Does registration of several generics translate into more and cheaper drugs for the patient?

1. DOES REGISTRATION OF SEVERAL GENERICS TRANSLATE INTO MORE AND CHEAPER DRUGS FOR THE PATIENTS’ IN SRI LANKA?Fernandopulle BMR Senarathna SMDKGDepartment of Pharmacology, Faculty of Medicine, Colombo

2. Does registration of several generics translate into more and cheaper drugs for the patient? Fernandopulle BMR, Senarathna SMDKG. Department of Pharmacology, Faculty of Medicine, Colombo. • Problem statement -The regulations in Sri Lanka do not limit the registration of the products of a drug. This predictably has resulted in a large number of products of the same drug with variable prices. As in other countries in Sri Lanka the fundamental principle of market economy does not regulate prices of pharmaceuticals merely through open competition, although import duty and VAT are not imposed on drugs. Furthermore there is some evidence that the prices of generics vary between geographical regions in Sri Lanka (1). But little is known regarding variability of prices and availability of drugs within a geographical region. • Objectives –To study the registration and availability of some selected essential drugs and to determine variation in costs within Colombo. • Design –Descriptive study(2) • Setting - Pharmacies located around the National Hospital of Sri Lanka, Colombo. • Study population – 13 pharmacies including private and semi governmental outlets. • Methodology – Pre-designed structured questionnaires were interviewer administered. The availability and prices of 30 drugs (selection criteria, local burden of disease and inclusion in the Essential Drug List) were inquired. The number of products for each category, market leader, most sold generic equivalent and the cheapest generics were studied. The market leader, the most sold generic equivalents were predetermined (2). The cheapest generic drugs were determined on the spot (2). The Management Sciences for Health (MSH) reference prices 2002 was selected as the standard. • Outcome Measures- No of registered products, availability in pharmacies and price. • Results-All 30 drugs were available at variable prices. When median prices were compared, only 3 (Erythromycin 116 %, Salbutamol inhaler 109% and Beclomethasone inhaler 112 %) of the cheapest generics were higher than the International Median Price (IMP). Although there were many registered products (2-36) for each drug, the availability at pharmacies varied from 1–5. Greater than 75% availability of the cheapest generic was 46%, most sold 46%, and market leader 20%. Cheapest generic was not always the most sold, but eleven of the most sold was also the cheapest. In most sold, 55% were less and 25% were 100-199 % and 18%were 200 -499 % were higher than the IMP. No market leader was less than the IMP, 25% were 100 -199 % higher; 25 % were 200 -499 % higher; and 50 % were 500-3500 % higher than the IMP. • Conclusions- Although 90 % of the cheapest generics are less than IMP, they are not always available and prescribed. Market leader is always more than the IMP. Thus although cheap drugs are available, they are not necessarily being prescribed. • References 01). Essential Drug Monitor; WHO: No32,2003,Page05 02). Medicine Prices a new approach to measurement, WHO, 2003

3. Introduction and background YEAR 2002 Population: 19 million Life Expectancy : males 70.7y females 75.4y Literacy Rate : 90.1% Poverty Level: population < USD1/day: 6.6% < USD2 /day: 45.4% Wages of lowest paid worker :USD35/M Total govt. health expenditure : USD 256.91/1.6% GDP Total drug budget :USD 51.49 Million Contribution to total health expenditure : Govt: 48%, Households 46%, Employers 3%, Private insurance 1%, NGOs 2% Doctor : Patient ratio: 1: 2300

4. Imported pharmaceuticals 1). Imported price 100 ( including CIF and fiscal levies) 2). Price to wholesaler 130.8 3). Price to retailer1 141.9 4). Price to public 165.0 Mark up in semi govt. outlets162.0 Locally manufactured pharmaceuticals F.P. P.P. P. only Cost of drug 100 100 100 (including marketing cost) Price to wholesaler 120 117.5 115 Price to retailer 130.2 127.5 124.8 Price to public 152 149 146 F.P. - Fully processed , P.P. - Partially processed , P. only - Packing only PHARMACEUTICALSImported drugs dominate, local manufacture contribution minimal.Import Expenditure: USD 105 millionPrice structure

