Medicine Price Components
Medicine Price Components
Chapter 9 in ‘Measuring Medicine Prices, Availability, Affordability and Price Components’
Developed by: Health Action International (HAI) / World Health Organization (WHO)
Objective: To categorise price component costs in the medicine supply chain, identifying those components with the most significant contribution to the final price and to gather data on the manufacturer’s selling price for reliable international price comparisons.
Additional information: A price component survey can be conducted separately or as part of a full WHO/HAI medicine price and availability survey. The price components methodology has two parts: a pharmaceutical policy investigation at the central level and research into actual price components along the medicine distribution chain. Data collectors should select five to seven medicines that illuminate pricing policies in their country.
The data to be collected includes:
- import tariffs on finished products, including exemptions for particular products and for certain buyers
- financial charges incurred in importing pharmaceuticals, such as charges for letters of credit at the central bank or charges for foreign currency transactions
- policies on taxes levied on medicines, both along the supply chain and to the final customer
- policies that control mark-ups in the supply chain
- policies on quality assurance, as set by the ministry of health, and associated charges for any required quality control tests
- the entry points of imported medicines into the country, as well as the port fees and the costs for customs clearing that are incurred.
Process and resources:
- Collecting data requires interviewing staff in various ministries and healthcare delivery systems.
- Individuals with good knowledge of the pharmaceutical sector and supply chain should conduct the data collection visits.
- The data collectors need good investigative and interpersonal skills and a non-threatening approach. They also require an understanding of the relationships and the political situations in their country, and should ideally be recognised in the pharmaceutical sector (a signed, official letter of endorsement can be of great help in carrying out the price components survey).
- As part of the WHO/HAI Project on Medicine Prices and Availability, on-line support is offered by project personnel to survey managers undertaking a medicine price and availability survey using the WHO/ HAI methodology. Please see: www.haiweb.org/medicineprices/manual/documents.html
Link to the tool: www.haiweb.org/medicineprices/manual/mp2008/NPrices_9.pdf
Country Experience: WHO and HAI conducted an in-depth validation study in three countries (Morocco, Pakistan and Uganda) in 2005 and an additional study in New Delhi, India, in 2007.