Can Competition-Promoting Policies Reduce Medicine Prices in Developing Countries? Loraine Hawkins...
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Transcript of Can Competition-Promoting Policies Reduce Medicine Prices in Developing Countries? Loraine Hawkins...
Can Competition-Promoting Policies Reduce Medicine Prices in Developing Countries?
Loraine Hawkins
ICIUM, Track 2c Economics
Tuesday, 15 November, 3.15-5.45 pm, [email protected]
Competition, prices and availability
Generic competition increases availability of low priced medicines
Competition works best for institutional buyers
Healthy competition needs effective medicine quality regulation & general law enforcement
Competition law can help secure competition at all stages of the medicines supply chain
What is competition law and what is it used for?
Objective: maintain & enhance competition in order to enhance consumer welfare Control mergers & takeovers Restrictive agreements that reduce
competition e.g. price-fixing, market-sharing Abuse of a dominant market position Market studies
Remedies: fines, price monitoring & controls, divestment, undertakings on company conduct
Where has competition law been applied to medicines markets? OECD countries
US, EU have many cases & market studies Some OECD country experience may offer
lessons for middle income countries E.g.South Korea, Ireland, EU accession states
Middle income countries with adequate institutional capacity South Africa, Argentina Many LMICs have adopted Competition Law
but with limited implementation
What institutional and technical capacity is required?
Judicial system independence & competence
3rd party enforcement of law, regulation & contract without undue political or industry intervention
Adequate human & financial resources for the competition & medicines regulatory agencies
Case study: South Africa
New Competition Act 1998 adopted after inclusive policy making process
Cases covering every stage of supply chain: abuse of dominant position by multinationals exclusive distribution agreements, merger & acquisition of retail pharmacy chains collusion in public procurement by local firms
Remedies: substantial fines, orders to divest, undertakings to change conduct
Price monitoring committee
What challenges were encountered and lessons learnt? Choose strategically important cases to
set precedents to guide the sector Use public information & education to
advocate for the whole sector to comply with the principles established by landmark cases
Willingness to tackle a complex, high profile case involving patent-protected ARVs was important for credibility
Mobilize international donor & technical resources to support legal action
Complementary competition-promoting policies
Effective, timely, low cost, transparent medicines quality regulation
Openness to imports of quality-assured generics with low/zero tariffs
Competitive public procurement Competition in distribution & retail pharmacy Health insurers use competition for
formulary listing & setting medicine reimbursement rates
Consumer information & protection policies Ethical codes
Competition-promoting policies for low-capacity contexts Using public pharmacies or public/NGO
partnerships to promote competition in areas were the poor are under-served
Promoting generics as “good value” Accreditation & partnerships with low-cost
drug-sellers to increase consumer confidence in their quality
Market studies on how to remove barriers to quality-assured generic entry & to formation of efficient wholesale/distribution/retail sector
Can public, NGO or accredited outlets stimulate price competition?
Kyrgystan rural pharmacy initiative Successful revolving drug funds in
villages with no private sector pharmacy NGO support, village committee support Social health insurance fund contracts
Competition from RPI led private pharmacies in the district town to cut prices to match RPI prices
Generics pharmacy chains: creating conditions for private sector
Philippines Chains &wholesaler-
retailer integration permitted
Franchise model Generics promoted
by advocacy for “Cheaper Medicines Act”
Mexico Farmacia Similares Parallel context
WHO/HAI Project on Medicines Prices and Availability: Review
Series on Pharmaceutical Pricing Policies and Interventions
Working Paper #4: Competition Policy
http:/www.haiweb.org/medicineprices/policy/index.html