By .

A senior business development manager with long stints in FMCG companies had the shock of his life when the general manager of the new drugs distribution company he joined lately made him realise all that he had learnt in his long career was just ‘crap’.  The task on hand for our man was to work out a retail price for an imported medicine, which he set out to do in earnest by employing all the complicated formula that he was used to working with during his days with leading consumer goods companies. That involved calculating the import cost plus other incidentals, marketing and management costs, finance cost, margin of profit etc.

“Why bother about all this; you just take the basic import price and multiply it by ten and that’s your retail price,” the general manager told our friend in a tone that didn’t hide his displeasure of the new colleague’s ‘overzealousness’ with numbers.

To be frank, it was difficult to believe in much of the story, even after discounting for the exaggeration such stories generally carry, until I came across the results of a World Health Organization survey on basic medicine prices in various countries. The report spoke about ‘extremely high patient prices’ in the private sector medical stores in the UAE.

According to the report, the price at which private pharmacies in the UAE sold originator brands of prescription medicines was an incredible 24 times of their basic international reference prices.  Even the lowest-priced generic medicines were sold at 14 times the reference price. Twenty-five medicines, including originator brand and lowest priced generic equivalent of each were surveyed in 23 private retail pharmacies and 18 public sector outlets.

Public sector procurement details were based on GCC procurement system purchases, with the 2005 Management Sciences for Health International Drug Price Indicator Guide being used as reference prices. This is the average procurement price at which the generic versions of drugs are offered to developing countries on a not-for-profit basis.

The report pointed out that expensive originator brands were being purchased by the government at about five times the reference prices along with much cheaper generics whose prices were similar to the reference prices. As such, prices in the public sector were high, often higher than in private pharmacies, primarily as a result of high procurement prices. In private pharmacies, originator brands were being sold at very high prices compared to their generic equivalent – up to 28 times more for diclofenac tabs. Generic versions of basic analgesics such as paracetamol and ibuprofen were being sold at very high prices in international terms.

Poor availability was another issue of concern. Availability in the private sector was excellent for originator brands but not for cheaper generics. In addition, some lifesaving drugs were not even available in government-run pharmacies, where prices are lower, and must be bought in retail outlets, says the research.

By another criterion, lowest priced generics were generally affordable when purchased by the lowest paid unskilled government worker in the private sector but originator brands were far less affordable. For instance, a person with arthritis would have to work two-and-a-half days to buy a month's supply of diclofenac 25mg tabs originator brand but less than a day for lowest priced generic equivalents.

Of the Middle East countries included in the survey, only Kuwait had higher private generic-drug prices than the UAE, averaging 15.7 times the international reference. By contrast, Lebanon’s prices are just 6.1 times the reference prices. In India, medicine prices were near about the international reference prices or even lower when it came to generics.