CIF Pharmaceutical Price and Availability Study (Fifth Wave Results)

The Curatio International Foundation has released the results of the fifth wave of the Pharmaceutical Price and Availability (PPA) study in Georgia. The study set out to generate further evidence regarding pharmaceutical prices and availability in the country through the continuous monitoring of the prices of medicine. One of the chief aims of the study is to inform and strengthen health policy and contribute to evidence-based discussions around current trends and processes in pharmaceutical market in Georgia.

The study analyzes the current, as well as the previous four waves of the PPA studies that have been conducted by CIF since 2009. The main findings of the research responds to two important questions:

  1. What is the trend of physical and financial availability for Generic (LPG) and Originator rand (OB) drugs in Georgia, and how is the treatment cost linked to the availability?
  2. How is Georgia’s pharmaceutical sector being developed after the introduction of the new prescription policy?

The answers to these questions are available in the main findings of the study:

Main Findings

AVAILABILITY

  • Currently, OB availability is almost two-times higher compared to LPG
  • The observed trend in decreased LPG availability can be attributed to several factors:
    • Insufficient knowledge and/or trust in the quality of LPGs among consumers and providers
    • Low demand for LPGs among the population caused by physician reluctance to prescribe generic medicines
    • The revenue-maximizing strategy of pharmaceutical suppliers
TRENDS IN PRICING STRATEGIES
  •  It is likely that increased competition caused by legal changes in the country’s drug laws in late 2009 determined the downward trend in the OB prices observed during 2009-2012 waves, albeit OB prices rebounded and significantly increased in 2016
  • OBs are largely imported from western countries. Therefore, it is possible that the price increase documented in 2016 can be partially attributed to the significant devaluation of the country’s national currency against the USD and Euro that began in late 2014, and continued throughout 2015. Consequently, OB prices increased in both pharmacy networks and in independent pharmacies
  • In 2015, MoLHSA initiated a new prescription policy with the aim of reducing the level of irrational drug use in the Country. The importance and/or need for prescription system introduction is unquestionable, like in many other countries; however, the insufficiency and/or lack of the necessary instruments for the effective operation of the system most likely allowed pharmaceutical companies to use this initiative to further increase their profits. This assumption is supported by the fact that while in 2012 markups were largely comparable for prescription and non-prescription drugs, in 2016, we observed significant changes in behavior. Namely, markups for prescription OBs are now 89% higher compared to non-prescription OBs, and markups on prescription LPGs are currently 210% higher compared to non-prescription LPGs
  • Surprisingly, locally-manufactured LPGs are sold at a higher price compared to their imported equivalents, most likely affording greater profit potential to local manufacturers. Along with the marketing strategies used by the largest retail networks (also linked to local manufacturing), the promotion of locally-produced drugs over imported drugs helps local producers effectively use their market power in a poorly-regulated marketplace
EMERGING POLICY RECOMMENDATIONS

A single policy intervention in a complex pharmaceutical market like Georgia’s will most likely fail to meet its objective i.e. a reduction in costs to the public, and improved access to pharmaceuticals. Therefore, the government needs to immediately implement a multi-pronged policy to better address the issue.

This policy should include the following:

  1. The introduction of reference pricing on the market – the government can achieve this by learning from other countries’ (high/low/middle-income) experiences and best practices. Through observing others’ experiences, the most appropriate reference pricing methodology can be utilized to further facilitate the regulation of drug prices in the country.
  2. Encourage the use of generic prescription drugs and enforce the generic substitution in the prescription of medicines.
  3. Introduce strict rules and controls for drug promotion, marketing, education, and sponsorship gifts to doctors.
  4. Enhance pharmaceutical market monitoring to adequately adjust for weaknesses in the policy or its implementation.

The full report is available here.

 About the Study

The study was conducted using World Health Organization (WHO) standard methodology. The survey looked at the prices and mark-ups of 52 medicines (brand-name medicines and their generic equivalents) in six regions of Georgia.

CIF has been conducting the PPA study since 2009. The results of the study’s previous waves were released in 2010, 2011, 2012 and 2014.

 

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