TBS 2007 1

Medicines prices: measurement

and findings in countries

Richard Laing PSM - WHOGilles Forte TCM - WHOAlexandra Cameron PSM - WHO

TBS 2007 2

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

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• WHO/HAI methodology

• Launched at WHA 2003

• Measures medicine prices availability affordability component costs

• 50+ surveys to date

• Intended to empower NGOs

• New manual coming soon

Medicine PricesMedicine Pricesa new approach to measurementa new approach to measurement

www.haiweb.org/medicineprices

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Survey tool – data collection• Systematic sampling of 5 public and 5 private

medicine outlets in at least 4 (6) regions/areas • Prices of 14 global core + 16 regional core

pre-selected commonly used medicines • Predetermined dose forms & strengths, &

recommended pack sizes• Supplementary medicine lists are encouraged,

adapted to local needs• Prices of innovator brand and lowest price

generic are collected • Components of price, from manufacturer to

retailer, are identified

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Survey tool – analysis

• Price calculated as Median Price Ratio (MPR): actual price compared to MSH International reference price (world market generic procurement price)

• Availability calculated as number of facilities having that product at time of survey, reported as a percentage

• Affordability assessed for 12 pre-selected courses of treatment compared to daily wage of lowest paid government worker

• New Excel workbook, for data entry (double entry, with error checking) and analysis, accompanies manual

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How prices are expressedMedian price ratio (MPR)

– ratio of median unit price to an international reference price (converted to local currency)

– medicine must be found in at least 4 outlets for MPR to be calculated

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

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Price components

• Identified by tracking final prices backwards through the supply chain, from the patient price to the manufacturer’s selling price/CIF price

• Method involves interviews with pharmacists, wholesalers, importers, Ministry of Health, Ministry of Trade, Customs office, local manufacturers…. Note - companies are rarely willing to divulge their selling prices

• Types of charges can include: insurance & freight costs, port & inspection charges, handling charges, import duties, import, wholesale & retail mark-ups, VAT/GST, dispensing fees

• The amount of charge is often variable depending on whether the medicine is:

- Imported or locally manufactured- Innovator brand or generic- Sold in the public or private sector

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Price components are analysed by stage of the supply chain

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Surveys: underway or completed

Middle East: Lebanon, Jordan, Kuwait, Syria, Sudan, Yemen, UAEAfrica: Tunisia, Algeria, Morocco, Mali, Chad, Uganda, South Africa,

Tanzania, Kenya, Ethiopia, Zimbabwe, Mozambique, Nigeria, Ghana, Cameroon, Senegal, Burundi, Niger, Congo, DRC

Asia/Pacific: Sri Lanka, Pakistan, Indonesia, Philippines, Malaysia, Fiji, China (Shandong, Shanghai), India (West Bengal, Haryana, Karnataka, Maharashtra (2), Chennai), Vietnam, Cook Islands

Central Asia: Mongolia, Kazakhstan, Tajikistan, Kyrgyzstan, UzbekistanEurope: Bosnia Herzegovina, KosovoLatin America/Caribbean: Peru, Brazil, Dominican Republic, El Salvador

54 surveys in 46 countries

Note – some data in this presentation is preliminary

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Tool for routine monitoring of price & availability

• Simple, inexpensive, standardised method to inform consumers & purchasers about current prices, availability and patterns of price changes

• Data collected for 10 medicines each month, on a 3 month rotation, in sentinel public and private sector pharmacies (40 of each)

• Simple and sustainable method of data collection, e.g. telephone, fax, email, post

• Medicines monitored – based on core list but adapted to local needs, only data for lowest priced product is collected

• Price variations compared to basic consumer commodities, e.g. a dozen medium eggs

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Medicine prices surveys to inform policy changes

Surveys carried out using WHO/HAI methodology in 11 countries in the WHO African Region - 2004/05

Cameroon, Chad, Ethiopia, Ghana, Kenya, Mali, Nigeria, Senegal, Tanzania, Uganda & Zimbabwe

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• Surveys carried out by countries to inform policy decisions & change for enhanced availability and affordability

• WHO Support to carry out surveys: data collection, cleaning, analysis, report writing, priority setting and planning.

