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With shifting disease burdens, growing populations, and rising expectations comes a greater focus on value for money. International health funders and agencies want to know how to make the most of money spent by focusing on the highest impact interventions among the most affected populations. Whether through better procurement systems for health commodities, results-based financing, or more detailed assessments of the effective ness of health technology, CGD’s work aims to make health funding go further to save, prolong and improve more lives.
Researchers highlight big issues with drug purchasing and generic drug markets
Eva Taylor Grant
Center for Global Development
WASHINGTON – Basic, everyday drugs can cost up to 20 to 30 times more in some poor countries than others, according to a new study released today by the Center for Global Development. The study examined billions of dollars of health spending on common, life-saving medicines in developing countries, mostly in Africa and Asia. To date, it is one of the largest-ever studies on global health procurement.
“Developing countries are often paying far more for everyday drugs than they should be. Why do some poor countries pay 20 to 30 times as much as others for common medicines to relieve pain or treat hypertension? In large part, because of flawed drug buying practices and broken generic medicines markets,” said Amanda Glassman, one of the authors of the study and the executive vice president at the Center for Global Development.
“A robust market for generic drugs is a core part of an affordable health system. But in way too many countries, generic drug markets are broken and patients are paying the price,” said Kalipso Chalkidou, the director of global health policy at the Center for Global Development and an author of the study. “You need enough competition to keep prices low and quality assurance that consumers trust, or essential medicines are going to be much more expensive than they should be.”
The study had three main findings:
In developing countries, prices for basic generic medicines can vary widely and far exceed wealthy-country prices. Some purchasers in low- and middle-income countries pay as much as 20 to 30 times more for basic generic medicines like omeprazole, used to treat heartburn, or acetaminophen (also known as paracetamol), a common pain reliever.
Low- and middle-income countries purchase more expensive branded generic drugs rather than unbranded quality-assured generics. In the US, most drugs are either on-patent medicines or unbranded generics, but in many developing countries more expensive brand-name generics are widely used, because people are concerned about unsafe or counterfeit drugs. In the poorest countries, unbranded generics are only 5 percent of the pharmaceutical market by volume—in comparison to the US where unbranded quality-assured generics are 85 percent of the market by volume.
There is little competition in the supply of essential medicines in low- and middle-income countries. The largest seller of products like contraceptives, cancer medicines, and antiparasitics can account for upwards of 85 percent of all sales in some countries.
“We’re talking about access to common medications for pain or high blood pressure, not the latest cutting-edge cancer drugs,” Glassman said.
“It’s not as exciting to talk about procurement as new health technologies or biotech breakthroughs,” she continued. “But drug purchasing is incredibly important, and if it’s done badly you end up with the poorest countries in the world paying some of the highest drug prices.”
You can read the full study at www.cgdev.org/better-health-procurement.
Decisions about which type of patients receive what interventions, when, and at what cost often result from ad hoc, nontransparent processes driven more by inertia and interest groups than by science, ethics, and the public interest. Reallocating a portion of public and donor monies toward the most cost-effective health interventions would save more lives and promote health equity.
It is a moral imperative that money spent on global health is used as effectively as possible to save lives, prevent and treat diseases, and reduce human suffering. While achieving more health for the money is the core business of all global health funders, the Global Fund to Fight AIDS, Tuberculosis and Malaria is particularly well placed to lead in this area because its New Funding Model makes possible the quick and flexible adoption of value for money principles and practices.
Join CGD on September 25th when Christoph Benn, Director of External Relations for the Global Fund, will discuss the Global Fund’s efforts to achieve more value for money and highlight the progress and potential of the New Funding Model. His remarks will be followed by a high-level panel discussion on the challenges and opportunities all global health funders face as they work to get the most return on their investments in health around the world. The discussion will be informed in part by recommendations from More Health for the Money, the forthcoming report of CGD’s Value for Money Working Group.
In recent years, many global health institutions have adopted eligibility and transition frameworks for the countries they support, generating questions about how these frameworks apply in practice—and whether global health progress will be put at risk through premature or poorly planned transition processes.
This report offers a strategy for the Global Fund to get more health for the money by focusing more on results, maximizing cost-effectiveness, and systematically measuring performance throughout its operations.