transparency by reporting the results on the

database- develop evidence-based pricing policies to lower prices

and improve availability- monitor the outcome- commit to ensuring that essential medicines are

available and affordable to all of their populations

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