Health Knowledge Zone
  print 
  Myths & Facts of Pharmaceutical Industry : Episode1 - Drug Price Bookmark and Share

Table of Contents

   Episode 1: Drug Price
  -  Myth: Medicines are expensive in Thailand
  -  Myth: Multinational Pharmaceutical companies can set their own prices

 Episode 2: Industry Profits
  -  Myth: The pharmaceutical Industry is the most profitable industry
  -  Myth: A member of the pharmaceutical industry participated in a THB 1 million per head dinner

 Episode 3: Drug Research & Development
  -  Myth: The pharmaceutical industry invests only 5% in R&D while marketing expenditure was as high as 13%

 Episode 4: Patent and Compulsory Licensing
  -  Myth: Patent prevents access to medicine and results in the high prices of medicine
  -  Myth: CL can be declared in non emergency situations
  -  Myth: The USA, Canada and Italy have all declared CL

Myth: Medicines are expensive in Thailand

Fact:

The prices of medicines in Thailand are not expensive in comparison to other countries


Detail

  • For example; the price per unit of a 600 mg dosage of Efavirenz - an anti-HIV medication was THB 400 in the US whilst the price offered to Thailand was THB 26 (Exchange rate USD1:THB34): a clear price differential of 15 times in favour of Thailand   (Source: Data from MSD)    
  • In 2003, the price per unit of a 200 mg dosage of Efavirenz - an anti-HIV medication was THB 120 in the US whilst the price offered to Thailand was THB 20[1]
  • Comparatively, table1 demonstrates a corresponding 6 times differential of the GDP (PPP) per capita between Thailand and the US[2]
  • A comparative study entitled - Medicine prices, availability, and affordability in 36 developing and middle-income countries revealed that the MPR* for South East Asian Nations are lower than all the other regions studied[3]

    * Medicine Price Ratio (MPR) = median local unit price divided by the international reference unit price (where the international reference unit price is the median of recent procurement or tender prices offered by for-profit and not-for-profit suppliers to international not-for-profit agencies for generic products[4]

  • In the same study series between the period of 2005 and 2006, the Thai public hospital procurement prices were less than equivalent lower-middle-income economies including the Philippines and the PRC (Table3)
  • Further, a recommendation from the study indicated that: The Government procurement prices of some generics were lowToo low prices could result in problems of quality and improvement of Thai local manufacturers in the future The study suggested that Appropriate drug pricing strategy should be employed to create benefits rendered to both buyers and manufacturers. [5]

Table 1 A comparison of the GDP (PPP) per Capita between Thailand and the US

Countries GDP (PPP) per capita  (Current international dollar)
2006 2007 2008
Thailand 7,407.368 7,925.687 8,224.625
U.S 44,118.967 45,778.446 46,859.058
U.S : Thailand 5.96 5.78 5.70

Table 2 Median price ratios of originator brands and lowest-priced generics in the private sector, and of lowest-priced generics in the public sector, by WHO region[6]


Region
Patient price for original brand in private sector Patient price for lowest-priced generic in private sector Patient price for lowest-priced generic in public sector
Africa 62.92 21.23 6.79
America 52.66 25.21 3.18
Eastern Mediterranean 24.54 13.75 6.88
Europe 24.96 8.69 8.19
South East Asia 21.28 9.61 6.84
Western Pacific 34.21 11.25 11.95

Table 3 A comparison of the MPRs between the procurement prices of both public and private hospitals for both originator and the lowest priced generic products.


Countries
Original Brand Lowest-priced Generic
Procurement price in public sector Patient price in public sector Procurement price in public sector Patient price in public sector
Thailand[7] 3.30 4.36 1.46 2.55
Philippines[8] 14.19 15.31 5.14 6.40
China[9] 5.48 7.20 1.52 2.03

 


Myth: Multinational Pharmaceutical companies can set their own prices

Fact:

 In general, pharmaceutical companies must take several factors into consideration when determining prices; these range from; the cost of each particular grade and type of raw materials varying greatly from the cheapest chemical to the most sophisticated biological products; the cost of rigorous quality assurance and quality control; the cost of educating users and the cost of post launch pharmacovigilance for long term adverse reactions. In addition, due consideration is also given towards the incremental therapeutic benefits from the innovative product in comparison to existing therapies; for example, the value of a non-sedating anti-histamine to the productivity of the patient vs sedating anti-histamine.


Detail

  • Internal price referencing and the related discipline of Pharmacoeconomics** which involve quality analyses of the value of a new medication in terms of the incremental effectiveness in comparison to other available therapies has long been critical to price determination

    ** Pharmacoeconomics is a financial decision making tool utilized by the public health system when selecting medicines[10]

  • Under certain circumstances, MNCs may utilize the method of External Price Referencing[11]which delineates the economic capacity of nations into similar groupings for example; Thailand, Indonesia, the Philippines, Columbia and the PRC are collectively categorized as Lower-middle-income economies.

Reference

Back

Comment

PReMA on Twitter

PReMA on Facebook