Strategies to Improve Health Systems(cont...)

Most countries in South Asia have developed essential drug lists to determine what drugs governments should purchase. Yet if countries were able to decide on a common essential drug list and to have a commonly agreed-on set of regulations, their procurement units could negotiate with drug companies collectively instead of individually, strengthening their bargaining position and securing lower prices.

Countries should therefore compare their lists and rationalize them, to eliminate country differences. International cooperation may well result in lower prices in those
South Asian countries where they are high. In Bangladesh, Nepal, and Pakistan, for example, drugs provided by public facilities are free of charge, but when a list of 32 essential medicines for chronic conditions was examined, less than 8 percent were actually available in the public sector.

Therefore, patients have to buy drugs in private outlets where only 30 percent of the lowest-price generics are available (Mendis et al. 2007). When compared with international reference prices the lowest price generics are 2.05, 1.64 and 1.14 times more expensive in Nepal, Pakistan, and Bangladesh respectively; whereas in Sri Lanka the prices of the lowest-price generic and the most commonly sold generics are equivalent to the international reference

price.

Over the past 20 years, both developed and developing countries have attempted various models to improve drug availability and reduce their price. There are several examples of aggregated pooled procurements at state, country, and intercountry levels that have led to lower prices and improved quality control (Huff-Rousselle and Burnett 1996; Murakami et al. 2001; WHO 2007).

In some instances, pooled procurement is used with subsidies that both encourage participation of private pharmacies and improve access for the poor—a potential approach that could be adopted regionally instead of just one country at a time. Some European and Latin American countries use reference pricing, where the insurance plan or government takes as a reference for reimbursement the lowest priced generic (Schneeweiss 2007). Adopting the same system would give countries in South Asia greater bargaining power with drug companies. Another approach is comparative effectiveness.