Public health need

Each country must first decide, as a part of its health policy, whether it intends to allow a large number of drugs to be authorized, or instead to concentrate its financial and distribution resources on a smaller number of drugs which it considers essential in the light of public health need. In the first case, a company may submit an application for marketing authorization for any new product with proven quality, safety and efficacy, without considering whether it is essential for public health. In the second case, marketing authorizations are not issued for drugs which are deemed non-essential in the light of, for example, the WHO Model List of Essential Drugs (5) and of local requirements and public health needs, notably in relation to endemic diseases. In both cases, new products must be subject to an application for marketing authorization and a process by which a decision is made as to whether the product meets appropriate standards of quality, safety and efficacy, product information and, when applicable, therapeutic equivalence.

For countries with limited financial and distribution resources, drugs that are essential to public health must be a priority. Availability of essential drugs with a small potential market can be encouraged by, for example, waiving the initial application fee and not charging a retention fee.

These decisions guide the functioning of the DRA. Whatever approach the government chooses to take must be defined in both the legislation and in the DRA’s guideline documentation.

Number of interchangeable products

A separate decision is needed on whether any number of licence holders may be authorized to market the same active ingredient, or whether the number for each should be restricted. This is a decision that each country must make on the basis of the local situation. Some of the factors are set out below:

In favour of limiting the number of licence holders

• More resources are needed for premarket evaluation of multiple licence holders prior to issuing marketing authorization, GMP inspection, and subsequent quality control laboratory testing to detect substandard and counterfeit products.

• More resources are needed for distributing and holding stocks of several licence holders’ products than for dealing with a more limited number, particularly in terms of administrative records.

• Multiple licence holders stimulate competitive promotion, leading to more pressure on pharmacists and prescribers and possibly to unnecessary prescribing.

Against limiting the number of licence holders

• In the absence of price controls, price competition among multiple licence holders can be encouraged, which may - depending on local circumstances - lead to a lower prices.

• The existence of multiple licence holders can stimulate local economic growth and hence employment.

• In addition to the potential for lowering price, competition promotes manufacturing efficiency, and possibly even quality if regulatory controls are comprehensively applied and enforced.

• Enforcement of regulations becomes difficult if only one brand is authorized (i.e. has a monopoly) and the drug is essential. The DRA may then have to decide whether to allow substandard batches to remain on the market, or to interrupt supplies of an essential drug.

• If only one brand is authorized, failure of that source (e.g. because of a fire at the site of manufacture or a decision to discontinue marketing) means that the drug is no longer available.

If it is decided to limit the number of licence holders, in keeping with the principle of transparency, criteria for granting marketing authorizations should be published and the reasons given for any negative decisions.

Price

Pricing is a complex and political issue on which WHO has published widely (e.g. 6-8). In some DRA, evaluation of price is still a part of the marketing authorization procedure, but in others it is a separate process handled by reimbursement or insurance agencies, which may be public or private. Although pricing policies are not discussed here, the following points are relevant:

• A low price does not justify accepting supplies that are of inadequate quality, safety and efficacy.

• While some governments take price into account, others consider this separately from the assessment of quality, safety and efficacy.