Managing Access to Medicines
and Health Technologies
ii
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Management Sciences for Health
Attn: Managing Drug Supply
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Acknowledgments
e development of MDS-3: Managing Access to Medicines and Health Technologies was
largely supported through the Strategies for Enhancing Access to Medicines grant from the
Bill & Melinda Gates Foundation. e opinions expressed herein are those of the authors and
do not necessarily reect the views of the Gates Foundation.
Recommended Citation
Management Sciences for Health. 2012. MDS-3: Managing Access to Medicines and Health
Technologies. Arlington, VA: Management Sciences for Health.
Technical Writer
and Editor
Martha Embrey
Managing Editor
Marian Ryan
Designer
Edna Jamandre
Copyeditor
Laura Glassman
Proofreaders
Karen Weller-Watson
Robin O. Surratt
Reference Reviewer
Karen Frenchu
Illustrators
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Cover Photo Credits
(from top to bottom)
Michael Paydos (Tanzania)
Martha Embrey (Kenya)
David Lee (Vietnam)
Saul Kidde (Uganda)
Mark Morris (Afghanistan)
iii
Contributors by Chapter
is list identies the contributors to each chapter and their professional aliations and locations at the time of their
contribution. Contributors are listed alphabetically, not in relation to the proportion of material they contributed.
1. Toward Sustainable Access to Medicines
Martha Embrey, MSH, USA
2. Historical and Institutional Perspectives
Graham Dukes, University of Oslo, Norway
Helena Walkowiak, MSH, USA
3. Intellectual Property and Access to Medicines
Sisule Musungu, South Centre, Switzerland
4. National Medicine Policy
Graham Dukes, University of Oslo, Norway
5. Traditional and Complementary Medicine Policy
Torkel Faulkenberg, Karolinska Institute, Sweden
6. Pharmaceutical Legislation and Regulation
Enrique Fefer, Consultant, USA
7. Pharmaceutical Production Policy
Martha Embrey, MSH, USA
8. Pharmaceutical Supply Strategies
Malcolm Clark, MSH, Australia
9. Pharmaceutical Pricing Policy
David Henry, University of Newcastle, Australia
Andrew Searles, University of Newcastle, Australia
10. Economics for Pharmaceutical Management
David Henry, University of Newcastle, Australia
11. Pharmaceutical Financing Strategies
Martha Embrey, MSH, USA
12. Pharmaceutical Benets in Insurance Programs
John Chalker, MSH, UK
13. Revolving Drug Funds and User Fees
Martha Embrey, MSH, USA
14. Global and Donor Financing
Logan Brenzel, World Bank, USA
15. Pharmaceutical Donations
Malcolm Clark, MSH, Australia
Martha Embrey, MSH, USA
16. Managing Medicine Selection
Christopher Olson, MSH, USA
17. Treatment Guidelines and Formulary Manuals
Christopher Olson, MSH, USA
18. Managing Procurement
Andrew Barraclough, MSH, ailand
Malcolm Clark, MSH, Australia
19. Quality Assurance for Pharmaceuticals
omas Laylo, MSH, USA
20. Quantifying Pharmaceutical Requirements
Laila Akhlaghi, MSH, USA
21. Managing the Tender Process
Malcolm Clark, MSH, Australia
Ned Heltzer, MSH, USA
James Rankin, MSH, USA
iv
22. Managing Distribution
Malcolm Clark, MSH, Australia
23. Inventory Management
Vimal Dias, MSH, Sri Lanka