• Pre- and post- survey workshops held for key survey personnel in the Middle East, Central Asia, Africa (Francophone & Anglophone), Asia Pacific and IndiaNext phase – Caribbean and Latin America

Medicine prices survey process and use of evidence

2. Plan3. Implement

1. Assess and Monitor

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Parameters and sectors surveyed

Public sector

PrivateSector

NGO sector

Procurement price

√ √

Patient price √ √ √

Availability √ √ √

Affordability √ √ √

Price components

√ √ √

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Procurement prices – public sectorLowest Priced Generic

0.57

0.95

0.61

0.88

3.29

1.69

0.66 0.710.8

1.3

0

2

4

6

Cam

eroon (n=12)

Chad (n=17)

Ethiopia (n=22)

Ghana (n=26)

Kenya (n=24)

Mali (n=33)

Nigeria (n=18)

Senegal (n=33)

Tanzania (n=32)

Uganda

Pric

e (M

PR

)

75th percentile

25th percentile

Median

n= number of medicines

Procurement prices – public sectorof Lowest Priced Generic

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Procurement prices – LPG public sector: by products

0.710.89 0.83 0.88

1.90

1.07

0.65

0.29

0.83

1.19 1.18

0.55 0.62

0

1

2

3

4

5

amitriptyline (n=6)amoxicillin 250mg (n=4)amoxicillin 500mg (n=7)captopril (n=5)

co-trimoxazole suspension (n=4)

fluphenazine injection (n=6)furosemide tab (n=8)glibenclamide (n=7)metformin (n=4)nifedipine retard (n=8)phenytoin (n=4)salbutamol inhaler (n=4)sulfadoxine-pyrimethamine (n=10)

75th

25th

median

good prices

n= number of countriesP rice (MP R )

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Patient prices vs. procurement price (LPG) – public sector

2.4

2.2 2.2 2.1 2.12.0

1.4

3.1

2.9

n/a0

1

2

3

C had(n=13)

K enya(n=22)

G hana(n=22)

E thiopia(n=36)

S enegal(n=27)

C ameroon(n=22)

Mali (n=29) Tanzania(n=26)

Nigeria(n=16)

Uganda (*)

n = number of medicines

P rice (MP R )

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Patient price of ciprofloxacin tablets in public sector – (LPG)

1.8

7.98.3

1.5

4.7

1.5

2.9

13.3

11.311.0

2.0

8.4

4.8

15.2

13.0

3.3

4.5

1.1

7.1

7.1

2.9

0

5

10

15

Cameroon Ethiopia Ghana Kenya Mali Nigeria Tanzania

Pri

ce (

MP

R)

75th

25th

Median

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Patient price in the public and private sector (LPG) matched pairs of same medicines

9.3

14.9

5.3

3.1

4.0

2.9

4.0 3.9

2.61.8

1.3

7.3

2.12.0

3.5

1.3

3.3

2.4 2.02.9

3.5

00

4

8

12

16

C ameroon(n=17)

C had(n=5)

Mali(n=30)

Tanzania(n=28)

S enegal(n=20)

G hana(n=30)

E thiopia(n=36)

K enya(n=28)

Zimbabwe(n=25)

Nigeria(n=19)

Uganda(n=38) (*)

Pri

ce (M

PR

)

P rivate

P ublic

n = number of medicines

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Patient prices of OB and generic version in private sector – matched pairs of the same medicines

26.9

23.7

17.9

16.3

13.6

11.5

3.55.0

14.613.4

12.8

7.7

4.4 4.9

2.6 2.0

0

10

20

C ameroon(n=17)

S enegal (n=27) K enya (n=33) G hana (n=17) Nigeria (n=17) Uganda (n=11) Mali (n=24) E thiopia (n=12)

Pric

e (M

PR

)

Orig inator brand

L owest priced generic

n = number of medicines

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Ethiopia: 71 days

Kenya: 24 days

Nigeria: 30 days

Ghana: 107 days

South Africa: 9 days

Affordability of medicines in the private sector for a family* : Innovator Brand

* an asthmatic child with a respiratory infection, an adult with diabetes and hypertension and another adult with a peptic ulcer

It would take more than 2 weeks wages in 6 out of 7 countries for a month treatment (where innovator brands were found)

Cameroon 47 days

Senegal: 18 days

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in 9 of the 10 countries, it would take 5 or more days salary to pay for the medicines every month

Ethiopia: 8 days

Kenya: 7 days

Tanzania: 5 days

Uganda: 6 days

Nigeria: 13 days

Ghana: 17 days

Zimbabwe: 8 days

South Africa: 1 day

Affordability of medicines in the private sector- for lowest priced

generics

Cameroon: 39 days

Senegal: 6 days

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Structure of drug prices in EuropeStructure of drug prices in Europe

57

77,6

72,4

57,5

62,7

67,8

64,8

56,6

63,4

63,3

63,1

69,5

63,8

51,2

51,8

52,5

10,1

2,4

10,3

8,7

6,7

8,4

3,8

8,5

10,8

2,6

5,5

12

6,7

7,7

7,5

4,1

33

20

17,3

30,9

26,8

19

26,2

29,2

20,2

26,6

24

10

29,4

27,3

24,1

23,4

0

0

0

2,9

3,8

4,8

5,2

5,7

5,7

7,4

7,4

8,5

9,1

13,8

16,7

20

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Ireland

Sweden

GB

Luxenburg

Spain

Portugal

France

Belgien

Netherlands

Finland

Greece

Slovenia

Italia

Germany

Austria

Denmark

Manufact. p. Wholesalers Pharmacies VAT

Kanavos P, 2004Kanavos P, 2004

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The components of medicine prices

