Medicines Access, Pricing, and Affordability: Discussions from the Third International Conference on Improving Use of Medicines Dennis Ross-Degnan, ScD Harvard Medical School and Harvard Pilgrim Health Care WHO Collaborating Center in Pharmaceutical Policy Boston, USA International Pricing Workshop National Training Institute Cairo, Dec 6-7, 2011 Overview Pricing in the context of the pharmaceutical system Global and regional data from WHO/HAI Medicines Price Surveys International Conference on Improving Use of Medicines Overview Selected results related to access and pricing Policy recommendations and research gaps 2 Competing Pharmaceutical Policy Objectives Encouraging Appropriate Use Necessary, safe, effective, properly taken Improving Equitable Access Available to the poor Keeping Costs Affordable To patient and to the health system Access and Pricing in a Pharmaceutical Systems Context SUPPLY Public Transparent sector procurement supply Supply chain efficiency Government procurement systems Government health facilities International manufacturers Drug importers Professional standards Unbiased information Insurance and risk protection DEMAND Expand coverage Cost-efficient utilization Domestic manufacturers ` Manufacture & import Other key stakeholders: Drug regulatory agency Manufacturers associations Reasonable profit to manufacturers Fair supply chain mark-ups Private sector supply Balanced incentives Other key stakeholders: Wholesale & pharmacy orgs Wholesalers and Professional associations distributors Ethical Health promotion delivery systems Private and NGO facilities Trade and IP policy Industrial policy Taxes and tariffs Private physicians/ other providers Regulatory enforcement Pharmacies and retail outlets Patterns of careseeking and utilization Information about availability, price, quality Access to low-cost, Consumer high quality demand generics Other key stakeholders: Consumers and Consumer & patient orgs patients Third party payers Employers WHO/HAI Medicines Price Surveys: Global and Regional Evidence How Much Do Patients Pay for Medicines? Data from 36 WHO/HAI Price Surveys 5 A Cameron, M Ewen, D Ross-Degnan, D Ball, R Laing. Lancet 2008 6
Procurement Efficiency in EMR Countries: Data from 9 WHO/HAI Surveys CPI-adjusted MPRs of procurement prices across basket of 30-40 medicines Error bars represent interquartile range. Private Sector Patient Prices in EMR Countries: Data from 9 WHO/HAI Surveys CPI-adjusted MPRs of patient prices across basket of 30-40 medicines Error bars represent interquartile range. Medicine prices, availability, affordability and price components. WHO-EM/EDB/089/E 2008 7 Medicine prices, availability, affordability and price components. WHO-EM/EDB/089/E 2008 8 Taxes, Duties, and Supply Chain Mark-ups in EMR WHO-HAI Medicine Price Surveys Treatment Affordability in EMR Countries: Estimates from WHO/HAI Price Surveys Medicine prices, availability, affordability and price components. WHO-EM/EDB/089/E 2008 9 A Cameron, M Ewen, D Ross-Degnan, D Ball, R Laing. Lancet 2008 10 History of International Conferences on Improving Use of Medicines ICIUM 2011 Objectives 1997 Chiang Mai, Thailand 272 participants, 46 countries 2004 Chiang Mai, Thailand 472 participants, 70 countries 2011 Antalya, Turkey 588 participants, 80 countries Antalya, Turkey, 594 participants, 86 countries Live webcast in Egypt, 262 participants, Alexandria and Pharos Universities Assemble state-of-the-art knowledge Improve health through improved medicines use Focus on vulnerable populations Recommend evidence-based strategies Multiple stakeholders Different levels of the health care system Develop future research agenda Fill gaps in current knowledge Focus on emerging challenges & opportunities Evaluate impacts of change Plan dissemination and implementation Globally, regionally, nationally, locally 11 12
ICIUM 2011 Contributions Disappointing Global Progress But Suggestions for a Way Forward Oral Presentations 268 Plenary sessions 38 Methods and early sessions 41 Parallel track sessions 189 Posters (presented in sessions) 554 (189) Policy, regulation, governance 128 (25) Access to medicines 104 (27) Economics, financing, insurance systems 74 (24) HIV/AIDS & TB 65 (27) Antimicrobial resistance 57 (22) Chronic care 52 (24) Child health 42 (20) Malaria 32 (20) 13 Little progress over the past decades, despite existing knowledge and effective policy tools. Kathy Holloway, SEARO Regional Medicines Advisor, Delhi, India Create an independent think-tank, comprising a small group of responsible actors (including research-based and generic manufacturers) who identify win-win situations for collaboration of all stakeholders on medicines access and use Klaus Leisinger, Novartis Foundation for Sustainable Development, Basel, Switzerland 14 General