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Can Competition-Promoting Policies Reduce Medicine Prices in Developing Countries? Loraine Hawkins

Can Competition-Promoting Policies Reduce Medicine Prices in Developing Countries? Loraine Hawkins ICIUM, Track 2c Economics Tuesday, 15 November, 3.15-5.45 pm, 2011 loraine.hawkins@gmail.com. Competition, prices and availability.

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Can Competition-Promoting Policies Reduce Medicine Prices in Developing Countries? Loraine Hawkins

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  1. Can Competition-Promoting Policies Reduce Medicine Prices in Developing Countries? Loraine Hawkins ICIUM, Track 2c Economics Tuesday, 15 November, 3.15-5.45 pm, 2011 loraine.hawkins@gmail.com

  2. Competition, prices and availability • Generic competition increases availability of low priced medicines • Competition works best for institutional buyers • Healthy competition needs effective medicine quality regulation & general law enforcement • Competition law can help secure competition at all stages of the medicines supply chain

  3. What is competition law and what is it used for? • Objective: maintain & enhance competition in order to enhance consumer welfare • Control mergers & takeovers • Restrictive agreements that reduce competition e.g. price-fixing, market-sharing • Abuse of a dominant market position • Market studies • Remedies: fines, price monitoring & controls, divestment, undertakings on company conduct

  4. Where has competition law been applied to medicines markets? • OECD countries • US, EU have many cases & market studies • Some OECD country experience may offer lessons for middle income countries • E.g.South Korea, Ireland, EU accession states • Middle income countries with adequate institutional capacity • South Africa, Argentina • Many LMICs have adopted Competition Law but with limited implementation

  5. What institutional and technical capacity is required? • Judicial system independence & competence • 3rd party enforcement of law, regulation & contract without undue political or industry intervention • Adequate human & financial resources for the competition & medicines regulatory agencies

  6. Case study: South Africa • New Competition Act 1998 adopted after inclusive policy making process • Cases covering every stage of supply chain: • abuse of dominant position by multinationals • exclusive distribution agreements, • merger & acquisition of retail pharmacy chains • collusion in public procurement by local firms • Remedies: substantial fines, orders to divest, undertakings to change conduct • Price monitoring committee

  7. What challenges were encountered and lessons learnt? • Choose strategically important cases to set precedents to guide the sector • Use public information & education to advocate for the whole sector to comply with the principles established by landmark cases • Willingness to tackle a complex, high profile case involving patent-protected ARVs was important for credibility • Mobilize international donor & technical resources to support legal action

  8. Complementary competition-promoting policies • Effective, timely, low cost, transparent medicines quality regulation • Openness to imports of quality-assured generics with low/zero tariffs • Competitive public procurement • Competition in distribution & retail pharmacy • Health insurers use competition for formulary listing & setting medicine reimbursement rates • Consumer information & protection policies • Ethical codes

  9. Competition-promoting policies for low-capacity contexts • Using public pharmacies or public/NGO partnerships to promote competition in areas were the poor are under-served • Promoting generics as “good value” • Accreditation & partnerships with low-cost drug-sellers to increase consumer confidence in their quality • Market studies on how to remove barriers to quality-assured generic entry & to formation of efficient wholesale/distribution/retail sector

  10. Can public, NGO or accredited outlets stimulate price competition? • Kyrgystan rural pharmacy initiative • Successful revolving drug funds in villages with no private sector pharmacy • NGO support, village committee support • Social health insurance fund contracts • Competition from RPI led private pharmacies in the district town to cut prices to match RPI prices

  11. Generics pharmacy chains: creating conditions for private sector Philippines • Chains &wholesaler-retailer integration permitted • Franchise model • Generics promoted by advocacy for “Cheaper Medicines Act” Mexico • FarmaciaSimilares • Parallel context

  12. WHO/HAI Project on Medicines Prices and Availability: Review Series on Pharmaceutical Pricing Policies and Interventions Working Paper #4: Competition Policy http:/www.haiweb.org/medicineprices/policy/index.html

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