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Pharmaceutical System Strengthening from the

Perspective of an International Organization

Availability, Prices, NCDs and Generics

Dr. Richard Laing

Department of Essential Medicines and Pharmaceutical Policies World Health Organization

Antalya

August 2011

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Target 8.E: In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing

countries

Indicator 8.13. Proportion of Population with Access to Affordable, Essential Drugs on a Sustainable Basis

Access to medicines is required for the fulfilment of MDG 8

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2003

2008

WHO/HAI Joint Activity on Essential Medicine, Prices and Affordability

Source http://www.haiweb.org/medicineprices/manual/documents.html

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Low public sector availability leads patients to the private sector, where medicines are unaffordable

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Reliance on originator brand products makes treatment more unaffordable

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Increased focus on chronic diseases is therefore needed to achieve MDG Target 8.E

"Further support is needed for chronic, noncommunicable diseases such as cardiovascular disease, cancer, diabetes and chronic respiratory disease."

(MDG Report 2008)

"Governments, in collaboration with the private sector, should give greater priority to treating chronic diseases and improving the accessibility of medicines to treat them"

(MDG Report 2009)

Access to report and data: http://www.who.int/medicines/mdg/en/index.html

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Differences in the availability of selected medicines for acute and chronic conditions

Results from 50 medicine price and availability surveys undertaken using the WHO/HAI methodology in 40 countries (2003 – 2008)

Source Cameron et al 2011

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Average availability of medicines chronic diseases by therapeutic class, generics, all

countries82.9%

65.0%

57.1%

43.1%40.3%

45.1%

66.2%

51.7%49.5%

34.7%

30.1% 29.4% 27.8%

53.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Antiul

cera

nts

Antidi

abet

ics

Antihy

perte

nsive

s

Antias

thm

atics

Antiep

ilept

ics

Antide

pres

sant

s

Baske

t of 1

5 ac

ute

med

icine

s

Mea

n a

vaila

bili

ty

private sector

public sector

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What do NCD medicines cost without tariffs, taxes and mark-ups?

Product Units per month

Median Unit Cost

Monthly Cost

Source

Glibencamide 5mg tablet 30 $ 0.0034 $0.102 MSH 2010 Metformin 500mg 60 $0.0105 $0.63 MSH 2010 Insulin NPH 100 IU/ml 10ml 1 $ 4.20 $ 4.20 MSH 2010

(Buy) Salbutamol inh 100mcg 200 doses 1 $1.08 $1.08 ADF 2011 Beclometasone 100mcg 200 dose 1 $1.28 $1.28 ADF 2011 Aspirin (ASA) 100mg 30 $0.0019 $0.057 MSH 2010 Simvastatin 20mg 30 $0.0286 $0.858 MSH 2010 Hydrochlorthiazide 25mg 30 $0.0037 0.111 MSH 2010 Atenolol 50mg 30 $0095 $0.285 MSH 2010 Tamoxifen 20mg 30 $0.0732 $2.196 MSH 2010 Main Source MSH International Drug Price Indicator Guide 2010 (http://erc.msh.org/mainpage.cfm?file=1.0.htm&id=1&temptitle=Introduction&module=DMP&language=English )

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High prices, low availability and poor affordability can have many causes

• Low public sector availability: – lack of resources or under-budgeting– inaccurate forecasting– inefficient procurement / distribution– low demand/slow-moving products

• High private sector prices: – high manufacturer’s selling price– high import costs– taxes and tariffs– high mark-ups

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• Separate prescribing and dispensing• Control import, wholesale and/or retail mark-ups through

regressive mark-up schemes• Provide tax exemptions for medicines• Where there is little competition, consider regulating

prices • Patented medicines

– use the flexibilities of trade agreements to introduce generics while a patent is in force

– differential pricing schemes whereby prices are adapted to the purchasing power of governments and households in poorer countries.

Many policy options exist

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• Improve procurement efficiency• Ensure adequate, equitable, and sustainable financing, e.g.

