Improving Medicines Quality in LMICs: Role of Market and Financing Institutions

January 15, 2020


Poor quality medicines pose significant risks to global health. They add substantial health, social, and economic burden on individuals and communities. Poor quality medicines can prolong illness, contribute to drug resistance, increase the cost of health provision, and lead to higher mortality. According to some estimates, poor quality medicines cause about 70,000 excess deaths from childhood pneumonia and roughly 8,500 to 20,000 deaths from malaria every year in sub-Saharan Africa. Unsafe food takes a similar toll–estimates show that over 400,000 people a year mostly in low- and middle-income countries die from unsafe food. (While fully acknowledging that addressing the problem of food safety is equally important, this blog focusses on medicines quality). Ensuring the safety and quality of food and medicines should be an important component of global health.

Today, the National Academies released a new consensus expert committee report titled Stronger Food and Drug Regulatory Systems Abroad. This report lays out clear recommendations to global, national and agency level stakeholders which can help strengthen food and medical products regulatory systems in low- and middle-income countries. Having been part of this consensus expert committee and two earlier NASEM expert committees on related topics (Ensuring Safe Foods and Medical Products Through Stronger Regulatory Systems Abroad 2012 and Countering the Problem of Falsified and Substandard Drugs 2013), it is exciting to see the considerable attention this field has received from researchers, global and national policy makers in the last decade. However, strengthening quality regulation in LMICs continues to be generally neglected by global donors and development financing institutions.

Limited Global Donor Interest in Quality Improvement

For donors to invest in building/strengthening regulatory institutions in low- and middle-income countries, we need more measurable outcomes of regulatory system strengthening and quality improvement initiatives/projects. While more research is needed in this area, the WHO’s Global Benchmarking Tool can help identify specific improvement initiatives with defined and measurable outcomes. In principle, the ability to break down the range of activities (sometimes overwhelming) required to improve medicines regulation into specific targets with defined time periods for implementation should lend itself for 3-5 year projects with clearly defined outcomes- the type of project which are the mainstay of what development agencies fund. So it remains unclear why there is limited uptake of this idea. The National Academies’ report provides additional insights on what may be needed to make this more mainstream.

Global Tools and Division of Roles and Responsibilities

Medicines supply chains are increasingly global. As a result, ensuring quality is a combination of global and national roles and responsibilities. Regulators in LMICs must be more receptive to the use of global tools and embrace work sharing and international cooperation in this sphere. The National Academies’ report lays out a series of recommendations on how regulatory agencies in LMICs can improve their efficiency by making use of global decision support tools, and coordinating activities that can be carried out through regional or international collaboration

Role of Development Finance in Creating Market Incentives for Quality

While international cooperation, and national regulatory strengthening (through domestic and global donor efforts) are crucial to this effort, it is important to recognize that improving quality of medicines may require more than just well-equipped regulatory agencies. Pharmaceutical manufacturers; wholesalers and distributors; retailer pharmacists and drug shops in LMICs don’t always realize the business value of investing in higher quality and meeting national or global quality standards. For some of these value chain actors, adhering to higher quality standards requires some investment–in production and laboratory technology, trained personnel, better distribution infrastructure, and better data/information technology systems. Often, the willingness of domestic payer/purchasers and end-patients to pay for higher quality is too low, weakening the business case for investing in higher quality standards. This dynamic can keep the overall system in a state of lower level equilibrium where the demand-side is not willing to pay for higher quality and as a result the supply-side isn’t increasing quality. Stronger quality regulation alone cannot overcome this. The few manufacturers, wholesaler/distributors, and retailers who genuinely want to change competitive dynamics in the local market by adhering to higher quality standards and investing in quality systems, do not receive any advantage in the market for fixed and working capital. Local commercial banks and capital markets do not provide any preferential lending for the quality enhancement efforts of manufacturers/distributors/retailers operating in the local market. (This may be different for manufacturers who focus exclusively on the export market).

Development finance institutions can make the investment/business-case calculus work in favor of market actors who invest in higher quality standards. While they cannot (and should not) alter the fundamental viability of a business operating in the medicine value chain, if a manufacturer, distributor or retailer with a commitment to higher quality is facing unnecessary obstacles to accessing finance for their investments in quality standards, development finance institutions can create priority lending practices for such projects. They can also provide information/advisory services regarding the long term business case for investing in higher quality. The report underscores the role development finance institutions such as IFC, UK’s CDC, and US-DFC can play in helping actors along the distribution chain meet regulatory standards. One recent example of such an effort comes from the food safety sector. In its recent investment in Twiga Foods, a Kenyan-based technology food distribution platform, IFC included a specific approach to bring Twiga’s food safety practices to meet global standards. IFC will advise the company on food safety and quality management systems in its produce handling facilities and the investment will cover Twiga’s staff being trained on internationally-accepted practices. Such investment approaches are also needed for the medicine distribution chain.

A key factor in the sustainability of DFIs investing in such initiatives will be whether investing in higher quality does contribute to superior financial performance for the company. In the absence of long-term revenue benefits, DFI investments in quality improvement activities will only be of marginal relevance to them. Therefore, for this to function in the long run, payers and regulators will have to do their part well i.e. strong enforcement by regulators to shut down poor quality producers, and payers/purchasers not purchasing from low quality producers. As with most system improvements, changes in different sub-components of the system are complementary (and sometimes pre-requisites for the whole of the system to get better).

I sincerely hope the new National Academies’ report forces more thoughtful dialogue and debate on this important issue.

The view expressed in this blog are of the author and do not necessarily reflect those of the National Academies’ Consensus Committee.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.