Price Considerations for TB Drugs

1. Price Considerations for TB Drugs

2. Selecting appropriate medicines • Meeting required quality standards • In right quantities • Delivered in a timely manner • At lowest possible purchase price Goals of Effective Procurement

3. The cost of the necessary medicines for a short-course regimen of 6–8 months is between USD 10 and USD 40 for first-line regimens. Price Ranges

5. Impact of Hidden Costs on Total Cost

6. Buyer • Reliable/prompt payment history of buyer • Competition • Long term agreements • Standardization • Accurate forecasting Factors influencing Price - 1

7. Manufacturer • Quality • Packaging/Product Information • Additional services • Product inputs affected by global markets • Market entrance • Depending on IncoTerms and shipment method - unit product price will increase to include risk of loss and cost and insurance for shipment, security system, quality control during shipment, distance, weight of product, other • Profit - for new innovator products much higher to recoup some of the development costs outlined above; for generic products not so high because are recouping cost of production & testing Factors influencing price - 2

8. Supplier • unit price has to do with supplier acquisition, handling and IncoTerm decisions • no product development necessary - therefore no added cost • get better acquisition price from manufacturer or other supplier if ordering in bigger quantities (economies of scale) • must pay staffs to procure and manage inventories • must train staffs • must pay for real estate (storage facility) • must add cost for shipment, insurance, delivery, as appropriate with contract Factors influencing price - 3

9. Procuring Institutions • Institution (MoH, other) determines (quantifies) its needs for individual drugs • Does a price comparison to determine “market prices.” • Decides on special markings such as embossing on tablet or packaging to indicate a MoH product, or special colours, packaging such as FDCs, patient kits, blisters, etc • Reviews in-country supply system to remember capacity for receiving, delivery system and frequency needed for distribution to various health system levels, size of warehouses/storerooms at different levels Factors influencing price – 4.0

10. Procuring Institutions • Based the above aspects the procuring institution will tender based on the following options; each option would of course affect the procurement price: • Quantities to order - higher price if ordering fewer products (economies of scale) • Little or no capacity for most of the above aspects if centralized system or if procurement and supply system is decentralized - highest price since supplier may need to decrease delivery quantities at a given time, ship to port, pay handler to pass through customs, assure quality during delivery, cover in-country transportation costs, maintain documentation system for all activities • Capacity to receive order, clear through port, store large quantities at central level and adequate in-country delivery system - price not so high but country is paying for real estate, staffs, vehicles and managers to carry out the in-country activities Factors influencing price – 4.1