What must governments do to fulfil these multiple goals of regulation? In order to ensure that drugs reaching consumers are effective, safe, of good quality and affordable, governments may exert control in several areas through various means. However, the areas controlled and the agencies responsible for controlling them may differ from country to country. They will therefore require different regulatory functions: licensing and inspection, product assessment and registration, QC, monitoring of promotion and advertising, etc. Some regulatory roles are carried out by most governments, while others are less frequently invoked.

The overall picture of drug regulatory functions undertaken in the 10 countries is presented in Table 4.1. Each regulatory function may cover one or more of the targets indicated above. For example, by requiring licensing of pharmaceutical manufacturing, importation and distribution, the relevant legislation will specify the requisite qualifications (and sometimes also the number) of personnel handling specific tasks, the procedures used to produce, import and distribute pharmaceutical products and the health and safety conditions of the premises in which any of these processes take place. The manufacturing, importation and distribution premises are inspected to ensure compliance with regulatory specifications, as well as to correct and/or prevent mistakes.

Legal requirements for pharmaceutical product assessment and registration specify how pharmaceutical production should be carried out, and lay down requirements concerning packaging, information to be provided by labels and inserts, methods of analysis, etc.

Prohibition of certain categories of pharmaceutical products from public advertising, pre-approval of materials and/or surveillance of advertisements are intended to prevent pharmaceutical businesses from communicating inaccurate, biased and misleading information on drugs to the public and health providers. Governments may also choose to intervene in drug price-setting instead of leaving this to market mechanisms. Drug prices can be controlled in several ways-for example, by imposing a price ceiling or maximum profit margin on general sales, or by setting a fixed price for payment or reimbursement of treatment. Of concern here is either the affordability of drugs for the general public or the cost of public drug programmes. In the same way, generic substitution aims to achieve efficient use of health system resources.

In all 10 countries, licensing of manufacturing, product assessment and registration, GMP inspection, import controls and control of product quality are determined by legislation. Licensing of importation and wholesale trade is not required in Cuba and Cyprus, however. In Zimbabwe, a licence is required for wholesale trade.

Legal provisions for inspection of distribution channels and control of drug promotion and information exist in all the countries, except Cuba. All drug distribution channels in Cuba belong to the National Health System and operate under the Ministry of Health. The National Centre for Drug Quality Control (NCDQC)-the country’s DRA-issues guidelines on good storage and distribution practices for distribution channels. Inspections of the distribution channels are carried out by NCDQC, the distribution sub-division of the Pharmaceutical Industry Union or the pharmacy division of the Ministry of Health. However, these activities are not founded on legislation. Also, Cuba does not have any legislation relating to drug promotion, since the practice does not exist in this country.

Drug prices are regulated by drug regulatory authorities in Cyprus and Tunisia. In Australia, Cuba, Estonia, Netherlands and Venezuela, price controls exist but the responsibility for enforcing them rests with other government agencies. In Malaysia, Uganda and Zimbabwe, drug regulatory authorities likewise do not regulate drug prices. Among the 10 countries, only Cyprus states specifically in its official drug regulation mission statements that “rationally priced” drugs should be available. The Zimbabwean drug regulatory mission statement specifies the notion of “sustainable cost”, but does not regulate drug prices.

Table 4.1 Regulatory functions performed by the 10 drug regulatory authorities

• = yes = no

* Special permit for biological products, steroids and others.

** Permit required for investigational products and products for personal use.

Prescribing practice is the least widely regulated activity. It is regulated in six of the 10 countries, namely Australia, Cuba, Estonia, Malaysia, Venezuela and Zimbabwe.

4.2.1 Regulatory policy spheres

The existence of a regulatory function in a country does not necessarily mean that the function covers the entire range of pharmaceutical products and/or activities. Nor does it mean that the control described in the country’s legislation is always fully executed in practice.

Moreover, a country may choose to enact laws to regulate only certain areas of its drug supply system. Figure 4.1 depicts the conceptual framework of theoretical and actual domains of drug regulation. For example, the universe of all the products claimed to have effects on human health (therapeutic, preventive, etc.) can be thought of as the area within the boundary of the outermost circle - the global sphere. The DRA may choose to register all products, or only certain categories. It may decide not to register herbal medicines, but to require that all other pharmaceutical products be registered. The exempted products thus fall into area A, while other drugs are within the boundary of the next circle, area B-the regulatory sphere.

Figure 4.1 Conceptual spheres of regulatory control

In any given year, the DRA may be able to inspect manufacturing, importation and distribution facilities and to collect samples for quality testing in a limited number of product categories. These products can then be considered as being contained within the third largest circle-the monitoring sphere. Some of these drugs pass the quality test, represented by area C, while a percentage of them may be found substandard or counterfeit, or else are not registered. These failed/illegal products can be visualized as falling within the next area, area D-the violation sphere. Legal sanctions may be imposed in all or a proportion of the violation cases found, which are contained in the smallest circle, area E-the sanction sphere. Violations discovered do not necessarily represent all the violations that exist. There are likely to be violations that are beyond the reach of regulatory authorities and other monitoring mechanisms (area G). It is also possible that monitoring fails to uncover a number of violations within the monitoring sphere (area F).

