75% of WHO essential medicines could be cheaper: UK and South Africa both overpay
Polly Clayden, HIV i-Base
Most medicines in The WHO Model List of Essential Medicines (EML) can be manufactured and sold profitably at very low cost in all countries – according to an analysis published in BMJ Global Health, 29 January 2018.
The EML, created in 1977, includes medicines judged to be necessary for functional health systems. But many are unaffordable in nearly all low-income countries and some middle-income countries.
Andrew Hill and colleagues conducted an analysis to estimate generic prices for all medicines in solid oral dosage forms included in the EML. This group have previously used similar methods to analyse production costs for viral hepatitis, tuberculosis (TB) and cancer drugs.
The authors developed a generic price estimation formula by reviewing published analyses of cost of production for medicines and assuming manufacture in India – including costs of formulation, packaging, tax and a 10% profit margin.
They retrieved data on per-kilogram prices of active pharmaceutical ingredient (API) exported from India from an online database (infodriveindia.com). They then compared these estimates with the lowest available prices for HIV, TB and malaria drugs worldwide, and current prices in the UK, South Africa and India.
They were able to calculate production costs and estimated generic prices for 148/197 (75%) of medicines on the EML, showing that most essential medicines can be manufactured at low cost. Although most medicines on the EML are off-patent, they found 214/277 comparable prices in the UK, 142/212 in South Africa and 118/298 in India to be greater than the price expected based on production costs and a 10% profit margin.
The estimated generic prices ranged from US$0.01 per tablet (glyceryl trinitrate 500 μg) to US$1.45 per tablet (darunavir 800 mg), and were strongly skewed towards lower prices in the range.
The authors found a strong correlation between the estimated generic prices with current global lowest prices for HIV, TB and malaria drugs. Lowest available prices were higher than estimated generic prices for 214/277 (77%) of comparable products in the UK, 142/212 (67%) in South Africa and 118/298 (40%) in India. Lowest available prices were over three times the estimated generic price for 47% of products compared in the UK and 22% in South Africa.
Overall the authors concluded that most items in the WHO EML are sold in the UK and South Africa at significantly higher prices than those calculated from production costs. “Generic price estimation and international price comparisons can be expanded to empower government price negotiations, and to support cost-effectiveness calculations at international and national levels. Assuming an absence of barriers to market entry, a wide range of the drugs on the EML can be profitably sold at very low prices in all countries” they wrote.
This analysis is excellent, contains a wealth of supplementary information and is worth reading in full.
Generic competition (and huge demand) led to massive price reductions for antiretrovirals in the early 2000s.
Similar price reductions for more medicines would enable wider treatment of other diseases in low- and middle-income countries.
Hill AM et al. Estimated costs of production and potential prices for the WHO Essential Medicines List. BMJ Global Health. DOI: 10.1136/bmjgh-2017-000571. 29 January 2018.