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How to Cite Complete Issue More Information About This Article Revista de Economía del Rosario ISSN: 0123-5362 ISSN: 2145-454X [email protected] Universidad del Rosario Colombia Herrera Ballesteros, Víctor H.; Moreno Velásquez, Ilais; Conte, Eric I.; Hall, Cecilio N.; Gómez, Beatriz Essential and Orphan Drugs in Panama: Perception of Competition and Implications of Pricing Policy* Revista de Economía del Rosario, vol. 23, no. 2, 2020, July- Universidad del Rosario Colombia DOI: https://doi.org/10.12804/revistas.urosario.edu.co/economia/a.9179 Available in: http://www.redalyc.org/articulo.oa?id=509563753003 How to cite Complete issue Scientific Information System Redalyc More information about this article Network of Scientific Journals from Latin America and the Caribbean, Spain and Journal's webpage in redalyc.org Portugal Project academic non-profit, developed under the open access initiative Revista de Economía del Rosario. Vol. 23. No. 2. Julio-Diciembre 2020. 115-134 Essential and Orphan Drugs in Panama: Perception of Competition and Implications of Pricing Policy* Received: October 28, 2019 – Accepted: February 10, 2020 Doi: https://doi.org/10.12804/revistas.urosario.edu.co/economia/a.9179 Víctor H. Herrera Ballesteros** Ilais Moreno Velásquez*** Eric I. Conte*** Cecilio N. Hall*** Beatriz Gómez*** Abstract We measured the perception of competition in the market for essential and orphan drugs. The inflation rate for original products was 0.002 annually, whereas that for generic drugs was 0.005. The province of Panama, containing 46.5 % of private pharmacies, has the lowest index in the perception of competition; 18 % of the respondents to the out-of- pocket expenditure survey did not have drugs available, and 55 % could not afford them. The Gini coefficients were 0.40 (2014) and 0.76 (2017). The increase in prices, the relative independence of retailers to establish prices, and low access to social/private insurance increase the out-of-pocket expenses. Keywords: Economic competition, generic drug policy, orphan drug, pharmacy, therapeutic equivalency. JEL classification: H5 National Government Expenditures and Related Policies: H51, H53, H55. * The authors declare no ethical or economic conflicts of interest. This research was covered by the public research fund of the Gorgas Memorial Institute of Health Studies. ** Universidad de Panamá, Departamento de Teoría y Desarrollo Económico. Corresponding author. Email: [email protected] orcid: 0000-0002-4756-4108 *** Gorgas Memorial Institute for Health Studies, Panama City, Panama. To quote this article: Herrera Ballesteros, V. H., Moreno Velásquez, I., Conte, E. I., Hall, C. N., & Gómez, B. (2020). Essential and Orphan Drugs in Panama: Perception of Competition and Implications of Pricing Policy. Revista de Economía del Rosario, 23(2), 115-134. h t t p s :// doi.org/10.12804/revistas.urosario.edu.co/economia/a.9179 © Revista de Economía del Rosario. Universidad del Rosario. ISSN 0123-5362 - ISSNE 2145-454x 116 Essential and Orphan Drugs in Panama Medicamentos esenciales y huérfanos en Panamá: percepción de la competencia e implicaciones de la política de precios Resumen Medimos la percepción de competencia en el mercado de medicamentos esenciales y huérfanos. La tasa de inflación de los productos originales fue de 0.002 anuales, mientras que la de los medicamentos genéricos fue de 0.005. La provincia de Panamá, que contiene el 46.5 % de las farmacias privadas, tiene el índice más bajo en la percepción de competencia. El 18 % de los encuestados en la encuesta de gastos de bolsillo no tenía medicamentos disponibles y el 55 % no podía pagarlos. Los coeficientes de Gini fueron 0.40 (2014) y 0.76 (2017). El aumento de los precios, la relativa independencia de los minoristas para establ- ecer los precios y el bajo acceso al seguro social/privado aumentan los gastos de bolsillo. Palabras clave: competencia económica, política de medicamentos genéricos, medicamentos huérfanos, farmacia, equivalencia terapéutica. ClasificaciónJEL : H5 National Government Expenditures and Related Policies: H51, H53, H55. Medicamentos essenciais e órfãos no Panamá: percepção da concorrência e implicações da política de preços Resumo Medimos a percepção de concorrência no mercado de medicamentos essenciais e órfãos. A taxa de inflação dos produtos originais foi de 0.002 anuais, enquanto a dos medicamentos genéricos foi de 0.005. A província do Panamá, que contém o 46.5 % das farmácias privadas, tem o índice mais baixo na percepção de concorrência. O 18 % dos inqueridos na enquete de despesas de bolso não tinha medicamentos disponíveis e o 55 % não podia pagá-los. Os coeficientes de Gini foram 0.40 (2014) e 0.76 (2017). O aumento dos preços, a relativa independência dos retalhistas para estabelecer os preços e o baixo acesso à segurança social / privada aumentam as despesas de bolso. Palavras-chave: concorrência económica, política de medicamentos genéricos, medicamentos órfãos, farmácia, equivalência terapêutica. ClassificaçãoJEL : H5 National Government Expenditures and Related Policies: H51, H53, H55. Revista de Economía del Rosario. Vol. 23. No. 2. Julio-Diciembre 2020. 