Estimation of cost-based prices for injectable medicines in the WHO Essential Medicines List

OBJECTIVES

Challenges remain in ensuring universal access to affordable essential medicines. We previously estimated the expected generic prices based on cost of production for medicines in solid oral formulations (ie, capsules or tablets) on the WHO Model List of Essential Medicines (EML). The objectives of this analysis were to estimate cost-based prices for injectable medicines on the EML and to compare these to lowest current prices in England, South Africa, and India.

DESIGN

Data on the cost of active pharmaceutical ingredients (APIs) exported from India were extracted from an online database of customs declarations (www.infodriveindia.com). A formula was designed to use API price data to estimate a cost-based price, by adding the costs of converting API to a finished pharmaceutical product, including the cost of formulation in vials or ampoules, transportation and an average profit margin.

RESULTS

For injectable formulations on the WHO EML, medicines had prices above the estimated cost-based price in 77% of comparisons in England (median ratio 2.54), and 62% in South Africa (median ratio 1.48), while 85% of medicines in India had prices below estimated cost-based price (median ratio 0.30). 19% of injectable medicines in England, 9% in South Africa, and 5% in India had prices more than 10 times the estimated cost-based price. Medicines that appeared in the top 20 by ratio of lowest current price to estimated cost-based price for more than one country included numerous oncology medicines-irinotecan, leuprorelin, ifosfamide, daunorubicin, filgrastim and mesna-as well as valproic acid and ciclosporin.

CONCLUSIONS

Estimating manufacturing costs can identify cases in which profit margins for medicines may be set significantly higher than average.

Production costs and potential prices for biosimilars of human insulin and insulin analogues

Introduction

High prices for insulin pose a barrier to treatment for people living with diabetes, with an estimated 50% of 100 million patients needing insulin lacking reliable access. As insulin analogues replace regular human insulin (RHI) globally, their relative prices will become increasingly important. Three originator companies control 96% of the global insulin market, and few biosimilar insulins are available. We estimated the price reductions that could be achieved if numerous biosimilar manufacturers entered the insulin market.

Methods

Data on the price of active pharmaceutical ingredient (API) exported from India were retrieved from an online customs database. Manufacturers of insulins were contacted for price quotes. Where market API prices could not be identified, prices were estimated based on comparison of similarity, in terms of manufacturing process, with APIs for which prices were available. Potential biosimilar prices were estimated by adding costs of excipients, formulation, transport, development and regulatory costs, and a profit margin.

Results

The manufacturing processes for RHI and insulin analogues are similar. API prices were US$24 750/kg for RHI, US$68 757/kg for insulin glargine and an estimated US$100 000/kg for other analogues. Estimated biosimilar prices were US$48-71 per patient per year for RHI, US$49-72 for neutral protamine Hagedorn (NPH) insulin and US$78-133 for analogues (except detemir: US$283-365).

Conclusion

Treatment with biosimilar RHI and insulin NPH could cost ≤US$72 per year and with insulin analogues ≤US$133 per year. Estimated biosimilar prices were markedly lower than the current prices for insulin analogues. Widespread availability at estimated prices may allow substantial savings globally.

Estimated costs of production and potential prices for the WHO Essential Medicines List

Introduction

There are persistent gaps in access to affordable medicines. The WHO Model List of Essential Medicines (EML) includes medicines considered necessary for functional health systems.

Methods

A generic price estimation formula was developed by reviewing published analyses of cost of production for medicines and assuming manufacture in India, which included costs of formulation, packaging, taxation and a 10% profit margin. Data on per-kilogram prices of active pharmaceutical ingredient exported from India were retrieved from an online database. Estimated prices were compared with the lowest globally available prices for HIV/AIDS, tuberculosis (TB) and malaria medicines, and current prices in the UK, South Africa and India.

Results

The estimation formula had good predictive accuracy for HIV/AIDS, TB and malaria medicines. Estimated generic prices ranged from US$0.01 to US$1.45 per unit, with most in the lower end of this range. Lowest available prices were greater than estimated generic prices for 214/277 (77%) comparable items in the UK, 142/212 (67%) in South Africa and 118/298 (40%) in India. Lowest available prices were more than three times above estimated generic price for 47% of cases compared in the UK and 22% in South Africa.

Conclusion

A wide range of medicines in the EML can be profitably manufactured at very low cost. Most EML medicines are sold in the UK and South Africa at prices significantly higher than those estimated from production costs. Generic price estimation and international price comparisons could empower government price negotiations and support cost-effectiveness calculations.

Identifying efficient dairy heifer producers using production costs and data envelopment analysis

During November and December 2011, data were collected from 44 dairy operations in 13 Pennsylvania counties. Researchers visited each farm to collect information regarding management practices and feeding, and costs for labor, health, bedding, and reproduction for replacement heifers from birth until first calving. Costs per heifer were broken up into 4 time periods: birth until weaning, weaning until 6 mo of age, 6 mo of age until breeding age, and heifers from breeding to calving. Milk production records for each herd were obtained from Dairy Herd Improvement. The average number of milking cows on farms in this study was 197.8 ± 280.1, with a range from 38 to 1,708. Total cost averaged $1,808.23 ± $338.62 from birth until freshening. Raising calves from birth to weaning cost $217.49 ± 86.21; raising heifers from weaning age through 6 mo of age cost $247.38 ± 78.89; raising heifers from 6 mo of age until breeding cost $607.02 ± 192.28; and total cost for bred heifers was $736.33 ± 162.86. Feed costs were the largest component of the cost to raise heifers from birth to calving, accounting for nearly 73% of the total. Data envelopment analysis determined that 9 of the 44 farms had no inefficiencies in inputs or outputs. These farms best combined feed and labor investments, spending, on average, $1,137.40 and $140.62/heifer for feed and labor. These heifers calved at 23.7 mo of age and produced 88.42% of the milk produced by older cows. In contrast, the 35 inefficient farms spent $227 more on feed and $78 more on labor per heifer for animals that calved 1.6 mo later and produced only 82% of the milk made by their mature herdmates. Efficiency was attained by herds with the lowest input costs, but herds with higher input costs were also able to be efficient if age at calving was low and milk production was high for heifers compared with the rest of the herd.