WHO-EM/EDB/089/E Medicine prices, availability, affordability and price components A synthesis report of medicine price surveys undertaken in selected countries of the WHO Eastern Mediterranean Region MPSR final (27 Nov 2008).indd 1 12/2/08 12:20:55 PM WHO Library Cataloguing in Publication Data World Health Organization. Regional Office for the Eastern Mediterranean Medicine prices, availability, affordability and price components: a synthesis report of medicine price surveys undertaken in selected countries of the WHO Eastern Mediterranean Region / World Health Organization. Regional Office for the Eastern Mediterranean P. WHO-EM/EDB/089/E 1. Drug Costs 2. Costs and Cost Analysis - Eastern Mediterranean Region 3. Economics, Pharmaceutical 4. Cost Control I. Title II. Regional Office for the Eastern Mediterranean (NLM Classification: QV 736) ©World Health Organization 2008. All rights reserved. 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Design by Suhaib Al Asbahi and Ahmed Salah Mostafa Printing by Metropole WHO–EM/EDB/089/E/09.08/1000 MPSR final (27 Nov 2008).indd 2 12/2/08 12:20:55 PM Contents Foreword ...........................................................................................................................................................5 Acknowledgements ............................................................................................................................................6 Acronyms ..........................................................................................................................................................7 Executive summary ...........................................................................................................................................9 1. Introduction ..................................................................................................................................................11 2. The WHO/HAI Medicine Price Survey Methodology ...................................................................................15 2.1 Overview ................................................................................................................................................15 2.2 Methodology of the secondary analysis ...................................................................................................15 3. Results ...........................................................................................................................................................21 3.1 General ...................................................................................................................................................21 3.2 Availability of medicines in the public and private sectors .......................................................................22 3.3 Public sector procurement prices ............................................................................................................24 3.4 Public sector medicine prices ..................................................................................................................26 3.5 Private retail medicine prices ...................................................................................................................28 3.6 Brand premiums .....................................................................................................................................30 3.7 Affordability ...........................................................................................................................................31 3.8 Individual medicine prices ......................................................................................................................35 3.9 Price components of medicines in the private sector ...............................................................................37 4. Conclusions ..................................................................................................................................................38 5. Recommendations .........................................................................................................................................40 References .........................................................................................................................................................44 Annexes .............................................................................................................................................................45 1. National Pharmaceutical Sector data .............................................................................................................45 2. Egypt and Emirate of Abu Dhabi case studies ...............................................................................................50 3. Secondary analysis calculations to standardise data ........................................................................................53 4. Availability data for individual medicines. .....................................................................................................55 5. Median price ratios for individual medicines. ................................................................................................67 6. Affordability of standard treatments ..............................................................................................................105 7. Examples of the cumulative effects of price components ................................................................................108 MPSR final (27 Nov 2008).indd 3 12/2/08 12:20:55 PM MPSR final (27 Nov 2008).indd 4 12/2/08 12:20:55 PM In the name of God, the Compassionate, the Merciful Foreword Reliable and sustainable access to essential medicines remains a challenge for about one-third of the world’s population, with the poorest and most vulnerable populations at highest risk of failing to secure access. The unaffordable price of medicines is the major barrier they face in obtaining the medicines they need. Lack of transparency about the component costs contributing to the price of a medicine at the level where the patient accesses it—including the manufacturer’s selling price, the taxes, distributor and retail margins—has made it difficult to address this issue. Furthermore, even where governments have intervened in the form of medicine pricing regulations, the effects on access to essential medicines are not clear, especially where there may be conflicting policies to promote local pharmaceutical industry. The WHO Medicines Strategy recognized the need for greater information and openness on factors affecting access to medicines, including prices, and