115-134 Víctor Herrera, Ilais Moreno, Eric Conte, Cecilio Hall, Beatriz Gómez 117 Introduction The upward price increase in both generic and original products after the release of cap prices in 2004, whereby the market was left to free supply and demand, has left reasonable doubts as to the effectiveness of this measure. So the importance of addressing this problem goes beyond the structural characteristics of the Panamanian market, making it necessary to investigate aspects related to the conduct of economic operators along the marketing channel, as well as how the perceived competition environment, in addition to the degree of independent pricing in the retail segment. Concerning orphan drugs sold in hospitals in general, there is no clear idea of whether there are policies regarding the management of lists in pharmacies, distributor companies, and manufacturers. These drugs are essential for the treatment of rare diseases. This aspect has been a great conflict between patients and the public health system in Panama, and even in other countries of the Americas, regarding their supply. Given these facts, it is necessary to carry out a comprehensive analysis of public policies, regarding the functioning of the drug market, in the context of social inefficiency. Panama is one of the countries of the Americas with one of the worst distributions, drug supply problems, and access to out-of-pocket spending in the private sector, which is a complex problem to consider in the forthcoming reform of the public health and social security system, under a model common to that of many countries in the Americas, such as Chile, which makes it necessary to open up the debate on national drug policy in the current circumstances. While there are publications on the drug market in different parts of the world, they do not generally address certain particular aspects of countries that, as in the case of Panama, are importers of medicines, and small econo- mies such as those of Central America, which share common realities in the face of this problem. In general, many countries in the Americas continue to face health services’ inequality in the health sector; alternatives to this problem have been sought, focused on comprehensive reforms supported by international organisations such as the World Bank, the World Health Organization (who) or Pan American Health Organization (paho) (Vargas et al., 2008). Drug marketing is complicated due to its implications for social equity in health and its strong influence on the budgets of public health systems Abdel( Rida & Ibrahim, 2018; Martín-Conde, Tévar Alfonso, & García García, 2011; Gorgas, 2014). Since 2004, Panama has had a policy of prices established for Revista de Economía del Rosario. Vol. 23. No. 2. Julio-Diciembre 2020. 115-134 118 Essential and Orphan Drugs in Panama free supply and demand in the medicines market, in which it is expected that generic medicines will generate greater price competition than innovative medicines (Gorgas, 2014). The use of this competitive scheme continues to generate debate, regard- ing its efficacy for prices and medications’ access, particularly for those living in low-income regions, in which the approaches of market regulation and competition policy are contrasted under imperfect market structures (Lobo, 2014; Oliva, 2015). Furthermore, the current situation with orphan drugs is challeging; the low incidence of rare diseases results in very high prices in the private market, increasing the budget pressures on the public health systems. In general, orphan drugs are for hospital use, they acquire them directly from the distributors for their internal use, and few of these medications are sold directly to the public. Panama has not escaped from this reality, and in the last three decades, the country has followed a scheme that has shifted from regulated prices to, in 2004, prices set for free supply and demand. In 1969, a system of price regula- tion, by means of the Decree No. 60, was launched, and it ended with the Law 29 of 1996 (repealed by Law 45 of 2007), moving to a system of regulation by exception when merited by the specific case Asamblea( Nacional de Panamá, 1969, 1996, 2007). Law 1 of 2001 established the previous and subsequent control of medicines as well as the bioequivalence, surveillance, and safety of medicines (Ley 1 de Medicamentos, 2001). Its article 102 established a price ceiling system
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