KIRSTEN MYHR

K. Myhr

It has been quite a challenge for WHO and HAI to develop a methodology that enables you to draw a sample on which to make recommendations and conclusions that make sense in different parts of the world. We cannot be sure yet that we have succeeded, but we think we have taken a large step towards that objective. The methodology's success requires everyone to follow the guidance in the manual. Pharmaceutical prices are complicated and only by collecting data in a systematic way can you ensure that the findings are representative of your country or of the region in which the survey is being conducted.

Here, we briefly explain the key components - which medicines to look at, and where to look for their prices and availability.

Core and supplementary medicines lists

Many different medicines are registered and available worldwide. For many diseases or conditions, there are one or several therapeutically equivalent medicines available, and different countries may show substantial variation in what they have chosen. In order to make the survey manageable, a short "core" list of 30 medicines has been selected as the basis for data collection and analysis. The great variation in therapy tradition between countries made it quite a challenge to pick the 30. We recommend that you make up a supplementary list of medicines that you find are important in your country.

The core list is a list of essential medicines with very widespread use,which makes them needed in most countries. Because they are widely used, we can collect prices from different countries and so make international price comparisons. The supplementary list is to be made up locally and includes prescription medicines that are either widely used in your country or used for important diseases, necessitating price monitoring. You may also select medicines for this list which are therapeutically equivalent to the ones on the core list, in particular if the ones we have chosen are not the therapeutic alternatives you use. Because the medicines on this list may vary between countries, they are to be used for national comparison only, for example, to measure prices between sectors and between originator brands and generics.

Originator brands and generics

Most of the medicines on the list are no longer patented, but we have also included a few which may still be patented in countries that observe patent laws. On your supplementary list you may choose to include more expensive medicines.

When medicines are not patented, there may be several products with the same active ingredient on the market. One may be the former patented product, we have called that the originator brand. The others will be generic products (generic equivalents) and they may have a brand name ("branded generic") or have the generic name followed by the manufacturer's name. Generics are usually much cheaper than the originator (sometimes known as the innovator) brand. We have therefore asked for the price of the originator brand as well as the most-sold generic equivalent and, in the local facility that you visit, the cheapest generic copy. We think it is important to document if there is a price difference between not only the originator brands and most sold generic equivalents, but also between the most sold generic and the lowest-price generic. If there is a difference in price also between generics, then more money could be saved if there was a policy to use the lowest-price one.

You will most certainly notice another big difference in the number of products in each sector. Not only will the public sector have a limited number of substances, but also often only one product containing each substance. That is likely to be a generic product as it will be less expensive, but it could also be that the country has negotiated a good price on the originator brand product.

For each medicine, the core list contains one dosage form, one strength and one recommended pack size, to facilitate standardisation and to ensure as few sources of error as possible. Some countries may have substandard products on the market so there may be significant differences in quality. You should only include products approved by your regulatory authority.

Sampling method

Most countries, if not all, have at least two different parts to the health sector, a public part and a private for-profit part. The private sector may consist of not only private retail pharmacies but also dispensing doctors and private hospitals. Often other groups such as the private not-for-profit sector exist, and may comprise NGOs such as a church mission sector and other aid organizations, or insurance companies etc. All these sectors will probably deliver or sell medicines, possibly at different prices.

The public sector normally purchases on tender and so there will be a net tender price, but that is not always what the patient pays. They may pay nothing, or a fixed fee which could be less than the purchase price, or they may pay more if a mark-up is charged. In the public sector we therefore ask for both procurement prices and the prices patients pay to be recorded separately.

So, prices may vary between all these sectors. And they may also vary between different parts of the country, e.g. between urban and rural areas.

The manual describes a methodology which tries to take all this into consideration. It means measuring prices in different health facilities as well as in different pharmacies and in four different geographical areas, one being the capital or largest city. To ensure as accurate prices as possible, more than one facility or pharmacy in each sector and area are visited (see Figure 1, sampling diagram).

Core list of medicines to be surveyed

Figure 1. Sampling approach

International reference prices

You may find the way we express prices unusual. Instead of listing the actual prices found, they are compared with an international reference price, to facilitate national and international comparisons. The local price is first converted into US$ then compared to a reference price. The ratio between the local price and the international reference price is then used for comparison.

Our objective was to use reference prices that are widely available in the public domain (on the Internet). Not many such price lists are available and we therefore chose Management Sciences for Health Drug Price Indicator Guide supplier prices and use the median price for each medicine. MSH prices are net prices from not-for-profit wholesalers to developing countries, and you may find it strange to compare private sector prices with them, because wholesale and retail mark-ups are found in that sector. But once you get used to this way of analysing, there should be no difficulties.

One of the problems in choosing the MSH price list as reference, was that prices of patented medicines cannot be found there. However, our method allows you to choose a different list of reference prices if, for example, you want a choice, or to include on your supplementary list medicines that are still patented. One example of such a list is the public price list in Australia. These are the prices that have been negotiated with the industry for medicines that are reimbursed in Australia (see: http://www.health.gov.au/pbs/).

Affordability

While one issue is the price of medicines, another is whether people can afford them, regardless of how cheap or expensive they are. One good method to find this out is to compare the cost of treatment with peoples' income. We have chosen this method, and use the daily wage of the lowest-paid unskilled government worker for comparison.

In the Workbook you will find 10 conditions and suggested treatment courses representing both acute and chronic illnesses. In addition, you may enter more treatment schedules based on local/national treatment guidelines if they differ from the one in the manual. For the treatment courses we have selected, and using data which you will enter, the Workbook will automatically calculate the number of days an unskilled government worker will have to work in order to afford the cost of a defined course of treatment for these conditions.

When you look at the figures and remember that in many developing countries a large part of the population earns even less than the lowest paid government worker, you will find that this exercise is very illustrative and probably easier to understand, at least for the consumer, than the price ratios!

Price components

We are attempting to find out how retail prices are made up. The final cost of a medicine whether paid by a government facility, a health insurer or the patient reflects the manufacturer's selling price (MSP), plus all intervening price additions. Such additions may vary widely between countries and also between sectors in a country. Common add-ons are import duties, taxes, markups for importers, wholesalers and retailers, distribution costs, dispensing fees and VAT (see p. 20). The manufacturer's price is usually not disclosed by the government and/or the manufacturer. Manufacturers often argue that they are wrongly blamed for high prices that are caused by high national taxes and markups. Whilst in many developed countries, such add-ons are controlled, in others the wholesalers and retailers may charge whatever mark-ups they want or as much as the market will bear.

Basic information about the pharmaceutical sector

Finally, in order to help understand the medicines market in your country, we have developed a questionnaire for collecting basic information about the pharmaceutical sector, such as the procurement method, extent of aid programmes, reimbursement and exemptions, the size of the sector and distribution of pharmacies.