Too often, government price controls have the effect of pushing up drug prices so that they become unavailable and unaffordable to the very populations they are designed to help, an international conference has heard.

In many countries, the addition of taxes, wholesale and retail mark-ups, doctors’ fees and other price components frequently mean that branded medicines are cheaper and more widely available than their generic versions, according to Richard Laing of the World Health Organization. He was speaking in Vienna, Austria, at a meeting to launch Pharmaceutical Pricing and Reimbursement Information (PPRI), a project backed by the European Commission and the Austrian government which aims to improve the exchange of information and knowledge transfer about drug pricing and reimbursement in the enlarged European Union.

Dr Laing quoted examples from Medicine Prices, the joint project begun by the WHO in 2003 with Health Action International to collect information on the prices which people actually pay for key medicines, assessing their affordability by using the public-sector procurement prices and prices to patients in both the public and private sectors to calculate the number of days which each country’s lowest-paid unskilled government employees would need to work to afford 30 days’ treatment. In many countries, 50%-80% of the population earns less than this, he added.

So far, the project has undertaken more than 40 national price surveys in all WHO regions, and has discovered that some countries have set prices to patients at levels which have the purpose of, for example, protecting the industry, providing revenues for hospitals or funding the development of national health services.

The mark-up on generic products can be considerably more than on originator products, the study shows; eg, in Malaysia’s private pharmacy market, 50% of the 24 ringgit (around £3.45) which a patient pays for generic atenolol 50mg goes to the retailer, compared with 20% for the originator version, which costs the patient 72 ringgit. Moreover, 60% of the price of generic atenolol obtained in Malaysia from a dispensing doctor for 32 ringgit goes to the doctor, whose percentage for dispensing the originator product (cost to the patient 94.29 ringgit) is 44%.

Governments in poorer countries must adopt pricing policies for generic products which differ from those for innovative, patented, single-source drugs, said Mr Laing. They should also abolish taxes on essential medicines, separate prescribing and dispensing functions and control pharmacists’ remuneration, linking this to the service provided and not the value of medicines. Where there is little competition, government could consider regulating prices, from the manufacturer’s selling price to margins in wholesale and retail, although he agreed with other speakers that price controls tend to increase the prices of generics, with the officially-set maximum retail price frequently becoming the minimum retail price.

Problems also in rich countries

Problems of accessibility and availability are not confined to developing countries, the meeting heard. While access to medicines is not a pressing concern for most Organization for Economic Cooperation and Development member nations, availability does become a problem, for example, when a manufacturer decides not to sell a product in Canada because of the fear of cross-border trade, said OECD spokeswoman Elizabeth Docteur. How many products are listed on a particular market does not tell you all you need to know about availability, she added.

Thomas Cueni, head of the Swiss industry association Interpharma, agreed, and pointed to the public condemnation in England and Wales when the National Institute for Health and Clinical Excellence fails to recommend that the National Health Service should provide access to certain new drugs. He also attacked the German price system’s “jumbo” groups, in which patent-protected drugs are grouped together with generics for the purpose of setting reference prices which, he said, pulls down the prices of innovator produces while forcing up price levels for generics.

Reference pricing has also caused problems in Cyprus, which introduced a new policy of basing pharmacy purchase prices for medicines on four reference countries, added Athos Tsinontides of Cyprus’ Health Insurance Organisation. Problems have included continuous changes in some reference countries’ price lists, difficulties in understanding the “special conditions” applying to some products, lack of prices for hospital-only products and that fact that not all products sold in Cyprus are available in all four reference countries.

Having only one reference country nullifies the whole effect of reference pricing, he said; if the price in the single reference country is high, then this forces a high price in Cyprus, while if it is low, a product whose price was already low would decrease further and could, consequently, disappear from the market.

The PPRI report, which will include individual country reports (“Pharma Profiles”) and a comparative analysis based on the Profiles, will be available in the third quarter of this year. By Lynne Taylor