Drug prices will continue to vary across Africa says analyst

By Gareth Macdonald contact

- Last updated on GMT

Drug prices will continue to vary accross Africa says analyst

Related tags: Pharmacology

High importation costs and country-to-country differences in national healthcare systems mean drugmakers will continue to vary the cost of products in Africa according to an industry analyst.

Drug costs vary markedly across Africa according to the World Health Organisation (WHO)​  with, for example, the price for products like albendazole, amodiaquine and mebendazole differing depending on whether they are sold in Ghana and Kenya.

This variation is the result of policies manufacturers use to balance their need to grow market share and generate revenue with making medicines available to patients according to Aparna Krishnan, a GlobalData analyst who covers healthcare industry dynamics.

Krishnan told in-Pharmatechnologist.com that: “Retail prices of drugs vary to a considerable degree across 54 sovereign states in Africa​” adding that “the reasons for this variation are the high out of pocket expenditure levels and lack of healthcare infrastructure.”

She explained that western branded pharma companies usually follow a tiered pricing policy when introducing products in emerging markets, including in many countries in Africa, adding that a variety of other factors impact prices.

Most brand name drugs are imported into Africa. Associated import costs will be reflected in the drug price. There is an emerging generics drug industry in the region but it is largely restricted to South Africa, Nigeria, Uganda and Ghana.”

Krishnan went on to say that: “Access to healthcare services is low to medium. Low in conflict countries and medium includes the countries mentioned above. Access to health services drives drug demand, which is also low to medium​.”

South Africa

Another factor that determines drug prices in Africa is how robust the reimbursement system in the country involved according to Krishnan, who cited South Africa as an example.

The South African regulatory system allows for drug price controls, a robust tendering system for essential medicines balancing a strong reimbursement system and an increasing patient population with disposable income to spend on healthcare.

The latter two factors make it a viable market for pharma companies to pursue, especially with high volumes for drugs, while the former two factors contribute to better negotiating position for governments, especially for prices.

Tanzania in contrast has no drug price controls and only 17% of the population are covered by public sector health insurance, which means that people in the country pay for their drugs themselves, in cash Krishnan said.

With a largely cash market, lack of a sustained drug demand and affordability issues, the reimbursement protocols [in Tansania] are not robust enough to ensure a steady stream of revenue for western brand name pharma companies​.”

She added that: “As in any industry, pharmaceutical companies ultimately seek commercial gain, and this is obtained through a sustained revenue stream from a portfolio of products in any country​.”

We put this to Swiss drugmaker Novartis, which has publicly state its desire to grow its presence in markets across Africa.

A spokesman for the firm said: “Pricing strategies in this complex market are also evolving.  Comparisons with countries outside Africa are often misleading and only form part of the pricing process. 

Additional factors that have to be considered are local distribution systems, wholesaler and pharmacy fees, taxes and other costs, which vary from country to country. We are working with national governments to find pricing solutions that address affordability and expand patient access​.”

  

Related topics: Markets & Regulations, Regulations

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