ComponentComponent EUEU Kenya*Kenya* Uganda**Uganda**

Manufacturer’s Manufacturer’s selling priceselling price (MSP)(MSP)

48-78%48-78% 43-59%43-59% 24-77%24-77%

Landed costsLanded costs usually usually calculated in MSPcalculated in MSP

2-4%2-4% 5-14%5-14%

WholesaleWholesale 2,4-11%2,4-11% 1-43%1-43% 3-23%3-23%

RetailRetail 10-33%10-33% 17-50%17-50% 0-68%0-68%

Dispensed (final) Dispensed (final) price: VAT, GSTprice: VAT, GST

0-20%0-20% 0%0% 0%0%

Price components and essential medicines in Kenya. WHO 2006Price components and essential medicines in Kenya. WHO 2006**Levison L. Investigating price components, WHO**Levison L. Investigating price components, WHO 20062006

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Recommendations in the EAC countriesNairobi 17 to 19 September 2007

To regulate prices of all registered medicines and vaccinesTo regulate prices of all registered medicines and vaccines– To regulate the stage 3 (wholesalers’ margin) and stage 4 (retailers’ margin)To regulate the stage 3 (wholesalers’ margin) and stage 4 (retailers’ margin)– To publish recommended prices (print recommended prices on packs of To publish recommended prices (print recommended prices on packs of

medicines)medicines)– To To setset a maximum mark-up a maximum mark-upss for wholesalers for wholesalers and forand for pharmacies pharmacies– Regulation process should be transparent & fair to all stakeholdersRegulation process should be transparent & fair to all stakeholders

To promote generic prescribing and dispensingTo promote generic prescribing and dispensing– To mandate pharmacists to practice compulsory generic substitutionTo mandate pharmacists to practice compulsory generic substitution To build and/or to expand health insurance schemes for essential medicines

and treatments to the whole population

The countries with health insurance scheme are recommended to implement a The countries with health insurance scheme are recommended to implement a reference pricing system for therapeutic clusters of medicinesreference pricing system for therapeutic clusters of medicines

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Common recommendations emerging from surveyed countries

Pricing:• Introduce and enforce pricing policy and regulations to enhance affordability

• Ongoing monitoring of medicine prices to:Increase price transparency Reduce in-country price variation

Monitor impact of policy and regulations

Generics:• Develop and enforce regulations for generic substitution - promote and provide

incentives for generic prescribing and dispensing in all sectors.• Increase awareness and acceptance of generic equivalents among prescribers,

dispensers and the general public.

Advocacy and price transparency: involvement of CSOs and enhance information sharing and empower consumers

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Procurement:• Establish efficient public sector procurement and supply systems to

improve availability of essential medicines in the public sector

Regulation of price components:Regulation possible on one or more mark ups levels: wholesalers, Regulation possible on one or more mark ups levels: wholesalers, retailers Considerretailers Consider regressive schemes (i.e. higher mark-ups on lower-priced products) that encourage the sale of lower-priced medicines

Reduce or remove taxes and tariffs including VAT on medicines, especially essential medicines.

Sustainable Financing:• Explore feasibility of alternatives to out-of-pocket expenditure on

medicines including prepayment health insurance schemes.

Common recommendations emerging from surveyed countries

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East African Community: • 10% cut on import duties on medicines. Quarterly price monitoring carried out.Mali: • adoption of new regulations for enforcement of a fixed mark-up for

approximately 100 essential medicines in the private sector.• A pricing monitoring system has been set up by the Ministry of Health for private

pharmacies.Nigeria: • Director of Pharmaceutical services in Lagos State, has mandated responsible

officers for drug procurement to ensure reduction in medicines prices – a medicine prices policy is being developed.

Lebanon: • Ministry of Health reduced medicine prices by 3–15% after undertaking a price

survey United Arab Emirates: • Government decided to reduce prices by an average of 7–8% through

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

Regional workshop on priority setting and planning for policy and advocacy

Collecting evidence on impact of price surveys

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• 14 chronic disease medicines

• 30 surveys

• Public sector procurement prices and patient prices in the public and private sector

• Affordability: Number of days the lowest paid government employee must work to purchase 30 days treatment

Price, availability and affordability analysis for Price, availability and affordability analysis for chronic diseaseschronic diseases

http://mednet3.who.int/medprices/

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Recent Work / Work Underwayby WHO Interns

• Lixanne Gemerts – analysis of national pharmaceutical financing in EMRO countries

• Ziyan Wang – analysis of pharmaceutical pricing policies in China