Public-Private Roles in the Pharmaceutical Sector - Implications for Equitable Access and Rational Drug Use - Health Economics and Drugs Series, No. 005: 4. The public-private mix in drug markets: a global picture 1 : 4.1 Production

Public-Private Roles in the Pharmaceutical Sector - Implications for Equitable Access and Rational Drug Use - Health Economics and Drugs Series, No. 005
(1997; 115 pages) [French] [Spanish]

Índice de contenido

	Authors
	Acknowledgements
	Abbreviations and Acronyms
	Executive summary
	1. Public and private roles in the pharmaceutical sector
		1.1 Some definitions of public-private roles
		1.2 Questions on public-private roles
		1.3 The context of change
		1.4 Principles for assessing public-private roles
	2. Pharmaceutical markets: structure and performance
		2.1 Drug financing and distribution systems
		2.2 The pharmaceutical market: structures and actors
		2.3 Pharmaceutical market failure
	3. Essential state responsibilities
		3.1 Policy-making
		3.2 Drug regulation
		3.3 Professional standards
		3.4 Access to essential drugs
		3.5 Rational drug use
	4. The public-private mix in drug markets: a global picture¹
		4.1 Production
		4.2 National expenditure
		4.3 Drug distribution systems
		4.4 Household expenditures and sources of drugs
		4.5 Summary points
	5. Market mechanisms in public drug supply
		5.1 Organization of the supply system
		5.2 Desirability of using market mechanisms
		5.3 Summary points
	6. Promoting public health needs through the private sector
		6.1 Public health concerns
		6.2 Availability (geographical access)
		6.3 Making drug prices affordable
		6.4 Affordable financing for drugs
		6.5 Rational drug use
		6.6 Drug quality, safety and efficacy
		6.7 Summary points
	7. Pharmaceutical production and public-private roles
		7.1 Arguments for and against public sector pharmaceutical production
		7.2 The government's role in strengthening local production capacity
		7.3 Summary points
	8. Capacity-building and the process of change
		8.1 The nature of capacity and capacity constraints
		8.2 Approaches to enhancing capacity
		8.3 The process of change
		8.4 Summary points
	9. Managing public-private roles
		9.1 Developing a strategy
		9.2 Monitoring and evaluation
		9.3 Unanswered questions
		9.4 Conclusions
	References
	Glossary
	Back Cover

4.1 Production

Pharmaceutical development and production is a major private sector activity for many countries. Several OECD countries and some low- and middle-income countries such as Argentina, Brazil, China, Cuba, Egypt, India, Indonesia, Mexico and Sri Lanka have quite substantial private, and in some cases public, drug manufacturing plants with important innovative capabilities.

The public-private mix in drug production depends mainly on the industrial policy of each country, economic conditions, market, and varied other factors. In addition, it is a question that may substantially change in the future with the globalization of the economy and the effects of the recent international agreements on trade and intellectual property rights (TRIPs).

Box 4 summarizes data available for the Newly Independent States of the former Soviet Union. Country situations obviously vary immensely. In small and low-income countries in particular, a state-owned pharmaceutical production plant may be the only drug manufacturer.

Box 4. The public-private mix in drug production: expenditure and distribution in the Newly Independent States [Primary data provided by participants at WHO European Regional Seminar on Pricing and Reimbursement] [139] Production All of the Newly Independent States (NIS) have some pharmaceutical production capacity, although this varies between states such as Georgia and Ukraine which have substantial capacity and the smaller Asian republics, many of which have just one production plant which is publicly-owned. In Armenia and Georgia there has been fairly rapid privatization of production. The pace has been slower elsewhere.
	ARM	BLR	GEO	KAZ	KGZ	MDA	TJK	TKM	UKR	UZB
No. Of local production plants	10	6	18	14	1	1	1	1	21	3
% private plants	80%	33%	67%	0%	0%	0%	0%	0%	10%	0%
National expenditure There is a substantial variation in drug expenditure per capita in the NIS from a high of US$ 26.32 per capita in Armenia to a low of US$ 0.52 in Tajikistan. To some extent the differences reflect variation in GNP per capita, but there are also unexplained variations. For example, Armenia has a very high drug expenditure per capita compared to the other states although its GNP per capita is close to the mean of the group. In virtually all the NIS the proportion of expenditure is very high compared to global figures (see Table 4).
	ARM	BLR	GEO	KAZ	KGZ	MDA	TJK	TKM	UKR	UZB
Drug market US$ millions	97	164	56	185	11	55	3	13	317	91
Drug exports per capita US$	26.32	15.89	10.42	10.75	2.55	12.74	0.52	3.38	6.12	4.18
% private	98.0	67.2	61.1	100	99.4	97.0	96.5	67.5	88.7	100
GNP per capita US$	680	2160	-	1160	630	870	360	-	1910	960
Distribution Different rates of privatization are evident between countries in wholesale and retail markets. Armenia is notable in having very high rates of private sector participation in both wholesale and retail markets. In Belarus the wholesale market is dominated by the private sector but the majority of retail outlets remain in the hands of the state. This pattern is reversed in Uzbekistan.
	ARM	BLR	GEO	KAZ	KGZ	MDA	TJK	TKM	UKR	UZB
Wholesale
Number of distributors	15	307	110	155	25	133	1	7	39	20
% private	80	98	68	84	75	0	0	0	0	0
Retail
Number of pharmacies	1090	1334	1507	7731	608	702	507	406	6809	2537
% private	84	19	97	2	35	21	7	11	1	53
Key: ARM - Armenia, BLR - Belarus, GEO - Georgia, KAZ - Kazakstan, KGZ - Khyrgystan, MDA - Moldova, TJK - Tajikistan, TKM - Turkmenistan, UKR - Ukraine, UZB - Uzbekistan.