24. Importation and Port Clearing
Hilary Vaughan, Crown Agents, UK
25. Transport Management
Gabriel Daniel, MSH, USA
26. Kit System Management
Henk den Besten, IDA Solutions, e Netherlands
27. Managing for Rational Medicine Use
John Chalker, MSH, UK
28. Investigating Medicine Use
Lloyd Matowe, MSH, USA
29. Promoting Rational Prescribing
John Chalker, MSH, UK
30. Ensuring Good Dispensing Practices
Paul Spivey, Consultant, UK
31. Community-Based Participation and Initiatives
Jane Briggs, MSH, Guatemala
32. Drug Seller Initiatives
Malcolm Clark, MSH, Australia
Ned Heltzer, MSH, USA
Keith Johnson, MSH, USA
Robert Staley, MSH, USA
33. Encouraging Appropriate Medicine Use by
Consumers
Keith Johnson, MSH, USA
34. Medicine and erapeutics Information
Keith Johnson, MSH, USA
35. Pharmacovigilance
Christopher Olson, MSH, USA
36. Pharmaceutical Supply Systems Assessment
Martha Embrey, MSH, USA
37. Managing Pharmaceutical Programs
Sylvia Vriesendorp, MSH, USA
38. Planning for Pharmaceutical Management
Malcolm Clark, MSH, Australia
39. Contracting for Pharmaceuticals and Services
Raj Gonsalkorale, Consultant, Australia
40. Analyzing and Controlling Pharmaceutical
Expenditures
James Rankin, MSH, USA
41. Financial Planning and Management
David J. Walsh, Consultant, UK
42. Planning and Building Storage Facilities
Andrew Garnett, Consultant, UK
43. Security Management
Gabriel Daniel, MSH, USA
44. Medical Stores Management
Vimal Dias, MSH, Sri Lanka
45. Hospital Pharmacy Management
Christopher Olson, MSH, USA
46. Pharmaceutical Management for Health Facilities
Jean-Pierre Sallet, MSH, South Africa
47. Laboratory Services and Medical Supplies
Catherine Mundy, MSH, USA
48. Monitoring and Evaluation
Maria Miralles, MSH, USA
49. Pharmaceutical Management Information Systems
Julie Frye, MSH, USA
50. Computers in Pharmaceutical Management
Julie Frye, MSH, USA
51. Human Resources Management and Capacity
Development
Ummuro Adano, MSH, USA
Mary O’Neil, MSH, USA
52. Designing and Implementing Training Programs
Ross Holland, MSH, USA
v
Francis Aboagye-Nyame MSH, USA
Syed Rizwanuddin Ahmad USA
Samvel Azatyan World Health Organization
(WHO), Switzerland
Guitelle Baghdadi-Sabeti WHO, Switzerland
Andrew Barraclough MSH, ailand
Hare Ram Bhattarai MSH, Nepal
Tina Brock MSH, USA
Malcolm Bryant MSH, USA
Robert Burn MSH, USA
Edelisa Carandang WHO, Switzerland
Peter Carrasco WHO, Switzerland
John Chalker MSH, UK
Malcolm Clark MSH, Australia
Peter Cross MSH, USA
Gabriel Daniel MSH, USA
Vimal Dias MSH, Sri Lanka
Alex Dodoo University of Ghana
Medical School, Ghana
Alison Ellis MSH, USA
Marthe Everard WHO, Switzerland
Julie Frye MSH, USA
Michael Gabra MSH, USA
Louis Garrison University of Washington
School of Pharmacy, USA
Natalie Gaul MSH, USA
Nigel Gericke Consultant, South Africa
Raj Gonsalkorale Consultant, Australia
Ned Heltzer MSH, USA
Suzanne Hill WHO, Switzerland
Hans Hogerzeil WHO, Switzerland
Kathleen Holloway WHO, Switzerland
Keith Johnson MSH, USA
Reviewers
Reviewers provided feedback on one or more chapters. Reviewers’ professional aliations and locations are from the time
of their review. eir input does not necessarily reect the views of their employers.
