Drug system overview
Size of market
In recent years, the portion of Thailand's drug expenditure which actually passes through the pharmacy shops, doctors' practices, health centres, etc. has doubled, from 1/3 to 2/3. This highlights the importance of educating pharmacists and doctors on proper drug selection, which is of paramount importance in creating an essential drugs list. Exact figures for pharmaceutical products on the market are difficult to determine, and estimates vary, but it is certain that at least 22 000 different drug products, from only about 2 000 generic drugs, are sold in Thailand.
National Drug Policy
The National Drug Policy was first developed in 1981 by a National Drug Policy Committee appointed by the Cabinet. It aimed at accomplishing availability, accessibility and rational use of good quality essential drugs. The policy was revised and the second version was approved in 1993. It helped guide the total development of the national drug system. Major developments are: an improvement of drug quality and infrastructure to assure quality control; the establishment of an essential drugs list; increase in the capacity and standards of the Thai drug industry; the strengthening of rational use of drugs; and the use of traditional and herbal medicines at the PHC level.
Registration and patent issues
A huge drawback in the drug system is that the provisions of Thailand's copyright law do not extend to drugs, so that, by changing the shape and colour, multiple brand names can be produced from a single generic drug. Drug management problems and inappropriate drug use result from too many drugs being registered, as companies promote their products, rather than promote rationality. On the other hand, many believe that such pharmaceutical diversity creates competition in both price and quality. For example, prices for piroxicam range from 0.25 baht to 7 bahts, with the cheapest tablet differing from the most expensive one only in the absorption and peak blood level times. Still, a surplus of drugs does exist in the Thai market. Despite this, however, there are 40 'orphan' drugs which have definite therapeutic value, but there are no producers or importers because of poor market potential. Plans have been formulated to import eight of these drugs with partial Government subsidy and to manufacture two others.
Two other factors may contribute to there being too many drug products in Thailand: fast registration time and low registration fees. The procedure for registering new drugs is much less sophisticated in Thailand than elsewhere (8-10 months, as opposed to 33 and 30 months in the US and Japan respectively). Some people feel that quick registration should be promoted, as this will reduce importation and production costs, thereby reducing the capital investment costs and, thus, the consumer price. Others, however, are concerned that overly rapid registration could pose a threat to health, as this will lead to insufficient testing of drug products. Thailand charges a registration fee of US $100 compared to US $100 000 for the US. The Ministry of Finance collects the fees and does not reroute them back into the system to improve the registration process.
The Food and Drug Administration (FDA) has attempted to cancel the registration of drugs which have not been manufactured for at least two years, which would reduce the number of registered drugs to 16 000. Unfortunately, the FDA's efforts have been circumvented by the practice of some drug companies to produce just enough of some drugs once every two years to keep them registered.
Essential Drugs List
Thailand's Essential Drugs List has been revised five times. Actual promotion of essential drugs occurred infrequently because of the FDA's inefficient organizational structure; and enforcement was resisted, because of infrequent updating. The 80:20 ratio of the essential: non-essential drug budget was not considered by many to be uniformly suitable for all levels of health facilities.
Rational use of drugs
Drugs are used very irrationally in Thailand. This irrational use of drugs, an increasingly critical issue, may be traced to several causes. They are: unethical drug promotion, too many drug products on the market, the prevailing culture of prescribing, inefficient regulatory and monitoring systems, and lack of training for health personnel.
Thailand's drug industry includes 173 pharmaceutical factories and 496 importers. Thailand itself produces just 25 varieties of raw materials. Local preparations constitute 65% of total drug expenditure, and most of these contain imported raw materials. Quality control for local drugs is very important, the FDA, which gives top priority to monitoring pharmaceutical factories, has been inspecting the medicines available and certifying factories with the label 'GMP' (Good Manufacturing Practices). Just 8% of drugs manufactured in Thailand fail to meet the desired quality. However, only 7% of the GMP factories' drugs were found to be substandard, whereas 25% of non-GMP factories were judged to be so (all pharmaceutical factories are expected to be GMP-certified by 1996). However, criteria for fake drugs are based only on the drugs' active ingredient and not on their solubility, bioavailability or therapeutic efficacy.
