WHO Perspective on Medicine Prices & Policies

1. WHO Perspective on Medicine Prices & Policies • Meeting of Drug Board on Medicine Pricing • Federal Ministry of Health • Government of Pakistan • Dr Zafar Mirza • Regional Adviser • Essential Medicines & Pharmaceutical Policies • Division of Health Systems & Services Development • East Mediterranean Regional Office • World Health Organization 14th November 2008 ISLAMABAD

2. The Presentation PART 1: WHO Perspective on access to medicines PART 2: Medicine prices and affordability in EMR & in Pakistan PART 3: Medicine Pricing Policy considerations PART 4: Conclusions & Recommendations

3. WHO Constitution  “The enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition.” and  “Governments have a responsibility for the health of their peoples which can be fulfilled only by the provision of adequate health and social measures.

4. WHO Health System Framework - includes both public and private sectors v

5. Policy Access Quality & safety Rational use Implementation and monitoring of national medicines policies Traditional and complementary medicine Fair financing and affordability Medicines supply systems Norms and standards Regulations and quality assurance systems (DRA) Rational use by health professionals and consumers WHO Medicines Strategy:4 objectives, 7 components, 44 expected outcomes Objectives Components

6. Access to Medicines • Access to essential medicines is a integral component of: • right to health • Health care • 1/3rd of people in world do not have reliable access to essential medicines. • In some developing countries up to 50% of the population lack this access.

7. WHO FrameworkDeterminants of Access to Medicines 1. Rational selection 3. Sustainable financing ACCESS 4. Reliable health and supply systems 2. Affordable prices

8. WHO FrameworkDeterminants of Access to Medicines 1. Rationalselection and use 3. Sustainablefinancing ACCESS 4. Reliable health and supply systems 2. Affordableprices

9. Context Medicine Prices – why regulation • In the public sector, typically, governments in developing countries spend 30-40% of their recurrent health budgets on buying medicines: • Largest category after salaries • In the private sector, individuals and families spend a very high proportion of their health budget on buying medicines. • In some countries it reaches up to 80-90% of household health budget. • Hence, governments (MoH) directly or indirectly regulate medicine prices all over the world in their effort to expand health care coverage. • Approaches differ

10. Expenditure on medicinesfrom 9 NHA studies in the Region Pakistan

11. Context Medicine Prices – contesting field • Challenging area of public policy – interface of public health, commerce & industries and law. • Stakes are high for both public health as well as for business community. • Government has to strike a balance between numerous stakeholders – with ultimate goal of benefiting people. • Primacy of public health.

12. The Presentation PART 1: WHO Perspective on access to medicines PART 2: Medicine prices and affordability in EMR & in Pakistan PART 3: Medicine Pricing Policy considerations PART 4: Conclusions & Recommendations

13. EMRO National Surveys on Medicine Prices • Through a standard methodology for: • collection and analysis of prices of essential medicines • affordability • availability • component costs in various sectors and regions in a country • Surveys have taken place in 11 countries in the East Mediterranean region and in around 50 countries world wide.

14. EMRO National Surveys on Medicine Prices • In the national survey, prices of 30 medicines are collected from 20 public and 20 private pharmacies for both originator brand and lowest priced generic equivalent. • In case of Pakistan 29 medicines were surveyed in 30 public and 48 private pharmacies in all the four provinces Sept 2004.

15. Survey FindingsPublic sector procurement prices International Reference Price International Reference Prices (IRPs) for this methodology are selected as those of Management Sciences for Health (MSH) which are published yearly in The International Drug Price Indicator Guide and which provide an indication of pharmaceutical prices on the international market. • Generally, ministries of health were found to obtain good procurement prices compared to International Reference Prices (IRPs) except • Morocco: 3.7 times the IRPs • Pakistan came up well with its public procurement prices when compared with International Reference Prices.

16. Availability of medicines in public sector Yemen 16/35 medicines were not found in any facility 29/35 medicines were available only in 4 facilities Pakistan 23/29 medicines were not found in more than 15 out of 30 facilities Lebanon only 15 of the 32 surveyed medicines were found at 20 public dispensaries

17. Private sector Patient Prices in Pakistan Overall, prices of originator brands were 3.36 times the international ref price compared to 2.26 times for the lowest priced generics

18. Survey FindingsAffordability Number of days’ income a lowest paid government servant has to spend to buy pre-selected treatment regimes for 9 common diseases in the private sector Respiratory infection: 2.3 days’ income to buy a week’s supply of originator branded amoxicillin in Jordan Depressive illness: 7.7 days’ income to buy a month’s supply of lowest priced generic fluoxetine in Pakistan; 36.4 days’ income to buy originator branded fluoxetine Ulcer: One month’s treatment with lowest priced generic omeprazole – 2.9 days’ income in Sudan and 7.7 days’ income in Jordan; with originator brand 10.6 days’ income in Morocco and 23.7 days’ income in Pakistan

19. AffordabilityNo. of days wages to purchase treatments from the private sector

20. Affordability & Poverty

21. CATASTROPHIC APPROACH Affordability of Atenolol: 50mg/day LPG in private sector: at the cost of USD 0.04/day not affordable for the poorest 80% of the population at the 2.5% income threshold.

