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Impact of Tariff Reduction on Interferon Prices and Consumption

This study analyzes the relationship between tariffs, prices, and consumption of Interferon in Pakistan. It examines the impact of tariff reduction on the availability and affordability of Interferon in both private and public sectors. The findings highlight the importance of reducing tariffs, regulatory interventions, and increased availability in improving access to essential medicines for the treatment of hepatitis.

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Impact of Tariff Reduction on Interferon Prices and Consumption

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  1. AmanullahSaifCost Accountant , Drug Control AdministrationGovernment of Pakistan Relationship between Tariffs, Prices and Consumption of Interferon

  2. Introduction • 5% of population is infected with Hepatitis C and 2.5% with Hepatitis B in Pakistan*. • Most of the patients remains untreated: • High cost of treatment. • Lack of supplies of medicines in public health care facilities. * Hepatitis B & C prevalence in Pakistan, Pakistan Medical Research Council; survey 2008

  3. Objectives • Reduction in prices of medicines for treatment of hepatitis in the market. • To Improve supply chain of medicines . • Increase availability of medicines in public health care facilities.

  4. Interventions • Reduction in custom duty in July 2006 from 10% to 0% on import of medicines for treatment of hepatitis. • Regulatory intervention in July 2007 to reduce prices of originator brand from Rs.1074.16 to Rs.980.00 (10%) and of the most selling brand from Rs.979.00 to Rs.879.00 (11%). • Increased budgetary allocations in the public sector for treatment of disease and awareness campaign among masses.

  5. Study Design • Study was conducted at the national level to evaluate the impact of reduction in tariffs (along with other factors) on prices and usage of Interferon. • Data of prices, sales and procurement of Interferon over a period of 6 years (July 2004-June2005 through July2009-June2010) was obtained from: • Sales and price data in market complied by Information Medical Statistics (IMS) • Procurement data and prices from programs for hepatitis control and prevention by Federal and 3 provincial governments. • Data was analyzed to evaluate the trends in pricing, sales and consumption of Interferon before and after reduction in tariffs.

  6. Outcome Measures • Prices of originator and most selling brands in the private market • Number of units sold in the private market • Number of units purchased by the public sector • Procurement prices in the public sector • Total number of units consumed in the country

  7. Consumption pattern before and after interventions

  8. Results • Despite 10% reduction in the tariffs, the private sector did not reduce prices of interferon until regulatory intervention. • In private sector, sales increased by 40% in 2007-08 (1,515,175 vials) compared to 2006-07 (1,029,251 vials) after a decrease in prices. • Increase in unit sales and decrease in prices in the private sector helped decrease prices for public sector procurement by 28% in Pak Rupee and 89% in USD (Pak Rupee devalued by 40%) over a period of 3 years (2009-10 vs. 2006-07) despite the fact that 100% requirement was met through imports during these years.

  9. Results Conti… • Reduction in price further led to increased procurement in public sector (337,816 vials in 2006-07 vs. 3,766,120 vials in 2009-10). • Total consumption of interferon in the country increased by 280% from 1,367,067 vials in 2006-07 to 5,195,196 vials in 2009-10. • Increased availability (by 591% in 2009-10 from 2007-08) in the public sector reduced out of pocket purchase by the patients by 6% (1,429,076 vials in 2009-10 as compared to 1,515,175 vials in 2007-08).

  10. Conclusions • Usage of expensive medications can be increased by: • Reduction in tariffs • Regulatory interventions of reduction in prices, if needed • Increased availability in the public sector • Awareness among patients • Decrease in prices helps increase usage in the private sector.

  11. Conclusions Conti…. • Decrease in prices and increased volumes in the private sector helps decrease in prices for public sector procurement. • Increased availability of medicines at public sector facilities reduce out of pocket purchases in the private market. • Awareness of disease plays important role in increasing its treatment.

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