5. Objectives–To study the registration and availability of some selected essential drugs and to determine variation in costs within Colombo Study design –Descriptive study carried out in accordance with the methodology described in the manual of Medicine prices: A new approach to measurement(WHO/HAI,2003). Setting & study population- 13 pharmacies including private and semi governmental outlets located in Colombo (Within 2km radius from the National hospital)

6. Method • Pre-designed standardized structured questionnaires on prices and availability of 30 pre – selected drugs were interviewer administered • Drugs were selected on following criteria. • Local burden of disease and Inclusion in the Essential Drug List • The Innovator (INO), the most sold generic equivalents (MSG) were predetermined. The most sold generic drugs were selected using IMS health data (July to June 2003). The cheapest generic (CG) drugs were determined on the spot (2). • The International median prices (IMP) were selected from the Management Sciences for Health reference prices 2002.(Http://erc.msh.org) • The Median price for each drug category was calculated and converted into US dollars (Exchange rate, middle value = 1$ = 97.10 on 1st July 2003) • Median Price Ratio( MPR) = Median medicine price to patient : Medicine’s IMP • The availability of drugs in the retail pharmacies were compared with the total registered (Drug Index Sri Lanka 2003, Total = innovator, branded generics and generics ).

7. Results TR. -Total number registered under each chemical entity according to drug index 2003, AV. - Number available in pharmacies Table- 1 Indicates the number registered and availability

8. Table- 1 continued

9. Table - II Variation in price between pharmaciesFor some innovator products ( shown below) there was a variation between the maximum and the minimum prices. However for most of the INO and all of the MSG and CG the variation was less than Sri Lankan rupees one.

10. Median drug prices compared to the IMP(MSH) Table- III Innovator Cheapest generic Table- IV

11. Most sold generic Table- V

12. Discussion & conclusions • All 30 pre- selected drugs were available at variable prices in the retail pharmacies. • Many products registered (2-36) for each drug. But, availability varied from 1–5. • Price variations between pharmacies were seen mainly with some INO. • 90 % of the CGs were less than IMP but availability was 46%. This probably is due to non prescribing of CGs owing to concerns on quality. • Greater than 75% availability was 20% for INO, and 46% for MSG. • 11 MSG was also the CG, were locally manufactured and for 9/11 the availability was > 75%. • Greater than 75% availability of some of the CG is probably linked to the Price. When the MPR for the MSG is much higher than the CG , it appears that the availability of CG is above 75% and MSG below 50%. Table- VI Name of the drug MSG CG MPR Availability MPR Availability % variation in price 31 31 38 Omeprazole 20mg Metronidazole 200mg Metformin 500mg 3.32 4.575 1.44 0.097 0.807 0.22 77 97% 77 82.6% 85 101%

13. None of the INO was less than the IMP, 4 of the 7 unavailable INO products were in the ATC category C. • The widest difference between INO and CG was found to be 150 times for diazepam. • The lowest paid government worker would have to work for 5 1/4 days to pay for monthly course of INO Metformin where as less than half a day for the CG. • The non availability of certain INOs probably indicates that they do not a have market share to survive. • The availability of generics seems to have a impact on the price of the innovator. • Table 4 shows the change in prices between 2000(Essentails drug monitor No 32–Page 6) and 2003. In the year 2001 ranitidine was under the patent cover. Table- VII

14. Recommendations . • When several products of drug are registered, the Drug Regulatory Authority should have a mechanism to ensure that it is available to the consumer. • From our study if availability is indicated as demand, it could be interpreted that prescribers prefer locally manufactured generics (when available) over imported generics. Hence the presently limited local manufacture of drugs should be actively encouraged. • The patent protection should be limited as competition with generics seems to bring down prices. • It seems that doctors prescribe generics if they perceive them to be of good quality, hence the quality of generics should be ensured to gain the overall confidence of the prescriber.