New drug research and development in Thailand is difficult, due largely to the significant financial investment required to pay for highly-trained personnel. Thailand's pharmaceutical industry produces mainly for the domestic market, but drug exports are rising. The Asian Free Trade Agreement (AFTA) will conceivably expand Thailand's drug market from its current potential 60 million to a possible 300 million customers. Stiff competition is expected from other regional countries, and small companies could suffer.
Estimates of total drug expenditure in Thailand vary anywhere from 25 billion to 80 billion bahts annually. Drugs accounted for 35% of all health expenditure in Thailand in 1993 (Suwit et al., 1995), compared with 8.25% and 20.7% in the US and Germany, respectively. As there is no data collection on what the Thai population spends on drugs, the total amount of drug expenditure can only be a rough estimate.
This paper will show the channels through which people can get medical services (including drugs) when they are sick. The sources of funds are as follows: paid by people's tax; paid by people's own pocket; paid by both people's tax and people's pocket; paid by the participation of health care insurance of both public and private sectors; and village drug funds.
Paid by people's tax (public taxation)
There are two schemes for providing Government budget. One is known as the Public Assistance Scheme and the other is the Civil Servant Medical Benefit Scheme (CSMBS). These schemes are for the underprivileged, low-income group, school children, the elderly, and Government officials and public enterprise employees, through Government health care facilities. They include regional hospitals, provincial general hospitals, community hospitals and health centres. Details of the two schemes are given below.
The Public Assistance Scheme covers 27% of the population. It is financed through Government tax revenue for the low income households, the elderly and primary school children for free care at public outlets. In 1995 public source funding was 4 305 million bahts (Supachutikul, 1996).
Medical fringe benefits for generally low paid Government officials, such as the CSMBS, are financed by general tax revenue and offer generous coverage, which includes parents, spouse and up to three children under 18 years old. Population coverage of the scheme is approximately 10% in 1996. In 1995, public funding was 9 954 million bahts (Supachutikul, 1996).
Paid by people's own pocket (personal out-of-pocket expenditure)
People use services from general drug stores, private clinics, polyclinics and both public and private sector health care facilities. There are no data available on drug purchasing.
Paid by both people's tax and people's pocket
In this case, people have to pay a certain amount of money for drugs and medical treatment according to some predetermined guidelines. For example, a Government official who goes for health services at a private hospital can be reimbursed part of the total payment. The official has to pay the remaining amount of the expenditure himself according to Government rules and regulations. Another example is that if the Government official uses some unusual medical service, such as plastic surgery, the money paid for this kind of service cannot be reimbursed. No data are available on this kind of payment.
Financing public and private sectors by the health care insurance system
There are various health insurance systems, such as the Health Card Project, Social Insurance Scheme, Labour Welfare Scheme, Private Health Insurance Scheme, etc. The money spent on medical care can be reimbursed from a central agency where funds are available as detailed below.
The Social Security Scheme (SSS) is financed on a tripartite basis with Government, employee and employer contributing a total of 4.5% (1.5% each). The insurance covers formal workers in establishments of more than 10 employees for non-work related sickness, maternity, invalidity and death compensation. In 1993, the public contribution was 3 803.74 million bahts and the private contribution was 5 553.52 million bahts (Supachutikul, 1996).
The Workman Compensation Scheme (WCS) is financed solely through employer contributions, for work related sickness, disability and death compensation. In 1993, private contribution was 921 million bahts (Supachutikul, 1996).
Private insurance schemes cover higher income people.
MOPH voluntary health insurance, Health Card Project (HCP) covers the borderline poor and more well off in rural areas. In 1994, private contribution was 807.4 million bahts and public contribution was 400 million bahts (Supachutikul, 1996).
Village drug fund (or drug cooperatives)
A village drug fund is set up with the main objectives of providing essential drugs for the relief of sickness and training local people to learn about teamwork and administration in drug funds. It was estimated that 74% of all villages in Thailand have set up a drug fund (Tavitong et al., 1993). However, there is a high rate of drug funds dissolving due to poor utilization and management. Half of the funds have an income of less than 200 bahts per month which is not economical to operate. There were 37 016 drug funds in Thailand in June, 1996.
Initially, there were 63 358 drug funds for the whole country. Thus, a total of 700 × 63 358 = 44 350 600 bahts were initially invested in the Fifth and Sixth Health Development Plans. The Laemthong Sahakarn group, a private company, also provided 20 million bahts to 20 706 drug funds from 1983 to 1993, resulting in a total amount of 19 648 900 bahts.
