Policy decisions about whether to import essential drugs from reputable companies or to promote local manufacture, and if so, at what level, should be based on a careful situation analysis and on a realistic appraisal of the feasibility of domestic production.³⁹ When formulating a policy the most important objective should be to get quality essential drugs to the people who need them, at prices that they and their country can afford.

Pharmaceutical production can be classified into three levels. Primary production includes the manufacture of active pharmaceutical ingredients and intermediates; secondary production includes the production of finished dosage forms from excipients and active substances; and tertiary production is limited to the packaging of finished products or repackaging of bulk finished products.

Make or buy?

Many governments are politically interested in developing or maintaining local manufacturing capacity and in increasing self-reliance. There may be a complex mixture of health and economic arguments to consider. A government may hope to provide a regular supply of low-cost drugs to public health programmes aimed at disease control, through government-owned drug manufacture rather than through local or overseas procurement. Some governments consider that drug manufacturing plants may contribute to reducing foreign exchange needs, provide employment, improve the balance of trade and the viability of the plants through drug exports, and contribute to industrial development and transfer of technology.

In reality, however, these assumptions are rarely justified and the difficulties of establishing or even maintaining a viable and competitive industry should not be underestimated. Any decision about whether a government should be involved in pharmaceutical production and if so, at what level, should be based on a thorough situation analysis to determine the feasibility of any proposals. Particular attention should be paid to the real costs (including the need for highly qualified technical and commercial staff, imported equipment, spare parts and raw materials), and the quality and prices with which the locally produced drugs will compete in the market. In general, drug and vaccine production is best left to the private sector. The role of the government should move away from owning or managing drug production plants, towards regulation and inspection of drug production by the private sector. The government may promote the quality of locally produced drugs, and thereby strengthen industrial capacity, by arranging for training in GMP.

Price information on raw materials

WHO and the International Trade Centre in Geneva issue a monthly price indicator for pharmaceutical raw materials needed for the production of the most common essential drugs.⁴⁰ This service is intended to assist national industries in their market research for the procurement of active ingredients at competitive prices.