In The AmericasAlejo Baltasar Rodríguez Cacio, General Director, investBA
The introduction of pharmaceutical price controls is the latest move by the Colombian government in its commitment to reduce health care costs, while the pharmaceutical industry claims that faces unfair competition from generic drugs and the lack of incentives afflicting to invest in research facilities.
For many years, pharmaceutical prices in Colombia have been among the highest in the region. In July last year the government announced that it was introducing price controls 32 of the most expensive drugs, including treatments for cancer and HIV. According to the State, the stops at these prices were determined taking into account the prices in various countries both in the region and the European Union. The Ministry of Health said in turn expected to save an average of $ 180 million in annual terms from these initial changes.
Since then, the government has expanded the list of controlled drugs, bringing the total to more than 500 in early 2014 In January, Health Minister Alejandro Gaviria, told local press that "control to defend drug prices, given that access to health is a fundamental right. "Moreover, he added," will continue to expand the list of price controlled drugs. "
While the pharmaceutical market in Colombia is much lower than you can find in other regional powers such as Brazil, Argentina and Mexico, has been growing rapidly in recent years. Sales of prescription drugs increased 5.7% in 2013, reaching $ 1.38 billion, according to IMS, a leading provider of industry data.
The price controls is presented in a time when Colombia is working to improve its health system. Although the country has succeeded in ensuring access to health care to nearly 100% of the population through the program completely covers the POS, reforms aimed at reducing the current high costs and improve service quality. Among the most significant changes is the modification of the functions by the service companies intermediadoras (Health Service Company, EPS), joint ventures managed by way of insurance public funds for social security.
The decision to implement price controls is followed by the efforts made by the government to reduce drug costs by promoting the use of generics. Doctors are not required to state the names of the brands in recipes and, consequently, public health institutions often dispense generic. These policies appear to have been effective, as the total share of the market held by generics has increased to over 30%.
The potential of generic drugs has not gone unnoticed by some of the largest global pharmaceutical companies, including Sanofi, which in 2012 acquired Genfar, a local company specializing in the production of generic drugs. Following the acquisition, the French pharmaceutical giant managed to cover about 30% of sales of generic drugs, followed by MK Laboratories, which has a market share of around 20%.
While the increased use of generic drugs is part of a cost reduction strategy that has worked in several developed countries and emerging markets, the system is deficient in Colombia, according to pharmaceutical manufacturers. In particular, the regulations do not require bioavailability or bioequivalence of generic drugs - no absorption levels of the active ingredient required -. In the USA, for example, the drug may not substitute a generic for a brand name drug unless the former has been certified as bioequivalent by the Food and Drug Administration.
While the government is working on a new set of regulations, representatives of the pharmaceutical industry say the proposed regulations have been questioned by experts in the USA and the EU, and that do not meet WHO standards.
Francisco De Paula Gómez, chief executive of the Association of Pharmaceutical Laboratories Research and Development in Colombia (AFIDRO), told OBG, "Unfortunately, the Ministry of Health is prioritizing the cost of safety and effectiveness, which we consider an error . "
The absence of strict controls on generic drugs could undermine incentives for innovation by the pharmaceutical companies. While Colombia is unlikely to ever become a world center for pharmaceutical R & D, either could be achieved an outstanding venue for clinical trials. However, this would require the government to take measures to support the initiative.
That is the view of Sandy Sommer, president of AstraZeneca in Colombia. "The country has a large health care system and a highly skilled medical population. These two ingredients could make Colombia a very attractive destination for investment in R & D, but to do the right financial incentives should be established, including tax credits "he told OBG.
Supporting efforts for greater innovation and conducting drug tests at the local level tend to reduce drug costs, benefiting both consumers and state.
The introduction of pharmaceutical price controls is the Colombian government's latest STI Attempt to reduce health care costs, while the industry claims-it faces competition from generic drugs unfair as well as a lack of incentives to invest in research facilities.
For many years, pharmaceutical prices in Colombia Have Been Among the highest in the region. In July of last year, it was the government Announced introducing price controls on 32 of the Most Expensive medicines, treats including treatments for cancer and HIV. According To the state, the caps Were determined to by taking into account prevailing prices in a number of countries, Both Within the region and in the EU. The Ministry of Health said at the time it expected to That save an average of $ 180m per year from initial changes in Original.
The government has since expanded the list of Affected drugs, bringing the total to more than the 500 as of early 2014 In January, the minister of health, Alejandro Gaviria, I Told the Local press would "defend the price controls on drugs, Considering That access to health is an essential right. ", Moreover, I added, he" will continue to expand the list of drugs with controlled prices. "
While the pharmaceuticals market in Colombia is much smaller than Those found in regional powerhouses like Brazil, Argentina and Mexico, it is expanding quickly. Prescription drug sales Increased by 5.7% in 2013, reaching $ 1.38bn, According to IMS, a vendor of health care data.
The price caps come at a time When Colombia is working Toward an overhaul of Its health care system. While the country's universal health care Programme has Helped to Ensure That Nearly 100% of the population has access to medical services, Reforms aim to reduce costs and improve increase quality of service. Among the more significant changes would be a modification of the role of intermediary service managers (health care institutions), public-private companies manage public funds That for social security.
The move to price controls in Place Follows the government's Effort to keep costs in check by pharmaceutical Promoting the use of generic drugs. Doctors are not required to Indicate brand names on prescriptions, health care and public Institutions Typically dispense generics. These seem to Policies Have Been Effective, With the share of the total market Accounted for by generics increase increasing to more than 30%.
The potential for generic drugs has not gone unnoticed by some of the largest pharmaceutical companies overall, treats including Sanofi, in 2012 acquired Which Genfar, a local company Specialising in the production of generics. Following the acquisition, the French pharmaceutical giant accounts for around 30% of generic sales, followed by MK Laboratories, Which has a market share of about 20%.
While expanding the use of generic drugs is a cost-cutting strategy That has-been used in a number of developed and emerging markets countries country, the system is flawed in Colombia, According to pharmaceutical manufacturers. In particularly, Regulations do not require to be bioequivalent generics - meaning the same amount of active ingredient is absorbed by the body at roughly the same rate. In the US, for example, pharmacists can not substitute a generic product for a branded medication UNLESS the former has-been Deemed bioequivalent by the Food and Drug Administration.
"Unfortunately the health ministry is over Prioritising safety and cost efficacy. We think this is a mistake, "Francisco De Paula Gomez, the executive president of the R & D Association of Pharmaceutical Industry in Colombia, Told OBG.
The lack of strict controls on Could Undermine generic drugs for branded pharmaceutical companies incentives to innovate. While it is unlikely Colombia That Could Be Transformed into a global center for pharmaceutical R & D, it could very well Become a major headquarters for clinical testing. However, This would require the government to take steps to support Such an initiative.
That is the review of Sandy Sommer, the president of AstraZeneca in Colombia. "The country has a great health care system and a highly educated physician population. Could These two ingredients make Colombia a very attractive destination for investment in R & D, but the proper financial incentives, tax credits: such as, Would have to be in place, "I Told OBG.
As part of the New Kuwait 2035 development strategy unveiled in January, cost-cutting measures have begun to take hold in the health sector.