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Medicines Prices and Methods of Financing in South-East Asia

Medicines Prices and Methods of Financing in South-East Asia. Indian Pharmacological Society 38 th Annual Conference, Chennai 29th December 2005 Dr K Weerasuriya, Essential Drugs & Medicines Policy, World Health Organisation, South-East Asia Region, New Delhi, India. Introduction.

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Medicines Prices and Methods of Financing in South-East Asia

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  1. Medicines Prices and Methods of Financing in South-East Asia Indian Pharmacological Society 38th Annual Conference, Chennai 29th December 2005 Dr K Weerasuriya, Essential Drugs & Medicines Policy, World Health Organisation, South-East Asia Region, New Delhi, India

  2. Introduction • Prices and Methods of Financing affect access to Essential Medicines • Clinical Pharmacologists see it as part of “Medicines Use” • Previous presentations have shown the unsatisfactory prices, availability and need for standardised methodology to investigate problem • This presentation looks at some of the reasons for the pricing and availability in the Region

  3. Bhutan - example from a small country • Government commitment to supply medicines for the whole population through state health care. • An ever increasing recurrent expenditure that is difficult to sustain despite Essential Medicines List, bulk procurement. • Bhutan Health Trust Fund – build capital and then use interest • Lesson – even in tightly regulated state dominated situations it is difficult to finance all the medicines needed.

  4. Thailand & Sri Lanka • State a major provider but private sector a major player too • Thailand – 30 Baht scheme in state hospitals. Patient co-payment per episode of illness state funds the rest. Good principle but major problems in implementation • Sri Lanka – drugs from an Essential Medicines list free at point of dispensing in state institutions. Shortages, poor management & Health/Finance Ministry battles over funds • Private sector drug supply in both countries the iniquitous escape valve • Lesson- Poorly financed state sector begets a private sector with poor solutions and many additional problems

  5. India and Indonesia • Private sector outstrips state sector in providing drugs • Produces some of the biggest distortions in medicines prices; health considerations (EML, STG, Formularies) marginalized • State loses ability to influence medicines use as well as prices through indirect means • Lesson– when the state does not play a a major role there is a very unsatisfactory situation

  6. Medicines Prices & Financing – What other strategies do countries use? • Regulating Prices of Essential MedicinesWell intentioned but not well thought out decisionIf profits in one category, industry will shift to category where profits not controlled • Regulating prices of Essential Medicines but not other Medicines will encourage ….? • Higher returns will also encourage promotion of other medicines • Regulation of prices of all medicines with a fair return to essential medicines and lesser return to other medicines • However no country does this • Lesson – incentives should aim for specific objectives and monitor for unintended consequences

  7. Medicines Prices & Financing – What other strategies do countries use? • Generic substitution – Official/Unofficial, de facto. • Public sector medicines supply organizations (Bangladesh, Thailand, Nepal, Sri Lanka)Variable efficiency – depends on focus Health before Profits or vice versa? • Enforcement of Essential Medicines List in use and supply in state sector • Is there regulation of drug promotion ? • Lesson – Factors other than prices need to be regulated

  8. WHAT is the basis of pricing? • Cost plus (industry data, industry perspective) • Medicines should be assessed as any other industrial/consumer good OR • Assess the value of a medicine for health? • What is the “value for money” of a medicine in health care? • What would be the health reasons for paying different prices for drugs in same class with same benefit (e.g. propranolol, timolol)? • No country in the region use health considerations in pricing (could be simpler too) • Lesson – medicines are priced according to industrial perspective – should not health be taken into account too?

  9. India • National Drug Policy in 1978 had strong health and cost-effectiveness component • Subsequent policies severely watered down health and enlarged industrial aspects • Attempts at regulations of drug prices but from market angle, crude measures & from a Ministry other than Health • Broad regulation the need, but poor micro management the reality • Indian Industry is capable - 1% by value BUT 8% by volume of global market • No health focus in medicines activities • Lesson– The social contract of serving health while making profits was not imposed on the industry

  10. Conclusion • Medicines prices and methods of financing have a major influence on the health • Present situation globally and in the region is very confused and does not serve health • The standardized method provides valuable insight into medicines prices • Medicines are seen as industrial/consumer goods & there is no health focus • Despite this the data in the surveys would help to improve the situation and make medicines more accessible • The ultimate solution should be including a health aspect in medicines pricing and financing methods suitable to individual countries

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