Cost-Containment Mechanisms for Essential Medicines, Including Antiretrovirals, in China - Health Economics and Drugs Series No. 013: Introduction: Local state production

Cost-Containment Mechanisms for Essential Medicines, Including Antiretrovirals, in China - Health Economics and Drugs Series No. 013
(2003; 30 pages) [French] [Spanish]

Table of Contents

	Acknowledgements
	Terms of reference
	Introduction
		Cost-effective medicine selection
		Price information
		International open tendering
		Voluntary discount agreements
		Voluntary licensing
		Compulsory licensing
		Local state production
		Government price controls
		Reduction of import and other taxes for essential medicines, and rational dispensing practices
		Public investment in R & D for new medicines: A mid- to long-term strategy
	Background and experiences with voluntary agreements
	Country rights to be protected in voluntary agreements for reduction of prices of medicines
	Compulsory licensing - practical aspects and procedures
		Identify relevant patents
		Explore possible sources of supply based on local production
		Identify possible sources of importation of the required medicine
		Marketing approval
		Request for a compulsory licence
		Granting of the compulsory licence by the Patent Administration Department
		Negotiation with patent holder about fee
		Determination of fee by the Patent Administration Department
		Appeal
		Other considerations
	Concluding comments
	List of persons contacted
	Further 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.