Pharmaceutical System Strengthening from the Perspective of an International Organization Availability, Prices, NCDs and

1. Pharmaceutical System Strengthening from the Perspective of an International Organization Availability, Prices, NCDs and Generics Dr. Richard Laing Department of Essential Medicines and Pharmaceutical Policies World Health Organization Antalya August 2011

2. Access to medicines is required for the fulfilment of MDG 8 Target 8.E: In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries Indicator 8.13. Proportion of Population with Access to Affordable, Essential Drugs on a Sustainable Basis

3. WHO/HAI Joint Activity on Essential Medicine, Prices and Affordability 2003 2008 Source http://www.haiweb.org/medicineprices/manual/documents.html

4. Low public sector availability leads patients to the private sector, where medicines are unaffordable

5. Reliance on originator brand products makes treatment more unaffordable

6. Increased focus on chronic diseases is therefore needed to achieve MDG Target 8.E "Further support is needed for chronic, noncommunicable diseases such as cardiovascular disease, cancer, diabetes and chronic respiratory disease." (MDG Report 2008) "Governments, in collaboration with the private sector, should give greater priority to treating chronic diseases and improving the accessibility of medicines to treat them" (MDG Report 2009) Access to report and data: http://www.who.int/medicines/mdg/en/index.html

7. Differences in the availability of selected medicines for acute and chronic conditionsResults from 50 medicine price and availability surveys undertaken using the WHO/HAI methodology in 40 countries (2003 – 2008) Source Cameron et al 2011

8. Average availability of medicines chronic diseases by therapeutic class, generics, all countries

9. What do NCD medicines cost without tariffs, taxes and mark-ups?

10. High prices, low availability and poor affordability can have many causes • Low public sector availability: • lack of resources or under-budgeting • inaccurate forecasting • inefficient procurement / distribution • low demand/slow-moving products • High private sector prices: • high manufacturer’s selling price • high import costs • taxes and tariffs • high mark-ups

11. Many policy options exist • Separate prescribing and dispensing • Control import, wholesale and/or retail mark-ups through regressive mark-up schemes • Provide tax exemptions for medicines • Where there is little competition, consider regulating prices • Patented medicines • use the flexibilities of trade agreements to introduce generics while a patent is in force • differential pricing schemes whereby prices are adapted to the purchasing power of governments and households in poorer countries.

12. Other Policy options • Improve procurement efficiency • Ensure adequate, equitable, and sustainable financing, e.g. • Health insurance systems that cover essential medicines • Make chronic disease medicines available in the private sector at public sector prices • Prioritize medicine budget, i.e. target widespread access to a reduced number of essential generic medicines for NCDs, • Promote generic use: • preferential registration procedures, e.g. fast-tracking, lower fees • ensure the quality of generic products • permit generic substitution and provide incentives for the dispensing of generics • educate doctors/consumers on availability and acceptability of generics

13. Total potential cost savings and average percentage savings that could be obtained from switching private sector consumption from originator brands to lowest-priced generics, for a limited basket of medicines Source WHR 2010 Chapter 4

14. Total US generic market share has risen over each of the past 5 years Generic Share of Total Prescriptions Generic prescription share reached 78% in 2010 which was 4% higher than 2009 levels. This share gain is caused by a 3% gain in the available market for generics (81 to 84% in 2010) as well as a 1% gain in generic efficiency (93% vs. 92%). Most states allow pharmacists to substitute generics when available, others require a doctor’s direct instruction or restrict substitution for specific therapies where differences between brands and generics may impact patients. The broad availability of discounted generics is a further positive influence on efficiency. Source: IMS Health, National Prescription Audit, Dec 2010 Chart notes Prescriptions dispensed include retail pharmacies and longterm care facilities. Generic prescription share represents the percentage of unbranded and branded generic prescriptions dispensed annually. Generic availability is measured by evaluation of products at the form level that have a comparable generic available on the market in the time period. Generic efficiency is calculated based on the percentage of generic prescribing of the generically available market. COMPARISON OF 2010 VERSUS 2009 SPENDING X

15. Austria generic market dynamics Generic Share of Total Volume X Source: IMD MIDAS, Dec 2010 16

16. South Africa generic market dynamics Generic Share of Total Volume X Source: IMD MIDAS, Dec 2010 18

17. Time to market after patent expiry is a key issue

18. In US, Generics capture over 80% of a brand’s volume within 6 months Brand Prescription Share of Molecule Post-Expiry Source: IMS Health, National Prescription Audit, Dec 2010

19. Austria brand erosion after loss of exclusivity Almost no loss at 6 months and only 15% at 1 year Austria Brand Volume Share of Molecule Post-Expiry % SHARE OF PRE-EXPIRY MOLECULE TOTAL SU MONTHS SINCE PATENT EXPIRY Source: IMS MIDAS Monthly, Mar 2011. *2010 curve contains incomplete periods. 22

20. S. Africa brand erosion after loss of exclusivity 21% loss after 6 months & 34% after 1 year S. Africa Brand Volume Share of Molecule Post-Expiry % SHARE OF PRE-EXPIRY MOLECULE TOTAL SU MONTHS SINCE PATENT EXPIRY Source: IMS MIDAS Monthly, Mar 2011. *2010 curve contains incomplete periods. 23

21. Generic Market Shares 2010 Value & VolumeGeneric pricing regimes affects savings! % • 24 Total Market - Retail

22. Generic market highly segmented and countries vary greatly! • Company generics • Branded Generics • INN generics • All coexist and compete for the same space • National Policies must adjust to the national realities

23. Even after patent expiration brands still retain a sizeable volume share in some countries Source: IMS Health, MIDAS, Market Segmentation, MAT Dec 2010, Rx only. *Market Segmentation universe • 26 26

24. Components of a generics policyPrerequisite: Quality assurance recognized by prescribers & patients "Generics policies" is a broad term comprising a heterogeneous set of specific practices, including: • Fast track registration: abbreviated and less costly registration procedure for generics, Bolar provision • Procurement of medicines under INN or generic name; • Encouraged or mandatory prescribing by generic name; • Generic substitution by pharmacists; • Information and incentives for generic utilization to prescribers, pharmacists and consumers; • Selective financing of generics in positive lists, reference price systems, procurement by tendering, IPR policies.

25. Conclusions • In all but high income countries out of pocket payment is the most frequent form of payment for medicines • When health insurance is introduced and covers medicines they need to have generic policies in place • Where people have to pay out of pocket generic policies individuals can reduce costs by about 60% and this could make the difference between death or impoverishment and survival.

26. Questions?