– Health insurance systems that cover essential medicines

– Make chronic disease medicines available in the private sector at public sector prices

• Prioritize medicine budget, i.e. target widespread access to a reduced number of essential generic medicines for NCDs,

• Promote generic use: – preferential registration procedures, e.g. fast-tracking, lower fees– ensure the quality of generic products– permit generic substitution and provide incentives for the dispensing of

generics– educate doctors/consumers on availability and acceptability of generics

Other Policy options

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Total potential cost savings and average percentage savings that could be obtained from switching private sector consumption from originator brands to lowest-priced generics, for a limited basket of medicines

Country (n= number of medicines)Total potential cost savings (2008 USD)

Average percentage

savings across individual

medicines*

China, public hospitals (n=4) $86,492,276 65.1%

Colombia (n=9) $3,229,092 88.7%

Ecuador (n=12) $3,066,407 63.2%

Indonesia (n=9) $6,405,597 84.2%

Jordan (n=11) $887,262 55.9%

Kuwait (n=6) $64,261 9.3%

Lebanon (n=8) $4,397,432 67.5%

Malaysia, private hospital and retail sectors (n=10) $7,419,942 67.2%

Source WHR 2010 Chapter 4

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Total US generic market share has risen over each of the past 5 years

Generic Share of Total Prescriptions• Generic prescription share reached 78%

in 2010 which was 4% higher than 2009 levels.

• This share gain is caused by a 3% gain in the available market for generics (81 to 84% in 2010) as well as a 1% gain in generic efficiency (93% vs. 92%).

• Most states allow pharmacists to substitute generics when available, others require a doctor’s direct instruction or restrict substitution for specific therapies where differences between brands and generics may impact patients.

• The broad availability of discounted generics is a further positive influence on efficiency.

X

Source: IMS Health, National Prescription Audit, Dec 2010

COMPARISON OF 2010 VERSUS 2009 SPENDING

Chart notesPrescriptions dispensed include retail pharmacies and longterm care facilities.Generic prescription share represents the percentage of unbranded and branded generic prescriptions dispensed annually.Generic availability is measured by evaluation of products at the form level that have a comparable generic available on the market in the time period.Generic efficiency is calculated based on the percentage of generic prescribing of the generically available market.

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Source: IMD MIDAS, Dec 2010

X

Generic Share of Total Volume

Austria generic market dynamics

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Source: IMD MIDAS, Dec 2010

X

Generic Share of Total Volume

South Africa generic market dynamics

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Time to market after patent expiry is a key issue

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Brand Prescription Share of Molecule Post-Expiry

In US, Generics capture over 80% of a brand’s volume within 6 months

Source: IMS Health, National Prescription Audit, Dec 2010

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Austria brand erosion after loss of exclusivityAlmost no loss at 6 months and only 15% at 1 year

Austria Brand Volume Share of Molecule Post-Expiry

Source: IMS MIDAS Monthly, Mar 2011. *2010 curve contains incomplete periods.

% S

HA

RE O

F P

RE-E

XPIR

Y M

OLE

CU

LE T

OTA

L SU

MONTHS SINCE PATENT EXPIRY

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-1 0 1 2 3 4 5 6 7 8 9 10 11 12

2006 2007 2008 2009 2010*

S. Africa brand erosion after loss of exclusivity21% loss after 6 months & 34% after 1 year

S. Africa Brand Volume Share of Molecule Post-Expiry

Source: IMS MIDAS Monthly, Mar 2011. *2010 curve contains incomplete periods.

% S

HA

RE O

F P

RE-E

XPIR

Y M

OLE

CU

LE T

OTA

L SU

MONTHS SINCE PATENT EXPIRY

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Generic Market Shares 2010 Value & Volume

Generic pricing regimes affects savings!%

Total Market - Retail

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Generic market highly segmented and countries vary greatly!

• Company generics

• Branded Generics

• INN generics

• All coexist and compete for the same space

• National Policies must adjust to the national realities

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Even after patent expiration brands still retain a sizeable volume share in some countries

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

VO

LU

ME

MA

RK

ET

SH

AR

E %

SU

UNPROTECTED MARKET SEGMENTATION VOLUME (SU)

INN unbranded generics Branded generics Company branded generics Original brands

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Source: IMS Health, MIDAS, Market Segmentation, MAT Dec 2010, Rx only. *Market Segmentation universe

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Components of a generics policyPrerequisite: Quality assurance recognized by

prescribers & patients

"Generics policies" is a broad term comprising a heterogeneous set of specific practices, including:– Fast track registration: abbreviated and less costly

registration procedure for generics, Bolar provision– Procurement of medicines under INN or generic name; – Encouraged or mandatory prescribing by generic

name;– Generic substitution by pharmacists;– Information and incentives for generic utilization to

prescribers, pharmacists and consumers;– Selective financing of generics in positive lists,

reference price systems, procurement by tendering, IPR policies.

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Conclusions

• In all but high income countries out of pocket payment is the most frequent form of payment for medicines

• When health insurance is introduced and covers medicines they need to have generic policies in place

• Where people have to pay out of pocket generic policies individuals can reduce costs by about 60% and this could make the difference between death or impoverishment and survival.

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Questions?