Additionally, although violations are not indicated for area A, this does not imply that all products that fall within this area are effective, safe and of good quality. It is rather that the relevant legislation currently does not cover this area. The regulatory sphere can be expanded once it is deemed necessary for society to regulate additional products contained in area A, and when its capacity to do so is adequate.

The four main regulatory functions-product registration; licensing of manufacturing, importation and distribution, control of drug promotion and advertising; and price control-are conceptually presented in Figure 4.2. Each of the core drug regulatory functions is placed in a segment within the conceptual sphere. (This figure is for illustrative purposes only, since some details, e.g. those related to violations, have been omitted.)

Figure 4.2 Conceptual spheres of the four main regulatory functions

# = number of

The outer layer of the second segment of the diagram covers all facilities engaged in the activities of pharmaceutical manufacturing, import and distribution. The next layer of the segment represents those where a licence is required to operate. The third layer represents the manufacturing, importation and distribution facilities inspected. Cases of violation of GMP, GDP and other requirements are represented in the fourth layer, while sanctioned cases are found in the innermost layer. Similar diagrammatic representations can be made for product registration, control of drug promotion and information and price control.

The lines that set the boundary between the spheres may not be at the same level from one segment to the next, since government regulation may be more extensive, monitoring more thorough, violations more rampant and sanctions more strictly imposed in one functional area than in others. If quantitative data are available for each of the subsegments in the spheres, the size of each subsegment can be computed and a map of the drug regulatory system drawn for visualizing the legal domains and the extent to which drug regulation is undertaken.

Table 4.2 shows the details of the regulation of different components of the four main regulatory functions in the 10 countries.

All 10 countries have a registration system for allopathic/modern drugs, but only seven countries (Australia, Estonia, Malaysia, Netherlands, Tunisia, Uganda and Venezuela) make registration of herbal medicines compulsory.

Table 4.2 Domains of regulation

• = Yes = No N/A = not applicable - = information or data not available

* A manufacturing licence is issued for each product, rather than to the manufacturer.

** Pharmacies do not need a formal licence, but must register with the Healthcare Inspectorate. Dispensing physicians must be licensed.

*** Importation is centralized and State-operated.

Under the provisions of the Australian Therapeutic Goods Act, all goods about which a therapeutic claim is made must be registered, including herbal and complementary products. The level of evaluation that is carried out varies according to the type of product. In the Netherlands, registration of herbal and homeopathic drugs has been required since 1995. However, registration of these drugs applies only to quality and safety, not to efficacy. Herbal products which have no medical claims or indications are not registered as medicines. Similarly, Malaysia has mandated registration of traditional medicines since 1992, but largely for safety and quality, and only partially for efficacy.

Zimbabwe has rules regarding the practice of traditional medicine, but not for registration of traditional medicinal products. In future, however, the Medicines control agency can be expected to exert some control over this category of product. In Cyprus, there are no legislative provisions for herbal, dietary or homeopathic medicines, but some herbal medicines are registered as allopathic medicines.

Ownership also determines regulation. In Cyprus, Government drug supplies, including those manufactured by the Government-owned Pharmaceutical Laboratory, as well as imported drugs, are exempt under Law 6/67 and do not have to be registered. In Cuba, because all drug distribution channels are owned by the Government, inspection of these channels is not required by law.

Price controls also illustrate differences in regulatory emphasis. Many countries regulate drug prices through other government agencies or through health insurance systems, but not through the DRA. In Australia, the Pharmaceutical Benefits Scheme, which reimburses more drug costs than any other body, sets the prices for prescription products covered by the scheme. In addition, control is exerted over wholesalers’ margins, retail mark-ups and dispensing fees for pharmaceutical benefits. Similarly, in Estonia, the Government, but not the SAM, sets the gross margins for wholesale and retail trade, and also reimburses drugs at a percentage discount. Drug price controls are also exercised through the Public Health Insurance Scheme in the Netherlands. Once the Medicines Evaluation Board (MEB) has allowed a medicine to enter the market, the Government decides whether it should be included in the public health care insurance package. For such medicines, it is the Medication Reimbursement System that determines the level of reimbursement.

Drug price-setting in Cyprus is an integral part of registration. Law 6/67 (Control of Quality, Supply and Prices) stipulates that prices of controlled pharmaceutical preparations should be fixed before they are sold on the market. This applies to imported as well as locally manufactured products. A 30% mark-up is added to wholesale and retail prices. In Tunisia, price regulation is also tied to registration. Any national or international manufacturer must submit a price proposal when applying for registration. The drug price is then determined by a committee consisting of officers from the health and trade ministries. In Venezuela, prices of products with only one formulation or form are regulated at retail pharmacy level by the Government, through the Ministry of Commerce and Industry. Prices are not set for drugs with more than one formulation, but are left to market mechanisms. Drug prices in Cuba are controlled by the Ministry of Finance. The Government also subsidizes drug costs to bring prices down, with the result that some drug prices are no higher than they were 30 years ago.