Cost of medicines

Abstract

The problems associated with healthcare, namely rising costs, limited budgets and unlimited demand are faced by all Governments and all communities (Zayed & Manning, 1995). About 12% of the gross domestic profit worldwide is spent on health-care (Burstall, 1998). It is projected that the money spent on medicines will be about 50% more in 2005 when compared to 1995 (Burstall, 1998). As medical costs increase, and demand flourislres, it becnmesapparent that correct selection of treatment is important in ensuring that treatment can be made accessible to all who need it. The discipline of pharmacoeconomics evolved from the need to make judicious use of available resources and the reduction or avoidance of waste whilst maintaining the ultimate benefit of the patient as the prime focus (Schulman & Linas, 1997). Pharmacoeconomic evaluation is becoming an important tool in helping clinicians to make evidence-based choices about emerging pharmaceutical preparations and in providing the necessary justification to help patients obtain access to new medications. The access to drug therapy still varies widely between different areas of the world. The lack of compulsory pricing controls in the Unites States of America is said to be one of the reasons making the United States one of the most expensive markets. On the other hand in most European countries price regulations are applied in a direct or indirect way (Babington, 1998). Maintenance of price differentials is one way to maximize revenue of the marketing company (Burstall, 1998). High price differentials may prompt parallel importation which may result in decreased manufacturer's revenue. There is a trend towards narrowing of price differentials for newly developed drugs because of the possibility of parallel importation and because of the establishment of a global price band for newly developed drugs (Spilker, 1994). Taking into consideration factors which influence the establishment of prices of medicines society still questions the fairness of the price set by industry for medicines. The price of a product is usually established based on its medical value, the number of patients who are expected to use the medicine, ability of the medicine to displace current therapy and production cost. The latter price is rarely divulged by the marketing company. The mystique created by the pharmaceutical industry leads to the question: is the price fair and reasonable? With the European stride through the E.U. towards Marshall McLuhan's global village one may envisage European harmonisation in the prices of medicines. The possibility to compare the prices of medicines in Europe using the monetary currency of the Euro is a step forward in that direction. Yet harmonisation of prices of medicines does not automatically lead to equal accessibility to medicines since cost of living, transportation cost and patient access to diagnostic care have to be considered.