E-drug: Prices of essential drugs in developing countries (cont'd)
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Dear E-druggers,
This is a somewhat late reply on the call for info on essential drugs
pricing in developing countries.
In the Philippines, the duties on imported drugs have been assessed at
the rate of 3% for raw materials since 1996 and 5% for finished
products since 1999. These rates were 10% and 20%, respectively,
previous to the mentioned years. It is notable that after the reduction
in tariffs, there was no noticeable decrease in drug prices in the local
market in spite of the high proportion of imported inputs to
production.
It is difficult to bring a finger on the profit margin drug manufacturers
add on to the cost of goods. But one estimate, using macro-economic
data, puts the net income of drug manufacturers at 34%. Most
multinational drug companies distribute their goods through one
dominant distributor which controls about 60-70% of the market. This
distributor adds at least 15% to the cost of the goods.
In addition, a value-added tax of 10% is added to the cost of the
goods.
Thus, 65% is a fair estimate of the costs added to drugs from
importation to the warehouse of the Department of Health.
Drugstores who sell to the consumers add anywhere from 10% for
branded products to at least 50% for generics.
And yes, the government taxes its own procured drugs because it
buys from middleman traders. Presently, the government does not
conduct international biddings.
I hope the above answers are still useful.
John Q. Wong, MD, MS
Consultant
Philippine National Drug Policy Program Office
Department of Health
Philippines
E-mail: johnw@mydestiny.net
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