A Practical Approach to Pharmaceutical Policy. World
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Public Disclosure Authorized DIRECTIONS IN DEVELOPMENT Human Development Public Disclosure Authorized A Practical Approach to Pharmaceutical Policy Andreas Seiter Public Disclosure Authorized Public Disclosure Authorized APAPP_i-xxii.qxd 5/21/10 11:45 AM Page i A Practical Approach to Pharmaceutical Policy APAPP_i-xxii.qxd 5/21/10 11:45 AM Page ii APAPP_i-xxii.qxd 5/21/10 11:45 AM Page iii A Practical Approach to Pharmaceutical Policy Andreas Seiter APAPP_i-xxii.qxd 5/21/10 11:45 AM Page iv © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved 1 2 3 4 13 12 11 10 This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this volume do not nec- essarily reflect the views of the Executive Directors of The World Bank or the governments they rep- resent. The World Bank does not guarantee the accuracy of the data included in this work. The bound- aries, colors, denominations, and other information shown on any map in this work do not imply any judgement on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development / The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: [email protected]. ISBN: 978-0-8213-8386-5 eISBN: 978-0-8213-8387-2 DOI: 10.1596/978-0-8213-8386-5 Library of Congress Cataloging-in-Publication Data Seiter, Andreas. A practical approach to pharmaceutical policy / Andreas Seiter. p. ; cm. — (Directions in development) Includes bibliographical references and index. ISBN 978-0-8213-8386-5 (alk. paper) I. Pharmaceutical policy. I. World Bank. II. Title. III. Series: Directions in development (Washington, D.C.) [DNLM: 1. Drug Industry—organization & administration. 2. Developed Countries. 3. Government Regulation. 4. Health Plan Implementation. 5. Health Policy—economics. QV 736 S462p 2010] RA401.A1S45 2010 362.17'82—dc22 2010015420 Cover photo: istockphoto.com Cover design: Naylor Design, Washington, D.C. APAPP_i-xxii.qxd 5/21/10 11:45 AM Page v Contents Foreword xi Preface xiii Acknowledgments xv About the Author xvii Abbreviations xix Chapter 1 Pharmaceutical Policy Goals1 Pharmaceutical Policy Framework 3 Parameters for Monitoring the Effect and Progress of Pharmaceutical Reforms 6 References 10 Chapter 2 Introducing the Stakeholders 11 Multinational Research-Based Companies 13 Multinational Generics Companies 18 National Generics Companies 21 Brokers 22 Procurement Agents 23 Importers and Agents 24 Wholesalers 25 Central Medical Stores 26 v APAPP_i-xxii.qxd 5/21/10 11:45 AM Page vi vi Contents Retail Pharmacists and Drug Sellers 27 Prescribers 28 Consumers 29 Public Policy Makers: Legislative and Executive 30 Regulatory and Executive Agencies 31 Expert Commissions and Advisers 32 Civil Society Organizations 32 International Agencies and Donors 33 Public Purchasers 35 Payers 35 Pharmaceutical Benefit Managers 36 Consultants 36 Notes 37 References 38 Chapter 3 Patterns of Dysfunction 39 Inadequate Regulation of Core Pharmaceutical Sector Functions 41 Lack or Misuse of Funds 44 Ineffective or Inefficient Procurement 45 Dysfunctional Supply Chains 48 Corruption, Abuse of Public Funds, and Unethical Business Practices 51 Inadequate Incentives for Providers and Policy Makers 53 Medicine Prices Perceived as Too High 59 Conflicts between Innovation and Cost Containment 66 Conflicts between Industrial Policy and Public Health Objectives 71 Irrational or Inappropriate Use of Drugs 73 A Tool to Assess the Sector and Diagnose Dysfunctions 75 Notes 77 References 78 Chapter 4 Key Elements of a Successful Pharmaceutical Policy 81 Ensuring Access to Safe and Effective Drugs through Well-Designed Supply Chains 82 APAPP_i-xxii.qxd 5/21/10 11:45 AM Page vii Contents vii Using Purchasing Power to Get Value for Money 93 Managing the Decision Process on Formulary Inclusion 97 Creating Adequate Information Systems 104 Ensuring Rational and Cost-Effective Use of Medicines 107 Securing Adequate Financing and Payment Mechanism for Pharmaceuticals 110 Reconciling Health Policy and Industrial Policy in the Pharmaceutical Sector 113 Ensuring Good Governance of the Sector 117 Notes 120 References 121 Chapter 5 Policy Packages to Achieve Strategic Long-Term Goals 123 Essential Medicines Policy 124 Generic Drugs Policy 126 Innovation-Friendly Drugs Policy 127 Combining Several Policy Models within One Country 128 Notes 129 Reference 129 Chapter 6 Factors Influencing Policy Implementation 131 Stakeholder Assessment and