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WHO Guideline on Country Pharmaceutical Pricing Policies. Geneva: World Health Organization; 2013.

Cover of WHO Guideline on Country Pharmaceutical Pricing Policies

WHO Guideline on Country Pharmaceutical Pricing Policies.

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Executive summary

Medicines account for 20–60% of health spending in low- and middle-income countries, compared with 18% in countries of the Organisation for Economic Co-operation and Development. Up to 90% of the population in developing countries purchase medicines through out-of-pocket payments, making medicines the largest family expenditure item after food. As a result, medicines, particularly those with higher costs, may be unaffordable for large sections of the global population and are a major burden on government budgets. The Millennium Development Goals include the target: “[I]n cooperation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries.”

Initiatives to stimulate availability and access through manufacturing innovations, procurement mechanisms, or supply chain improvements require management of pricing to have sustainable impact. The past ten years have seen the introduction of several initiatives at both global and regional levels to support countries in managing pharmaceutical prices. Despite some clear successes, many countries are still failing to implement the policy and programme changes needed to improve access to affordable medicines.

This guideline was developed to assist national policy-makers and other stakeholders in identifying and implementing policies to manage pharmaceutical prices. Although the feasibility of these policies in countries of all income levels was considered, special consideration was given to implementation needs in low- and middle-income countries, where the pharmaceutical sector may be less regulated. References to low- and middle-income countries are therefore intended to highlight specific implementation needs and do not to exclude the appropriateness for high-income settings.

WHO uses the GRADE approach (Grading of Recommendations Assessment, Development and Evaluation) for the development and review of recommendations. This guideline was developed with consideration to GRADE principles including development of PICO questions, systematic reviews of existing literature and consideration of the quality of the evidence; however, the available evidence did not support the development of functionally useful GRADE tables. The majority of the evidence was case descriptions and generally considered low-quality by experts. The recommendations included in this guideline are therefore mainly based on the experience of the Expert Panel and their review of the qualitative evidence, with note of the need to develop more quantitative evidence for future updates. The scope of this guideline is expressed in the three overarching policy questions below.

  1. Should countries use price control measures to manage medicine prices? If so:
    • Can external reference pricing be effective in low- and middle-income countries?
    • Should health technology assessment be used in decision-making and/or price setting in low- and middle-income countries?
    • Can cost-plus price setting be effective in low- and middle-income countries?
  2. Should countries adopt measures to control add-on costs in the supply chain? If so:
    • Should wholesaler and dispenser mark-ups be controlled in low- and middle-income countries?
    • Should medicines be exempt from taxes and/or tariffs?
  3. Should countries promote the use of quality assured generic medicines as a strategy to manage medicine prices? If so:
    • What prerequisites are needed to promote use?
    • Should strategies be used to facilitate/accelerate market entry of generics (e.g. TRIPS flexibilities and compulsory licensing, facilitated regulatory approval, fast-tracking and/or reduced fees)?
    • Should optional/mandatory generic substitution by dispensers be used?
    • What is the role of generic competition in the pharmaceutical market as part of a strategy for managing prices?
    • Should internal reference pricing by product or therapeutic group be used?
    • Should strategies be adopted to encourage the use of generic or lower-cost products by providers (prescribers and dispensers)?
    • Should strategies be adopted to encourage the use of generic or lower-cost products by consumers?

The WHO Department of Essential Medicines and Health Products led the development of the guideline, following the processes specified by the WHO Guideline Review Committee. A guideline panel was convened to define the scope of the guideline, review the evidence summaries, and develop the recommendations. An external consultation process was held with a targeted group of stakeholders to obtain input on draft recommendations and accompanying evidence summaries. The recommendations are listed below, together with a list of general considerations identified by the panel.

Box 1Guideline recommendations and key principles

POLICY INTERVENTIONRECOMMENDATIONS
Regulation of mark-ups in the pharmaceutical supply and distribution chain

As part of an overall pharmaceutical pricing strategy, countries should consider regulating distribution chain mark-ups (distributors/wholesalers).

As part of an overall pharmaceutical pricing strategy, countries should consider regulating retail chain mark-ups and fees (pharmacies, dispensing doctors, dispensaries).

If mark-ups are regulated, countries should consider using regressive mark-ups (lower mark-up for higher-priced products) rather than fixed percentage mark-ups, given the incentive that the latter provides for higher-priced products to receive a higher net margin.

Countries should consider using remuneration/mark-up regulation to provide incentives for supplying specific medicines (generics, low volume medicines, reimbursable medicines) or to protect specific patients or population groups (e.g., vulnerable groups, remote populations).