publications and links related to medicine prices have been collated on a dedicated page on the WHO website. In addition, medicine pricing is an integral part of the Global Strategy and Action Plan on Public Health Innovation and Intellectual Property recently adopted by the World Heath Assembly. In 2003, WHO and Health Action International, a nongovernmental organization specialized in policy advocacy, developed a standard methodology for surveying medicine prices and availability to address this situation and provide to evidence on which to base sound policy decisions. The WHO Regional Office for the Eastern Mediterranean was the early leader in using this methodology, being the first to conduct training for countries on the methodology and performing the first comprehensive surveys. More than 15 countries of the Eastern Mediterranean Region have been trained in the methodology, and 12 have conducted medicine pricing and availability surveys. The results are being made available on the Health Action International website. Early in January 2007, the WHO Regional Office for the Eastern Mediterranean organized a follow-up workshop for countries in the Region which had or intended to conduct medicine price and availability surveys to share experiences and plan for the future. Public interest and advocacy groups, medicine regulators, World Bank representatives and other interested parties also participated. It was clear that some countries had taken action on the results of their surveys. For example, the Government of Lebanon had acted to reduce the prices of 1100 imported medicines and had introduced a new pricing structure. Jordan is also reviewing its medicine pricing regulations and policies in the light of the evidence derived from its survey and those of other countries in the Region. Ministers of health were made aware of the evidence building from this work at the meeting of the Regional Committee for the Eastern Mediterranean in October 2007 and agreed that action was needed. In this regard the Regional Office is developing a central online resource of public procurement prices from Member States and national price lists for comparison, with the aim of facilitating information sharing on medicine prices and policies within the Region to better inform pharmaceutical procurement and policy decisions. A “medicine prices policy package” is also under development to guide governments in initiating and revising their national health and medicine policies. This report is one of two commissioned by the Regional Office to synthesize the results of existing surveys in the Region and to relate them to existing medicines policies with a view to better understanding the pricing and availability of medicines and the efficacy of policy interventions which are available to governments. This information is critical if we are to make essential medicines both accessible and affordable to those who need them. Promoting and ensuring access to essential medicines is a part of right to health and it is a work in progress. The Regional Office will continue its efforts in this area as part of the work mandated by the WHO Constitution and requested by our Member States. Hussein A. Gezairy MD FRCS WHO Regional Director for the Eastern Mediterranean MPSR final (27 Nov 2008).indd 5 12/2/08 12:20:56 PM Acknowledgements This report was prepared using data collected with World Health Organization/Health Action International medicine prices surveys. Its authors, Douglas Ball* , Zafar Mirza † and Margaret Ewen ‡ , acknowledge that the report could not have been written without the efforts of the many people who were involved in developing the WHO/HAI medicine price survey methodology, and the various survey groups without whom there would be no data. The input of the reviewers in providing insight and comment is also gratefully acknowledged, along with the permission of state and civil bodies to support price transparency and allow their data to be publicly accessible on the HAI web site and in this report. Special thanks go to Bill MacLeod, Sumit Raybardhan and Brenda Waning of Boston School of Public Health and Charu Garg of the Health Systems Financing Department, Health Systems and Services Cluster of WHO for their efforts in developing the methodology for the economic adjustments of median price ratios to make valid intercountry comparisons. This report would not have been the same without their contribution. Survey managers Egypt: Zainab Obeid; Jordan: Rania Bader; Kuwait: Douglas Ball; Lebanon: Rita Karam; Morocco: Zoulikha Faraj, A. Agoumi; Pakistan: Ayyaz Kiani; Sudan: Khalid Alfadul; Syrian Arab Republic: Razan Sallouta; Tunisia: Jalel Eddine Hila; Yemen: Yasseen Ahmed Al Qubati; United Arab Emirates: Mohammed Abuelkhair. Reviewers of this report Many individuals gave valuable comments and insights to improve the report, but Richard Laing, Mohammed BinShahna and Alexandra Cameron deserve special mention. Sponsors of the WHO/HAI Project on medicine prices Ministry of Foreign Affairs, the Netherlands; The Rockefeller Foundation; Swedish International Development Cooperation Agency; Department for International Development, United Kingdom; European Union DG Development; World Health Organization. The WHO Regional Office for the Eastern Mediterranean funded a number of surveys in the Eastern Mediterranean Region. Members of the WHO/HAI Project on medicine prices Management: Margaret Ewen, Health Action International; Richard Laing, Department of Medicines Policy and Standards, World Health Organization; Gilles Forte, Department of Technical Cooperation for Essential Medicines and Traditional Medicine, World Health Organization; Alexandra Cameron, Department of Medicines Policy and Standards, World Health Organization. Advisory group: Kumaraiah Balasubramaniam, Health Action International Asia Pacific, Sri Lanka; Jorge Bermudez, UNITAID, Switzerland; Alexandra Cameron, World Health Organization, Geneva; Dennis Ross-Degnan, Harvard Medical School, United States of America; Jerôme Dumoulin, University of Grenoble, France; Yves-Antoine Flori, University of Bordeaux, France (in memoriam); David Henry, University of Newcastle, Australia; Jeanne Madden, Harvard Medical School, United States of America; Barbara McPake, London School of Hygiene and Tropical Medicine, United Kingdom; Elias Mossialos, London School of Economics, United Kingdom; Kirsten Myhr, Ullevål University Hospital, Norway; Carmen Perez Casas, Médecins Sans Frontières; Aarti Patel, University of Otago, New Zealand; Anthony So, Duke University, United States of America. Steering committee: Daphne Fresle, World Health Organization; Ellen ‘t Hoen, Médecins Sans Frontières, France; Zafar