Involvement 132 Strategies to Neutralize Political Opposition 135 Note 137 Reference 137 Chapter 7 Pharmaceutical Policy Illustrated in Country Examples 139 Ghana: National Health Insurance as a “Game Changer” 139 Lithuania: Dealing with the Effects of the Financial Crisis 143 China: Improving Social Protection for the Rural Poor 145 Russian Federation: Affordability and Access to Essential Drugs 146 APAPP_i-xxii.qxd 5/21/10 11:45 AM Page viii viii Contents Liberia: Building Up after Conflict 147 Notes 149 References 149 Chapter 8 Pharmaceutical Policy Outlook 151 Regulatory Framework 151 Drug Prices 153 Financing and Management of Drug Benefits 154 Effect on Markets and Industry 155 General Trend: Convergence toward Models That Work 158 References 159 Appendix A A Tool to Assess the Pharmaceutical Sector in a Given Country 161 Appendix B Customized Version of the Assessment Tool (Appendix A) for Use in an Assessment of the Pharmaceutical Sector in Turkey 167 Part 1: Quantitative Data 169 Part 2: Descriptive Section 171 Appendix C Assessment Tool for Government Procurement Agencies in the Health Sector in India 175 Index 207 Boxes 1.1 Example of Target Setting in a Project Aimed at Improving Access to Medicines in a Low-Income Country8 2.1 A Tragedy in Panama, Caused by a Toxic Ingredient in Cough Syrup 21 3.1 Major Cost Drivers for Ensuring Drug Availability in Health Centers in Lesotho 50 3.2 Fraudulent Abuse of Health Insurance Funds in Germany 53 3.3 Example of Price Regulation in Practice 62 3.4 NICE: Example of an Institution Set Up to Manage the Conflict between Innovation and Cost Containment in Health Care 69 3.5 Access to Medicines and the TRIPs Agreement in Brazil 70 APAPP_i-xxii.qxd 5/21/10 11:45 AM Page ix Contents ix 4.1 Scope and Purpose of a Framework Contract 90 4.2 Creating a Secure Supply Chain in Liberia 93 4.3 Hypothetical Example of the Use of Purchasing Power to Ensure Availability of Low-Price Drugs to Patients with Health Insurance 95 4.4 Hypothetical Example of a Low-Cost Assessment Process for New Drugs 101 4.5 Sample Format for Ranking Drug X for Treatment of Acute Ischemic Stroke within the First 60 Minutes 103 6.1 Example of a Multistakeholder Process to Address Controversial Policy Positions 134 Figures 1.1 Emergence of Core Pharmaceutical Policy Objectives by Income Level2 1.2 Hierarchy of Laws, Regulations, and Implementing Agencies in the Pharmaceutical Sector5 2.1 Evolution of the Pharmaceutical Sector in Countries of Different Income Levels 13 3.1 Example of a Pharmaceutical Procurement Cycle 46 3.2 Incentives Influencing a Physician’s Prescribing Behavior 54 3.3 Components of the Retail Drug Price 60 4.1 Example of an Integrated Pharmaceutical Supply Chain 84 4.2 Example of a Public Sector Supply System 87 4.3 Collection of Prescribing and Drug Use Information at the Pharmacy Level 105 5.1 Three Levels of Pharmaceutical Policy 124 5.2 Standard Elements of an Essential Medicines Policy 125 5.3 Standard Elements of a Generic Drugs Policy 126 5.4 Standard Elements of an Innovation-Friendly Drugs Policy 128 6.1 Model Process to Secure Acceptance for a Difficult Reform Project 136 7.1 Increase in Turnover of Revolving Drug Funds after Introduction of NHIS in Ghana 141 Tables 2.1 Top-10 Pharmaceutical Companies by Sales, 2008 16 3.1 Links between Enforcement of Drug Regulation and Access to Medicines 43 APAPP_i-xxii.qxd 5/21/10 11:45 AM Page x xContents 3.2 Typical Problems in Pharmaceutical Procurement and Their Consequences 47 3.3 Common Patterns of Irrational Drug Use and Their Likely Causes 76 4.1 Negotiated Solutions to Limit Prices of Patented Drugs 96 4.2 Payer-Side Data for Decision Makers 105 4.3 Improving Rational Use of Medicines 108 4.4 Comparison between Government-Run Health Service and Third-Party Fund 112 4.5 Industrial Policy versus Public Health Policy 116 4.6 Strategies for Dealing with Governance Issues in Low- and Middle-Income Settings 119 6.1 Likely Stakeholder Positions toward a Reform That Aims at Greater Compliance with Guidelines for Rational Use of Drugs 133 7.1 Ghana: Pharmaceutical Sector Data, 2008 140 7.2 Pharmaceutical Sector Challenges in Ghana 142 8.1 Likely Trends in the Pharmaceutical Sector, 2010–20 158 APAPP_i-xxii.qxd 5/21/10 11:45 AM Page xi Foreword Recent decades have seen miraculous progress in developing drugs and medicines that save lives, treat illness, and protect families and communi- ties from the devastating loss of parents and breadwinners.