Conclusions about the Evidence for Pricing Policies Lack of well-designed research on pricing policies in LMICs Urgent need to evaluate the impact of pricing interventions and policies Need for more longitudinal studies with sound research designs A plan for monitoring and evaluation should be built into every policy change Use strong research designs that compare preand post-policy outcomes If possible, include a control group Selected Results from the Economics Track Related to Access and Pricing 15 Pros and Cons of Taxes and Tariffs on Medicines Creese et al. #498 Regulating Supply Chain Mark-ups to Control Medicines Prices Ball #287 Case for taxing medicines Large potential revenue source Record-keeping for prescribed medicines is relatively good Demand is relatively inelastic Case against taxing medicines Taxes add to the price of medicines Higher prices reduce consumption, particularly by the poor Alternative taxes exist to improve health (e.g., tobacco) General conclusion: Taxes on medicines, such as VAT and sales tax, increase the price of medicines. These taxes are inequitable and add to the unaffordability of medicines. 17 Public and private drug distributions systems are complex and multi-leveled Literature review to describe evidence base for regulating supply chain mark-ups in LMIC to lower medicine prices Widely regulated in OECD countries Extent of regulation less clear in LMIC WHO/HAI data show wide ranges Wholesale mark-ups : 10% 35% Retail mark-ups: 0% 76% Total mark-ups 17% 84% in the public sector and 11% 6,894% in the private sector 18
Conclusions about Regulating Supply Chain Mark-ups Ball #287 Evidence on Tiered Pricing of Originator Products Moon et al. #1209 Evidence base is weak Regulating mark-ups without regulating either manufacturer s selling price or retail selling price unlikely to be effective Regulating mark-ups may affect viability of some wholesalers/retailers Reliable price monitoring system is essential to examine effects of regulations Properly structured mark-up regulation can be used to promote generics Tiered pricing: Selling of health technologies in LMIC at prices systematically lower than those in industrialized countries TP widely applied for HIV/AIDS, malaria, TB drugs; vaccines; contraceptives Renewed interest in TP as emerging markets strategy (e.g. Sanofi, GlaxoSmithKline, Merck, Novartis, Roche) Tiered pricing may not result in lower prices than competition and encouraging use of lower priced generic alternatives Most evidence is from HIV medicines More information is needed on the actual prices paid under tiered pricing arrangements 19 20 Tiered Pricing: The Middle Income Country Problem Moon et al. #1209 WHO/HAI Policy Review on External Reference Pricing Tiered pricing: wide variation, no norms Per capita GNI (low vs. middle-income countries)* HIV prevalence UN-classified least-developed countries Human Development Index Regions Which countries pay more? Why? What is fair? 33 ARVs with LIC and MICs prices Price difference : 20-1353 USD; 4.5% to 177% No norms, no transparent basis for pricing Tiering can seem arbitrary Definition: Using prices of a pharmaceutical product in one or several countries to derive a benchmark or reference price for setting or negotiating price Literature review of global evidence about impacts Survey of selected countries (emphasis on LMIC) *World Bank classifications (per capita GNI): low income <$996; lower middle, $996 - $3,945; upper middle, $3,946 - $12,195; high, >$12,195 21 22 ERP Benefits and Costs ERP Comparators in WHO-HAI Survey Implicit benefits: Compare prices in a set of countries to obtain Similar prices Same price as the lowest country Differential - usually lower prices Potential problems No clear rationale or theoretical foundation, and little evidence about positive impact on prices Considerable resources (human and material) needed Difficult to identify products due to different commercial names, dosages, and packaging Price comparisons complex because of taxes, supply chains, profit margins, etc. Confidential agreements often provide buyers with discounts or other hidden benefits 23
