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2. Affordable prices
With the potential cost of providing a full range of treatments for prevailing common diseases, medicine prices and financing are inescapable factors in access to essential medicines. Affordable prices can be pursued through the following mechanisms.
Price information is fundamental in obtaining the best price. Several international and regional price information services are made available for Member States. Price information helps in price negotiations, in locating new supply sources, and in assessing the efficiency of local procurement.
Price competition through tendering of generic products and therapeutic competition are powerful price-reduction tools, as evidenced by experiences from large producing countries such as Brazil and India. Through generic competition, price reductions of 75% to 95% were achieved over the initial brand prices (Figure 3). In addition, price reductions were also obtained through therapeutic competition -between several branded products belonging to the same therapeutic class.
Figure 3. Advocacy, corporate responsiveness and competition have reduced antiretroviral prices by 95% in 3 years
Bulk procurement encompasses that medicine orders are pooled together, that the focus is on a list of priority medicines and that duplication within therapeutic categories is avoided as much as possible. This will result in larger procurement volumes and will increase purchasing power. Bulk procurement can be through cooperation of facilities in a country, but positive experience has also been reported from arrangements between states.
Generics policies are effective instruments when a patent expires. In the United States of America the average wholesale price falls to 60% of the price of the branded medicine when one generic competitor enters the market, and to 29% with 10 competitors. To introduce and expand the use of generic medicine products, it is important that 1) supportive regulations exist; 2) reliable quality assurance is in place; 3) professional and public acceptance is obtained; and 4) financial incentives are in place.
Equitable pricing is especially important for newer essential medicines that are still protected by patents or other instruments that provide market exclusivity. Equitable pricing is explained as the adaptation of prices which are charged by the manufacturer or seller to countries with different purchasing power. Widespread equitable pricing is economically feasible provided that low-priced medicines do not leak back to high-income countries.
Reduction or elimination of duties and taxes for both generic and patented essential medicines contribute to price reduction. In developing countries, the final price of a medicine may be two to five times the producer or importer price. This reflects the effects of multiple middlemen, taxes of over 20% in some countries, pharmaceutical import duties of up to 65%, high distribution costs, and pharmacy and drug seller charges.
Box 4. WHO medicines price information services
WHO works with several partners to make price information easily accessible to governments, nongovernmental organizations, donor agencies and any institution involved in medicines procurement.
International Drug Price Indicator Guide: Details 350 active ingredients in 750 dosage forms from 17 sources. Indicative prices of generic products on the international market and selected tender prices. Produced by Management Sciences for Health and WHO.
Sources and Prices of Selected Medicines and Diagnostics for People Living With HIV/AIDS: Details 59 active ingredients in 100 dosage forms. Issued by UNICEF, UNAIDS, Médecins Sans Frontières and WHO. Covers antiretroviral (ARV) medicines, HIV/AIDS test kits for diagnosis and ongoing monitoring, and medicines for treating opportunistic infections, for pain relief, for use in palliative care, for the treatment of HIV/AIDS-related cancers, and for managing drug dependence.
Pharmaceutical Starting Materials/Essential Drugs Report: Details over 273 active ingredients. Issued by WHO and the International Trade Centre, a joint WTO - UNCTAD centre.
AFRO Essential Drugs Price Indicator: Nearly 300 essential medicines and dosage forms listed - details provided by Member States and international low-cost essential drugs suppliers. Published by the Regional Office for Africa and the WHO Collaborating Centre for the Quality Assurance of Medicines, University of Potchefstroom, South Africa.
AMRO: AIDS and STI - Average Prices of a One Year Treatment with Antiretrovirals in Countries of Latin America and the Caribbean: Survey by Pan American Health Organization of ARV therapy in Latin American countries.
Local production of assured quality when economically feasible and where it follows good manufacturing practices (GMP) can result in lower medicine prices. This can be facilitated by transfer of technology, GMP inspections, and other arrangements. Generic companies in India, Brazil and Thailand have offered their help to low- and middle-income countries to produce antiretrovirals locally through technology transfer through South-South collaboration.
The WTO/TRIPS Agreement defines minimum requirements for intellectual property rights that are applicable to all WTO members. Studies predict significantly higher medicine prices with full implementation of TRIPS requirements in low- and middle-income countries. National patent and related legislation should include standards of patentability that take health into account, promote generic competition, incorporate provisions for TRIPS compatible safeguards such as compulsory licensing and parallel import.