E-DRUG: Can we standardize the pharmaceuticals' mark-up on cost? (6)
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Dear Gamal,
Thank you for sharing your experience at the Zeist conference and for bringing attention to the work that HAI and WHO have been doing on surveying medicine prices and the price components that make up those prices.
You asked E-Drug "The central question is: can we use all these information to develop an optimum mark-up on cost of pharmaceuticals?"
Having done Price Component surveys in several countries, I think a slightly better question is: "Can we advise countries on what factors to examine when developing a pharmaceutical pricing policy?� The reason that I say this is for the reason that you give -- the diversity between countries.
You rightly point out that purchasing power, economies of scale, health expenditure, etc, all play a role in medicine prices. But so do road and transport infrastructure, geography and climatic conditions, disease prevalence, local production capacity, existing pharmaceutical pricing policies, transparency, political will, access to good market intelligence, and many others. Just to consider the local transport issue: a land-locked country like Uganda must either truck across Kenya or pay air freight. Bhutan has to carefully plan distribution of medical supplies in (before) winter; Kuwait has to deal with the heat; the DRC must rely on planes to deliver supplies across the country; Indonesia has thousands of inhabited islands where medicines must be sent. A country might not have a private sector trucking company that can manage the local distribution, forcing the Ministry of Health to maintain a fleet of vehicles, or a private company might choose not to distribute to (e.g.) villages in the desert.
HAI and WHO are collecting the medicine prices and price component data in a publicly accessible database. Some countries will want to study countries with a similar pricing policy; others might choose to study a neighboring country with similar population and medical needs, or a similar per capita expenditure on health.
Because transparency and information are an important aspect to the HAI/WHO work. How much more negotiating power will you have in Sudan when you know what a neighboring country pays the manufacturer or pays for international freight? Or when you know how another country removed a general sales tax on essential medicines? The information that the first survey countries have made available, through their Medicine Prices reports, provides everyone with information that they can use to achieve better trade terms for many of the price components of essential medicines.
So while I don't believe it is possible to say "price component X should be 14% in all countries" -- I do think that critical factors can be identified, guidance offered and lessons shared. And the more information we gather, and the more transparent these pricing systems become, the more evidence we'll have to set pharmaceutical pricing policies that reduce overall cost and increase access to medicines everywhere.
Best wishes,
Libby Levison
libby@theplateau.com
Boston, MA
Public health consultant
Including Price Component surveys with partners in Kenya, Morocco,
Pakistan, Uganda and Delhi State