Cost-Containment Mechanisms for Essential Medicines, Including Antiretrovirals, in China - Health Economics and Drugs Series No. 013
(2003; 30 pages) [French] [Spanish] View the PDF document
Table of Contents
View the documentAcknowledgements
View the documentTerms of reference
Close this folderIntroduction
View the documentCost-effective medicine selection
View the documentPrice information
View the documentInternational open tendering
View the documentVoluntary discount agreements
View the documentVoluntary licensing
View the documentCompulsory licensing
View the documentLocal state production
View the documentGovernment price controls
View the documentReduction of import and other taxes for essential medicines, and rational dispensing practices
View the documentPublic investment in R & D for new medicines: A mid- to long-term strategy
View the documentBackground and experiences with voluntary agreements
View the documentCountry rights to be protected in voluntary agreements for reduction of prices of medicines
Open this folder and view contentsCompulsory licensing - practical aspects and procedures
View the documentConcluding comments
View the documentList of persons contacted
View the documentFurther reading
 

Local state production

Two recent experiences have shown the importance of the existence of a state medicines manufacturing capacity.

During the 1998 Asian financial crisis, the Indonesian Government was able to supply hospitals, health centres and other health facilities with essential medicines thanks to the existence of state-owned local pharmaceutical manufacturers. Privately-owned local and foreign companies practically halted production for several weeks as the collapse of the local currency and uncertainty in foreign exchange rates prevented them from importing necessary raw materials.

Another important example has been the success of the Brazilian policy to fight AIDS, which has relied crucially on state pharmaceutical manufacturing capacity. Brazil produces most of the ARVs required for the local market, at prices significantly below those charged by brand-name companies. In addition, the existence of a significant local capacity to manufacture medicines increased Brazil’s negotiating power in discussions with brand-name companies over price discounts.

The existence of a state pharmaceutical manufacturing capacity may also play an important role regarding prices in the international market. If states act as competitors in the global market, that will reduce worldwide prices.

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