Many Injectable Essential Medicines Have Prices Substantially Higher Than Estimated Cost-Based Prices

Universal access to affordable essential medicines remains an unmet goal, and while the World Health Organization (WHO) has been attempting to address this problem through prequalification of drugs like insulin to help ensure access for patients in low-resource areas, costs for many products remain prohibitive.

Manufacturing costs are often cited as one reason for steep prices, particularly for drugs like biologics. However, in a recent paper, a group of authors sought to develop an algorithm to estimate the cost of injectable medicines on the WHO’s List of Essential Medicines (EML) and to use that algorithm to estimate the prices that would be expected given an average profit margin.

Injectable drugs on the WHO list include products like anti—tumor necrosis factor therapies and their biosimilars, as well as anticancer biologics and their biosimilars.

The investigators derived data on the cost of active pharmaceutical ingredients (APIs) exported from India using an online database of customs declarations in order to design their algorithm to estimate cost-based drug pricing. In total, 96 drugs on the list had API data available.

They also included costs to convert APIs into finished pharmaceutical products using the eMIT database, and they collected prices on drugs from databases in the United Kingdom, South Africa, and India.

They found that prices based on cost plus an average profit margin would range from a low of $0.24 for salbutamol to a high of $449 for a 500-mg vial of rituximab. However, a majority of injectables had prices significantly higher than the estimated cost-based prices in the United Kingdom and South Africa. In total, 77% of medicines had prices over the estimated cost-based price in England, as did 62% of medicines in South Africa. In India, 85% of medicines had prices below the estimated cost-based price.

The products that had the highest ratios of lowest current price versus the estimated cost-based price included filgrastim in the United Kingdom (radio, 112.6) and insulin injection in India (ratio, 2.7).

“Most injectable medicines on the EML can be manufactured at very low cost,” write the authors. Although they note that the wide range of medicines included in the analysis makes it difficult to generalize about the appropriateness of pricing, and that the analysis was unable to detect anticompetitive strategies that may raise prices, drugs with prices significantly higher than their cost to manufacture may represent a substantial burden on healthcare systems.

Estimating the cost to produce these drugs, the authors say, could help governments to develop drug pricing mechanisms to reduce some of this burden.

Reference

Gotham D, Barber MJ, Hill AM. Estimation of cost-based prices for injectable medicines in the WHO essential medicines list. BMJ Open. 2019;9:e027780. doi: 10.1136/bmjopen-2018-027780.