Mirza, World Health Organization Regional Office for the Eastern Mediterranean, Egypt; Lander van Ommen, Ministry of Foreign Affairs, the Netherlands; Raffaella Ravinetto, Médecins Sans Frontières; Harry van Schooten, Ministry of Foreign Affairs, the Netherlands, Mohga Kamal Smith, Oxfam, United Kingdom. Consultants: Martin Auton, Douglas Ball, Simona Chorliet, Kirsten Myhr, Klara Tisocki (monitoring systems), Anita Kotwani (advisors for national surveys); Andrew Creese (case studies and former project coordinator); Pierrick Gonnet (IT support); Libby Levison (price components). * Faculty of Pharmacy, Kuwait University, Kuwait † WHO Regional Office for the Eastern Mediterranean, Cairo, Egypt ‡ Health Action International, Amsterdam, Netherlands MPSR final (27 Nov 2008).indd 6 12/2/08 12:20:56 PM Acronyms CIP Cost, insurance, freight CPI Consumer price index EU European Union FOB Freight on board GDP Gross domestic product HAI Health Action International OB Originator brand medicine INN International Nonproprietary Name IRP International reference price LPG Lowest priced generic equivalent medicine MPR Median price ratio MSH Management Sciences for Health NGO Nongovernmental organization PPP Purchasing power parity UNICEF United Nations Children’s Fund VAT Value added tax WHO World Health Organization WHO-EMRO World Health Organization Regional Office for the Eastern Mediterranean WTO World Trade Organization MPSR final (27 Nov 2008).indd 7 12/2/08 12:20:56 PM MPSR final (27 Nov 2008).indd 8 12/2/08 12:20:56 PM Executive summary The data from medicine prices surveys conducted in 9 countries (Jordan, Kuwait, Lebanon, Morocco, Pakistan, Sudan [Khartoum State], Syrian Arab Republic, Tunisia and Yemen) of the Eastern Mediterranean Region and utilizing the WHO/HAI methodology are summarized in this report. These countries differ in demographic and economic indicators as well as health system structures and pharmaceutical policies. Within this diversity, the results are compared to investigate common elements and lessons for pharmaceutical policy review and implementation which can be learnt from sharing and comparing experiences. The key findings were as follows. Availability Availability of medicines is lower in the public sector than in the private sector. It is unclear whether charging patients for medicines in the public sector leads to increased availability. Medicines available in the public sector are usually generics but, for those which are not available, the private sector is more likely to stock originator brands. The balance between availability of originator brand and generic medicines in the private sector varies between countries, probably reflecting differences in local prescribing habits, pharmaceutical policy and regulations and health system structure. Public sector procurement prices Most countries procure a mix of originator and generic medicines for their public health sector. If the same medicine is obtained as originator and generic, the price is on average 2.9 times higher for the former. Some countries procure older, off-patent, wide therapeutic index (‘easy to use’) medicines such as diazepam and amitriptyline as originator brands when much cheaper generics versions are available. Among the countries in this report, Morocco and Syrian Arab Republic generally procured generic medicines at a higher price than other nations. Public health sector patient medicine prices Not all countries charge patients for medicines in the public health sector. Where they do, the prices of generic medicines at public health facilities are generally above an acceptable level. Prices were high in Sudan in spite of very low procurement prices, suggesting that costs and profits in the public distribution system add substantially to the price of generic medicines at public health facilities. Prices were relatively low in Yemen but availability was poor, meaning patients would need to utilize private retail pharmacies to access their medicines. Private retail sector patient medicine prices Medicine prices in private retail pharmacies are generally very high for both generic and originator medicines. Some individual medicines such as ciprofloxacin and diclofenac appear to have excessive private retail prices in the Region. Generic medicines are on average half the price of their originator except in Kuwait, Morocco, Pakistan and Tunisia, where pharmaceutical policies and pricing regulations result in only a small observed difference in their prices. Affordability of standard treatments In those public health systems where patients pay for medicines (Jordan, Sudan, Yemen), most standard treatments with core medicines were affordable from public health facilities – but median availability was only 28%, 35% and 5% respectively, so patients would need to use the private sector to access their medicines. There was wide variation in the affordability of medicines in private retail pharmacies to low-wage public workers. Purchasing the treatment as a generic medicine would improve affordability through eliminating the brand premium, but generic medicines were observed to be not always available in practice. Medicine price components Medicines are exempt from import duties in some countries, whereas others apply fixed or percentage-based fees of up to 11.5% of the landed price on medicines for sale in the private sector. Lebanon and Sudan include levies for pharmaceutical and physician associations. Levies for the Standards and Metrology Organization and Ministry of Defence were also applied in Sudan, while the Syrian Arab Republic had an allowance of 8% for pharmaceutical marketing. Mark-ups for importing agents and/or wholesalers were fixed percentages and were markedly higher in Kuwait than other countries. Retailer mark-ups were also percentage-based without payment of a fixed professional fee. The percentages were fixed, thereby promoting sale of more expensive medicines, except in Syrian Arab Republic and Tunisia where the percentage was reduced on higher cost items according to a sliding scale. The key recommendation of this report is that national policy-makers and medicines regulators review their pharmaceutical pricing regulations within the framework of formal national medicines policies, establishing these where they do not exist, so as to optimize availability of and access to essential medicines, especially to the disadvantaged members of society. As a first step, sharing pricing information to increase transparency, implementing or reviewing medicine pricing policies and removing taxes and import duties from essential medicines should be implemented. MPSR final (27 Nov 2008).indd 9 12/2/08 12:20:56 PM