UN health agency launches manual on medicine pricing in effort to lower costs

In an effort to lower the cost of medicine the United Nations health agency today released a new manual, outlining how to collect data for 30 widely used medications to identify how prices for patients are determined.

The manual, Medicine Prices, released in Geneva by the UN World Health Organization (WHO) and Health Action International (HAI), a non-profit network of health and consumer groups in more than 70 countries, will particularly benefit governments, consumer associations, non-governmental organizations (NGOs) and other groups in purchasing medicines by providing information on price composition and price differences.

It proposes a price survey methodology, suggests how to analyze price data, and identifies broad policy options to achieve more affordable prices. In short, it will allow buyers and procurers of medicines to make more informed, cost-effective choices, and will contribute to global knowledge on medicine pricing, WHO said.

Medicine prices vary between countries and regions. In developing countries, where poverty places medicines out of reach of one-third of the population, people who do have some access sometimes pay more than in industrialized countries for the same medicine. Most of this money is paid out-of-pocket, as health insurance is often lacking.

The manual offers a new approach to measuring the cost of medicines. Among other things, it encourages comparison of prices of innovator brand products with their generic equivalents. In field tests, 30 days of ulcer treatment with the innovator brand of ranitidine was found to cost the equivalent of 50 days' wages in Cameroon and 20 days in Kenya, while the generic ranitidine cost 24 and eight days' wages respectively.

The manual also highlights the difference between procurement and consumer prices. The latter include mark-ups, taxes, tariffs and other charges. Pilot-testing in Peru showed that local cost add-ons raised the imported price of generic ranitidine from $2.90 for 20 tablets to $7.20 retail.

Analysis of price components allows greater clarity on whether price differences originate with manufacturers, local distribution systems, dispensing fees, taxes and other local factors. Field tests in a number of low- and middle-income countries show that the consumer price of nifedipine, a drug used for hyper-tension, is six times higher in South Africa than in Brazil, with intermediate prices found in Ghana and the Philippines.

It is not unusual for people in developing countries to pay more for medicines than consumers in industrialized countries, both in relation to their income and even in absolute terms. In 2000, lamivudine, used in the management of HIV/AIDS, was found on average to be 20 per cent more expensive in Africa than in 10 industrialized countries. Average income levels in Africa are about 2 per cent of those in the high income industrialized countries, so the difference in affordability is severe.