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[e-drug] Prices of essential drugs in developing countries

  • From: Hilbrand Haak <HaakH@compuserve.com>
  • Date: Mon, 21 Feb 2000 18:41:07 -0500 (EST)

E-drug: Prices of essential drugs in developing countries

Dear friends,

In one of the countries where I work I got involved in a heated debate
on prices of essential drugs, as compared to world market prices. One
of the objectives in the essential drugs programme in question is to
keep prices below 2.5 times the world market prices. Let's say they
use as reference the average drug prices in the MSH Drug Price
Indicator Guide.

I thought that a markup of 150% was rather steep, knowing that for
price calculations the Price Indicator Guide (1998 edition) advises to
add 20-30% for costs of shipping and handling. I assume that those
are the prices until the doors of the procurement agency or central
medical stores. Further shipment until health facilities would have an
additional cost, but that will probably not explain the difference until

My counterparts explained that taxes need to be paid on imported
drugs, also for essential drugs for the public sector (one of 60% and
one of 15%). Taking all added costs together, the overall markup got
to something between 100-150%. Of course it can be debated
whether a government should tax drugs that are procured for its own
public health sector, thereby effectively reducing the budget available
for drug procurement.

What I would like to know from colleagues who work with national
drug procurement in developing countries is how much the markup
percentages are in their countries, let's say until the central
procurement agency, and until the enduser. Does it get to 150%? And,
equally important, does the government tax drug imports for its own
public sector?

Thanks for the help,

Hilbrand Haak
Consultants for Health and Development
e-mail: HaakH@compuserve.com

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