By Shahbaz Alam, ContributorIN RECENT years, pharmaceuticals sales have grown rapidly in most countries. In 2001, global sales grew by 12 per cent. North America and Europe were the dominant markets and the main engine of growths. Governments and health care payers have pursued aggressive cost-containment strategies in 2002 and onwards by introducing various measures.
U.S improved access to medicines for low-income seniors and disabled persons have been the dominant theme in health care funding news in 2002 and 2003. The federal government, individual states, and the pharmaceutical industry have all proposed initiatives designed to ensure that the needy can afford essential prescription drugs.
NO SINGLE MARKET IN SIGHT
Because of profound differences in national health care system, a single Europe market for pharmaceuticals remains a distant, and perhaps unattainable, dream. Nevertheless, several common trends have been discernible in Europe this year.
Price differences within Europe have fuelled pharmaceutical parallel trade (that is, the import of medicines from a low-priced country to a higher-priced country). One estimate suggests that this trade costs pharmaceutical companies more than $2 billion per year in lost revenues. Manufacturers have tried various strategies to impede parallel trade, but most measures have had only limited success, and some have been ruled illegal.
Manufacturers would set a single European ex-factory price for new drugs but then negotiate discounts on this price to meet the needs of each national market. Most European countries exercise for reimbursable prescription medicines. The Europeans hope that a uniform acquisition price throughout Europe will eliminate wholesalers' potential to engage in parallel trade.
Most European government are also promoting greater use of generic drugs in order to reduce pharmaceutical spending. The German government has implemented a controversial generics substitution laws that currently covers 176 molecules available as generics. Pharmacists who receive a prescription for one of these molecules must substitute a product from the bottom third of the price range for the molecule.
The French government likewise encourages generic substitution by pharmacists and recently introduced incentives for physicians to use international non- proprietary names (INNS) on at least 25 per cent of the prescriptions.
Many European countries now use reference pricing, the setting of a maximum reimbursable price for certain drugs (usually molecules that are no longer patent protected) to produce prices and promote the use of generics. Several southern European countries are among the most recent converts to reference pricing. Spain has introduced such a system in 2000, and Italy did so in 2001. The French government plans to follow the suit.
FUTURE OUTLOOK
In the near future, we are likely to see an increased polarisation of the global pharmaceutical market. This will affect us in Jamaica. In most of the developing countries, the price of the drugs are not as high as in Jamaica. We should encourage use of generic drugs wherever possible and should encourage import from low-cost drugs producing countries. This way we would be in a position to contain the prices of prescribed medicines.
Shahbaz Alam is a bio-statistical researcher at the University of the West Indies; email: yourhealth@gleanerjm.com.
