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Message Subject: Some considerations about the composition of cost and final price of durgs in pharmaceutical market

Forum: ARV Conference Discussion Area
Re: Are ARVs cost-effective in developing countries? (Steven Forsythe)
Date: 29/Apr/1998 10:40
From: mvitoria@bhnet.com.br>

The article written by Dr Floyd and Dr Gilks is very impressive and with a very interesting metodology of evaluation. All conclusions are correct in my point of view, but I would like to do some considerations about the "cost" and the "price" of antiretroviral drugs.
Actually, if the price of antiretroviral drugs continues at this elevated level, it will be hard to find any reasonable cost-saving and cost-effective situation that justify the use of this drugs at public health basis in the majority of countries, even in developed world. But it is interesting to know, that the price of one drug in the free pharmaceutical market do not have a direct relationship with the cost to manufacturing or producing it.

Generally, the main aspect that determines the final price of one medication is the local market situation at that moment.
If you considering the price of one medication in different countries (with different maket situations), you will probably see a very different prices. As an example, I would like to comment about the price of a high tech product like human insulin. In 1994, the sell price of one specific brand of this product (I will not say the name of the producer by ethical reasons) in Brazil and USA is about U$ 20.00, but is U$ 35.00 in Argentina and only U$ 2.00 in India.Even considering the different taxes and other indirect price components of the final price of the product in Brazil, US and India, the difference is very wide. If you analyze other different drugs, this situation is also clear, as showed above:

PRICES OF EIGTH DIFFERENT DRUGS IN REAIS (R$)(*) IN FIVE DIFFERENT COUNTRIES

DRUG NAME BRAZIL USA FRANCE U.K. ARGENTINA
ASPIRIN (100 mg) 9,67 2,68 2,57 - 1,17
ATENOLOL (50 mg) 14,01 11,70 14,39 21,14 -
VITAMIN C (1 gr) 7,14 3,03 5,97 - 5,68
FENOBARBITAL (100 mg) 2,27 13,67 1,99 - 10,62
BROMAZEPAN (3 mg) 6,28 5,85 5,61 13,78 4,47
ESCINA (40 g) 18,75 4,68 3,62 - -
DIAZEPAN (5 mg) 3,41 10,53 2,22 5,60 7,40
ACICLOVIR (200 mg) 62,00 35,10 35,45 57,45 45,69

(*) 1R$ = 1,2 U$

This kind of thinking can be seen in other areas out of the Pharmaceutical Market. Recently I have read that some computer specialists have afirmed that the price of manufacturing one Personal Computer, independent of the clock of the machine, is about U$ 300 per unit. But the final sell price of the PC in US and in some countries is about U$ 1,500, that is, the price that an middle class american can pay for this product at the market...
Another intersting aspect to discuss in the price composition of one drug is that the components of final price have many different components related and non-related to drug manufacturing.

In Brazil, the drugs of ethical market have a complex price composition, and about 40-45% of the final cost is the "margin" of the pharmaceutical producer. The remaning 55% is used for pay govermental taxes, financial and sell costs, distributor and drugstore margins. From that 45% of producer margin, it will need to pay other issues, like manufacturing, marketing , staff and administrative costs. But the real cost of manufacturing the drug and, of course, the profit margin are a very top secret of the high directory board of any pharmaceutical industry...

Then, I would like to conclude that the actual price of antiretroviral drugs can be substantialy lowered by reducing the govermental taxes over the product, but we can negociate with the produceres to reduce their "profit margin", if we considering the composition of the final price and other pharmaceutical market aspects.

This will permit a more reasonable price for financing by public health funds (may be a regional or even an international fund)and a more favorable cost-saving and cost-effective situation. Probably the pharmaceutical producers will argue that the high level prices are necessary to pay the "costs of research" and other issues, but they certainly do not consider the impressive increasing value of the producer's papers on wallmarket and other indirect gains with this research ...

If someone have any new aditional data or idea about this theme, I will be glad to talk about.

Cordially yours,

Marco A A Vitoria, MD
Belo Horizonte - Brazil





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