Some Conclusions about External Reference Pricing Impacts of Targeted Price Reductions in China: Oral Hypoglycemics Lu et al. #878 All countries cannot simultaneously apply ERP No country would find prices to reference Countries applying ERP give up some control over pricing criteria Rely on pricing policies of reference countries ERP has prompted manufacturers to set up international pricing strategies Single international price, delaying launch, reduced price transparency Possible negative effects in lower income countries include higher prices and delays in new drugs Market Volume Before and After 2006 Price Reduction Increase in sales volume (10.3 standard units sold/1000 people/quarter) No change observed in overall market share of price-regulated products. Conclusions about China s Price Control Policies and Open Questions Lu et al. #878 Price Information Transparency China s targeted approach to drug price reductions : Associated with increases in utilization of oral antidiabetics and insulin Improved access to essential medications OR increased quantities prescribed OR both Open research questions: Were results similar for other waves of price controls and other classes of medication? Did price and volume changes result in cost savings for patients, hospitals, or the health system as a whole? Did price and volume changes result in better quality of care? Accurate and timely information can lead to more informed decisions in medicines procurement An electronic medicines price information exchange is being developed, in line with a resolution of the Regional Committee, in order to facilitate efficient and informed public sector procurement of medicines. Eastern Mediterranean Region: Annual Report of the Regional Director, 2008 28 Western Pacific Regional Medicine Price Information Exchange Arifaj-Blumi #883 Arifaj-Blumi #883 Survey on medicines prices in public sector procurement (2009, 2010) www.piemeds.com 29 30
Generic* Market Share in LMICs with IMS Health Data, 1999-2009, by Region Kaplan et al. #716 Generic Market Share Is Growing in All EMR Countries Measured Kaplan et al. #716 Bangladesh, Pakistan, Philippines, Thailand Morocco, Tunisia, Egypt, Jordan, South Africa Argentina, Brazil, Chile, Colombia, Dominican Republic, Ecuador, Mexico, Peru, Uruguay, Venezuela * Includes both generics marketed under trade name and INN Addressing Perceptions about Generics Role of Health Insurance Systems in Improving Use of Medicines in LMICs Garabedian et al. #236 Perceptions that low cost medicines (generics) are of low quality have a significant impact on patient behavior, access, and affordability Quality of generics should be addressed: First at the regulatory level to ensure that only high quality generics are registered Secondly at the prescriber and patient level through education and transparent information Research is needed on the impacts of interventions to increase use of generics that align incentives to patients, providers, and industry 33 Rationale for focus on insurance and risk protection programs in LMICs Lack of affordable access to essential medicines Insurance systems can potentially improve access and cost-effective, appropriate use Increasing interest in universal coverage Systematic literature review Describe strategies used by insurance systems Evidence of successful strategies 63 publications from LMICs 34 Evidence on Effectiveness of Medicines Policies in Insurance Systems Garabedian et al. #236 Some Key ICIUM Policy Recommendations Good evidence that insurance coverage improves access and increases utilization Many active management strategies tried Purchasing (negotiating with suppliers, bulk purchasing, generic reference pricing) Selection (formularies, consumer cost-sharing, generic substitution) Utilization management (incentives for quality, separate prescribing and dispensing, provider and consumer education, disease management) Contracting (capitation, case-based payment, reducing reimbursement, preferred networks) Few well-designed evaluations of impacts 35 Significant efforts should be made to share medicine prices and procurement practices in a structured/standardized way at regional level Governments should strictly regulate inappropriate marketing practices To health professionals and consumers By both multinational companies and generic manufacturers 36
Key Research Gaps on Pricing, Access, and Affordability Key Research Gaps on Private Sector and Consumer Preference More and better-designed studies of the impact of national policies to reduce medicines prices Impact of reducing financial barriers to health care (such as medicine price reduction or insurance coverage) on affordability, utilization, outcomes (quality of life, mortality and morbidity), financial burden, and non-health expenditures Impacts of improved affordability on adherence and sustainability of financing for patients taking medicines for chronic illness 37 Performance of private sector providers related to appropriate use of medicines and its determinants Targeted analyses of policy changes in insurance systems, such as changes in formulary management, benefit design, provider contracting, or educational outreach activities Research on supply chain mark-ups and a reasonable markup for private sector sellers that can be standardized and monitored Joint facility and household surveys to link care seeking, provider choice, medicines availability, and household access 38 Thank you very much! 39