22. IMPOVERISHMENT APPROACH Affordability of 4 selected medicines Proportion of population becoming impoverished because of medicine procurement

23. The Presentation PART 1: WHO Perspective on access to medicines PART 2: Medicine prices and affordability in EMR & in Pakistan PART 3: Medicine Pricing Policy considerations PART 4: Conclusions & Recommendations

24. Medicine Pricing Policies • Pricing Policies for New Chemical Entities (NME) • Patent protection & access to medicines • TRIPS and public health safeguards • Data protection • Differential pricing • Cost-effectiveness analysis • Pricing Policies of Generics

25. Pricing Policies for GenericsGeneral Considerations • Lifeline of local pharmaceutical industry in developing countries. • Expiry of patents and introduction of generics is known to bring prices down in first year up to 40%. • Pricing policies need to be developed within the context of each country.

26. Paradox of Pharmaceutical Industrial Development in Developing Countries • The Case of India • Claims to be the 4th largest producer of medicines in the world • Exports to almost every country in the world – 70% of medicines in Africa are exported from India • And yet 50 to 80% of people within India do not have reliable access to needed medicines • Proportion of out-of-pocket expenditure on health is highest in the world i.e. 84% • A World Bank study suggests OOP medical costs alone may push 2.2% of the population below the poverty line in one year.

28. Contextual Factors Guiding Pricing Policies for Generics • National vision • Level of public health care coverage • Level of social protection • Existence and capacity of local pharmaceutical industry • Regulatory capacity and effectiveness

29. Globalization National Constitution National Development Objectives National Health Policy National Medicine Policy Access to Medicines Access to Medicines Access to Medicines Access to Medicines Access to Medicines Medicine Prices Medicine Prices Medicine Prices Medicine Prices

30. Five sets of policy tools for Generics for better availability, improved quality & affordable prices • Policies aimed at early introduction of generics. • Encouraging generic production and competition in the market • Promoting generic medicine use in public and private sectors. • Controlling / regulating prices of generic medicines • Effective quality control

31. Five sets of policy tools for Genericsfor better availability, improved quality & affordable prices • Policies aimed at early introduction of generics. • Encouraging generic production and competition in the market • Promoting generic medicine use in public and private sectors. • Controlling / regulating prices of generic medicines • Effective Quality control

32. Price Regulation of Generic Medicinescommon policy tools • Price controls or price fixing • Cost plus formula • India; Bangladesh; Egypt; Syria… • Gradual movement towards decontrol • Pakistan post 1993 experience • Experience from Latin American countries • Maximum prices or leader price ceiling • Can be a good policy in evolutionary process for de-controlled medicines with strong monitoring system in place • Price negotiations • Reference pricing • Internal reference pricing • External reference pricing

33. The Presentation PART 1: WHO Perspective on access to medicines PART 2: Medicine prices and affordability in EMR & in Pakistan PART 3: Medicine Pricing Policy considerations PART 4: Conclusions & Recommendations

34. Conclusions & Recommendations • Fixing medicines prices alone cannot improve the overall access situation • A comprehensive NMP-based approach is required along with major institutional reforms. DRA development has become imperative. • Unavailability of medicines in public sector facilities requires urgent attention in terms of improving financing and medicine supply systems. • Affordability analyses must be part of medicine pricing discussions and decisions. • A health system approach is needed for equitable financing and social protection in the face of rising inflation and poverty. Accessibility to essential medicines should be a part of such reform package.

35. Conclusions & Recommendations • The socio-economic situation, local pharmaceutical industry needs and aspirations and lessons learnt from June 1993 partial medicine prices de-regulation policy must set the context for a review of the existing medicine price policy and practice. • A major institutional development is needed for medicine pricing regulation and monitoring. Indian National Pharmaceutical Pricing Authority is a good example. • Prices of NCE must be negotiated in line with regional prices and those in Australia. • Policies must be adopted whereby generic entry into the market is facilitated as quickly as possible after the expiry of patents. Patent protection and market authorization must not be linked.

36. Conclusions & Recommendations • A clear criteria needs to be developed for the selection of medicines for the controlled category i.e. public health significance of medicines and the level of competition in the market. The prices of these medicines must be controlled so they are affordable for the poor. Appropriate Cost-plus formula can be developed for controlling the prices of these medicines. • The decontrolled category must also be provided a ceiling and these should be closely monitored. • The non-availability of important low priced essential generic medicines because of lack of profitability must be reviewed and appropriate price increases must be awarded. • Once agreed, the medicine pricing policy must be drafted, notified and implemented in letter and spirit.

37. Thank you