PHP40 Equity in Pharmaceutical Pricing and Reimbursement: Crossing the Income Divide in Asia Pacific

Abstract

Providers of a new technology are increasingly obliged to give governments an insight into related costs and benefits, and its value for money. This necessitates the use of cost-effectiveness (CEA) and cost-utility data. A good health policy, however, must not only aim to be efficient but should also guarantee equity. An analytic model has been developed to assess the ability to pay for 128 countries. The method introduces proportionality into pricing and reimbursement decisions across and within Asia Pacific countries by taking into account purchasing power parity measured at either the national or household level. Value-based pricing techniques are used in combination with national income parameters as defined in the Human Development Index together with health system variables. The resulting non-linear equity curve is a graphic representation of a price index calculated based on a country's national income. The ratio of wealth inversely reflects the theoretical discount rate that can be applied to each country compared to a high income reference country. The steepest discounts are reserved for the poorest countries, while for middle and high-income countries discounts will decrease as the country's wealth increases. The degree to which ‘equitable pricing' offers a sustainable solution to the problem of access to medicines depends on: the economic development status of a country, the value of a particular medicine to its therapeutic class and the incidence of the disease, and the extent to which segmentation can be applied. Equitable, differentiated pricing can improve access to and affordability of medicines, particularly in low- and middle-income countries. The method is relevant for the Asia Pacific region confronted with disparity in the ability-to-pay (ATP) between countries, and between different population segments in the same country.