The pharmaceutical market
The pharmaceutical market is an imperfect market. Such markets are distinguished by the existence of monopolies or oligopolies, where a small number of manufacturers exercise control over supply and prices (2) . Factors that contribute to such a market include market exclusivity due to patent or data exclusivity, a limited supply of active ingredients, registration barriers and sellers with strategies for underbidding on price. The information is asymmetric, because the supplier has full access to market information on prices, while the buyer does not. The supplier has thus an obvious advantage during contract negotiations. This is also reflected in some of the new initiatives that have been launched to make essential medicines more accessible (3) .
One would think that the price of a medicine would be set based on a desire to ensure that it would be available to anyone in need of the medicine, in other words that there would be some relation between price and the ability to pay. However, that is not the case – quite the opposite in fact. Measures such as equity pricing and differential or tiered pricing have by and large not left the drawing board. Equity pricing entails measures that ensure that the price is considered fair in the eyes of society and the consumers, even for the poor and/or the health system they use. Concepts such as differential pricing and segmentation of the market are often used to describe a practice whereby a different price is charged in different markets. This does, however, not necessarily result in a more affordable price or equal access to a product. They can be viewed instead as commercial terms for a price practice that aims to maximise the seller's profit. This may also result in equal access, but it does not necessarily mean that even the lowest price is low enough (4) .
In poor countries, medicines are therefore expensive for the majority of the population, both in terms of the absolute price and buying power. And the patients must often pay out of pocket, because there are no insurance schemes. For example, 80 % of the health care expenses in India must be borne by the patients themselves, and medicines account for 60 – 90 % of these expenses (5) . This is despite the fact that medicine prices in India are low compared with many other countries.
Differences between countries
Differences between countries
A total of 4.8 billion people live in low-income and middle-income countries, and 2.7 billion of them live on less than USD 2 per day (USD 730 per year). This can be countries in which a majority of the population is poor (39 countries), or middle-income countries where as much as three-fourths of the population may be poor, (6) . In comparison, the average consumption of medicines alone in the EU was USD 540 per person annually in 2008 (7) . The US ranked the highest of the OECD countries, with USD 897 per person annually. Norway's estimated consumption was USD 381, while Mexico's consumption was the lowest at USD 241 per personal annually.
In Norway the National Insurance Scheme covers most of our medicine expenses. In Malawi the lowest paid government worker must work 20 days to pay for one month’s treatment with four common medicines for the treatment of cardiovascular disease (8) . It is obvious then that such treatment is unattainable. In addition, the lowest paid government worker is better off than most of the population in poor countries, who are farmers or unemployed. In many countries, a seven-day treatment with generic ciprofloxacin can cost at least one day’s wages for the lowest paid government worker, and the patented Ciproxin can cost at least ten days' wages (9) . In Mali a farmer has to sell two kilos of cotton to pay for a strip of ten paracetamol, which costs 84 cents (10) . He has to have paracetamol because the pesticides give him a headache.
Patented products and generics
Patented products and generics
There are not only large price differences for medicines between different countries, but also between the original manufacturer’s product and copies of the same product (generics) (8, 9) . Medicines that are referred to as branded generics may also carry a high price because they are more popular. In the private sector the original manufacturers’ products may be more readily available than copies, and it is often perceived that they are of higher quality. If price-regulating measures are not implemented, then the individual regulatory authority must ensure that the quality of both the originals and copies is satisfactory, so that people will have confidence in the market.
How to obtain information on medicine prices
How to obtain information on medicine prices
It is not easy to compare medicine prices in different countries. Researchers and authorities have tried for years to compare the prices in, for example, the US, Canada, Japan, Australia and Europe – without much success (11) . In 2011 the WHO published the 3rd edition of the book World medicines situation (12) . Abundant information is available here on selection, procurement, distribution and rational use, in addition to information on access, human rights, good governance, human resources and national medicine policies.
A new chapter on prices, access and affordability has been introduced, which includes the results from more than 60 studies conducted by means of a methododology developed by WHO and Health Action International (HAI) (9) . A standardised method is used to study medicine prices in low-income and middle-income countries, make price information openly available and help countries with measures to improve the situation (13) .