A study in 1992 showed that 40.5% of drug funds had working capital of 300 to 2,500 bahts, 36.7% had more than 2,500 bahts and 22.8% had no working capital. The number of people visiting drug funds was as follows: 40.5% had 10-25 visitors per month, 23.4% had 26-50 visitors per month and 18.4% had fewer than 10 per month.
A study by Pornthip Supradit in 1995, found that people buy drugs from drug funds and grocery stores. The most important sources of information which influence drug buying decision-making are neighbours and senior-relatives. The second most important sources are radio and television. The best selling drugs in grocery stores are anti-pyretic and analgesic drugs, and it was found that grocery stores sell those drugs which are demanded by villagers.
A village drug fund is established with funds from villagers and with support from central and provincial organizations, to help people buy standard quality drugs at cheap prices. This fund is managed by a village committee. Benefits from the fund can be used for development of the village. Figure 1 shows the channels for drug procurement and distribution for village drug funds. It highlights the involvement of central organizations, such as the office of PHC and GPO, the provincial level health offices and the village drug fund, in improving accessibility of drugs to the consumer.
Pharmaceutical market value and drug distribution
Value of drug distribution in the wholesale market in 1992
The IMS Data, Thailand, conducted a survey from hospitals and drug stores and estimated the value of drugs on the wholesale market in 1992 at 18 006 million bahts.
The combined estimated value of allopathic medicines from the production reports submitted to the FDA by local producers and drugs imported from abroad into the country at wholesales prices was 16 878.367 million bahts. This value was not considered to be accurate and might be underestimated up to 48% according to an official random survey carried out during 1987-1992. Therefore, the value, after adjusting for 48% error, would be 35 163.3 million bahts.
Wholesale value report at factories owned by the Government (including the GPO, Military Pharmaceutical Factory, Thai Red Cross Society, and Government hospitals, for which reporting is not legally required). It is estimated that the total value of drugs from the four sources was 1 904 million bahts.
Wholesale value of addictive and psychotherapeutic drugs was 33 million bahts.
The estimated drug value (wholesale), based on the limited data above, ranged between 18 650 to 36 935 million bahts. From this amount must be subtracted the value of drugs produced for export and sales abroad, the total value of which was 700 million bahts. Therefore, the wholesale value of drugs distributed in the Thai market in 1992 ranged from 17 950 to 36 235 million bahts.
Pharmaceutical market value of drug consumption by population
This had been computed in various ways as follows:
Computed from the wholesale value of drugs distributed in the market multiplied by the percentage mark up (usually 30-70%) retailers add to wholesale prices, gives an estimate of 23 335 to 61 599 million bahts.
The National Economic and Social Development Board (NESDB) using household survey data and adopting the UNSNA (United Nations System of National Account) method for calculating drug expenditure estimated the pharmaceutical market value of drug consumption to be approximately 80 000 million bahts.
In 1990, Dr Viroj Tangchareonsathian, using household survey data and MOPH budget data, estimated the value at 53 894 million bahts.
International Network for Rational Use of Drugs, Country Report: Thailand, 1995 (unpublished).
Office of Food and Drug Administration, Ministry of Public Health (1994). "Current Situation of the Drug System in Thailand", paper presented in the Workshop on "The Role of Pharmaco-Epidemiology in Rational Use of Drugs", 31 January-2 February 1994, Chulalongkorn University, Bangkok (unpublished).
Pravinvongvuthi V. (1994). "Drug Procurement and Distribution". Paper presented in the Workshop on "The Role of Pharmaco-Epidemiology in Rational Use of Drugs", 31 January-2 February 1994, Chulalongkorn University, Bangkok (unpublished).
Supradit P. (1995). "Model Development of Drug Consumer Protection Through PHC Approach." Research Report, Office of Primary Health Care Administration, Ministry of Public Health, Bangkok.
Tangcharoensathien V, Supachutikul A. (1996). "Compulsory Health Insurance Development in Thailand". Health System Research Institute, Bangkok.
Vateesatokit P. et al. (1994). "Drug Utilization at Various Levels". Office of Food and Drug Administration, Ministry of Public Health, Bangkok (unpublished).
Wibulpolprasert S. (ed.) (1995). "Thai Drug System: A Situation Analysis for Further Development." Health System Research Institute, Bangkok.