In systems where rebates and discounts in the distribution chain occur, countries should consider regulating them and should make them transparent. The information should be taken into account when reviewing and regulating mark-ups and prices.

Tax exemptions/reductions for pharmaceutical products

Countries should consider exempting essential medicines from taxation.

Countries should ensure any tax reductions or exemptions result in lowered prices to the patient/purchaser.

Application of cost-plus pricing formulae for pharmaceutical price setting

Countries generally should not use cost-plus as an overall pharmaceutical pricing policy.

Countries using a cost-plus method as an overall policy that wish to change their strategy should consider replacing or complementing the cost-plus approach with other policies, including those covered in this guideline.

Use of external reference pricing

Countries should consider using external reference pricing as a method for negotiating or benchmarking the price of a medicine.

Countries should consider using external reference pricing as part of an overall strategy, in combination with other methods, for setting the price of a medicine.

In developing an external reference pricing system, countries should define transparent methods and processes to be used.

Countries /payers should select comparator countries to use for ERP based on economic status, pharmaceutical pricing systems in place, the publication of actual versus negotiated or concealed prices, exact comparator products supplied, and similar burden of disease.

Promotion of use of generic medicines

Countries should enable the early market entry of generics through legislative and administrative measures that encourage early submission of regulatory applications, and allow for prompt and effective review.

Countries should use multiple strategies to achieve low priced generics, depending on the system and market. These strategies may include: within-country reference pricing, tendering, and/or lower co-payments.

In order to maximize uptake of generics, countries should implement (and enforce as appropriate) a mix of policies and strategies, including:

  • Legislation to allow generic substitution by dispensers;
  • Legislative structure and incentives for prescribers to prescribe by international nonproprietary name;
  • Dispensing fees that encourage use of low price generics;
  • Regressive margins and incentives for dispensers; and
  • Consumer and professional education regarding quality and price of generics.
Use of health technology assessment

Countries should use health technology assessment (HTA) as a tool to support reimbursement decision-making as well as price setting/negotiation.

Countries should combine HTA with other policies and strategies, particularly within-country reference pricing (by chemical entity, pharmacological class, or indication).

Countries should consider the following approaches for using HTA: review of applicability and adaptation of reports from other countries; review of reports submitted by pharmaceutical companies; conduct assessments based on local information and local data. The choice of approach depends on technical capacity and local decision-making structures.

Countries could take a stepwise approach to develop legislative and technical capacity to take full advantage of the potential utility of HTA in pharmaceutical price setting.

In establishing the legislative/administrative framework, countries should clearly define the roles and responsibilities of the decision-makers and other stakeholders, and the process of decision-making.

Countries should ensure that HTA processes are transparent and that the assessment reports and decisions should be made publicly available and effectively disseminated to stakeholders.

Countries should collaborate to promote exchange of information and develop common requirements for HTA.

KEY PRINCIPLES
  • Countries should use a combination of different pharmaceutical pricing policies that should be selected based on the objective, context and health system.
  • Countries should make their pricing policies, processes, and decisions transparent.
  • Pricing policies should have an appropriate legislative framework and governance and administrative structures, supported by technical capacity, and should be regularly reviewed, monitored (including actual prices) and evaluated and amended as necessary.
  • In promoting the use of affordable medicines, countries should employ a combination of pharmaceutical policies that address both supply and demand issues.
  • If regulation of pharmaceutical prices is introduced, effective implementation will be required to ensure compliance (e.g. incentives, enforcement, price monitoring system, fines).
  • Countries should adopt policies to promote the use of quality assured generic medicines in order to increase access and affordability.
  • Countries should collaborate to promote exchange of information about policies, their impacts, and pharmaceutical prices.

In developing the recommendations, the panel noted that the overall quality of research and evidence in relation to pharmaceutical policy implementation and impact is poor, especially in developing country settings. There are many areas where more descriptive studies and good quality research would allow better understanding of what polices should be chosen and how they should be implemented. However, it is clear that such research takes time to complete and therefore the panel recommended that the guideline should be reviewed for potential update in 5 years.

Copyright © World Health Organization 2013.

All rights reserved. Publications of the World Health Organization are available on the WHO web site (www.who.int) or can be purchased from WHO Press, World Health Organization, 20 Avenue Appia, 1211 Geneva 27, Switzerland (tel.: +41 22 791 3264; fax: +41 22 791 4857; e-mail: tni.ohw@sredrokoob).

Requests for permission to reproduce or translate WHO publications – whether for sale or for noncommercial distribution – should be addressed to WHO Press through the WHO web site (http://www.who.int/about/licensing/copyright_form/en/index.html).

Bookshelf ID: NBK258628

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