Mohan Joshi MSH, USA
Charles Kagoma MSH, Tanzania
Grace Kahenya MSH, Zambia
Richard Laing WHO, Switzerland
Rama Lakshminarayanan World Bank, USA
David Lee MSH, USA
Evan Lee MSH, France
Andrew Marsden MSH, France
Lloyd Matowe MSH, USA
omas Moore MSH, USA
Gail Naimoli MSH, USA
Bannet Ndyanabangi MSH, USA
William Newbrander MSH, USA
Christopher Olson MSH, USA
Patricia Paredes MSH, USA
Alain Prat WHO, Switzerland
Jonathan Quick MSH, USA
James Rankin MSH, USA
Steve Reed MSH, USA
Andreas Seiter World Bank, USA
John Sheptor MSH, USA
Rima Shretta MSH, USA
Anthony So Duke University, USA
Robert Staley MSH, USA
Helen Tata WHO, Switzerland
Linda Tawk MSH, USA
Dat Tran MSH, USA
Anita Wagner Harvard Medical School,
USA
Helena Walkowiak MSH, USA
Hella Witt MSH, USA
Andre Zagorski MSH, USA
Xiaorui Zhang WHO, Switzerland
vi
Contributors to Previous Editions
Christel Albert
Wilbert Bannenberg
James Bates
Anthony Battersby
Elvira Beracochea
Carl G. Browne
Pascale Brudon
David H. Collins
Peter Cross
Gabriel Daniel
Miguel M. de Clerck
Henk den Besten
Vimal Dias
Jan F. Dik
M. N. G. Dukes
erese Edera-Piech
John Ellery
Enrique Fefer
Chris Forshaw
John Fox
Daphne A. Fresle
Julie Frye
Andrew Garnett
Aida Girma
Peter J. Graa
Sherita Gregoire
Agnes B. Guyon
Kara Hanson
Johan van Haperen
A. Frederick Hartman
Myriam Henkens
David Henry
William Hewitt
Hans V. Hogerzeil
John Holley
Peter J. Hu-Rousselle
Margaret Hume
Keith Johnson
O. M. J. Kasilo
Irene Klinger
Paul Krystall
Richard Laing
Jean-Pierre de Lamalle
Paul J. N. Lamberts
David Lee
Aida A. LeRoy
Jennie I. Litvak
M. Lee Morse
Sam Muziki
Kirsten Myhr
Hanif S. Nazerali
William Newbrander
Ronald W. O’Connor
David Ofori-Adjei
Christopher Olson
Ignacio J. Packer
Jonathan D. Quick
James Rankin
Candace Roosevelt
Dennis Ross-Degnan
Jean-Pierre Sallet
Budiono Santoso
Anthony Savelli
Paul D. Spivey
John C. Turnbull
Hilary Vaughan
Germán Velásquez
Marcelo Vernengo
Catriona Waddington
Robert L. Watt
David R. Wilson
vii
Contents
Preface
How to Use MDS-3
Part I Policy and Economic Issues
Policy and Legal Framework
1 Toward Sustainable Access to Medicines
2 Historical and Institutional Perspectives
3 Intellectual Property and Access to Medicines
4 National Medicine Policy
5 Traditional and Complementary Medicine Policy
6 Pharmaceutical Legislation and Regulation
7 Pharmaceutical Production Policy
8 Pharmaceutical Supply Strategies
Financing and Sustainability
9 Pharmaceutical Pricing Policy
10 Economics for Pharmaceutical Management
11 Pharmaceutical Financing Strategies
12 Pharmaceutical Benets in Insurance Programs
13 Revolving Drug Funds and User Fees
14 Global and Donor Financing
15 Pharmaceutical Donations
Part II Pharmaceutical Management
Selection
16 Managing Medicine Selection
17 Treatment Guidelines and Formulary Manuals
Procurement
18 Managing Procurement
19 Quality Assurance for Pharmaceuticals
20 Quantifying Pharmaceutical Requirements
21 Managing the Tender Process
Distribution
22 Managing Distribution
23 Inventory Management
24 Importation and Port Clearing
25 Transport Management
26 Kit System Management
Use
27 Managing for Rational Medicine Use
28 Investigating Medicine Use
29 Promoting Rational Prescribing
30 Ensuring Good Dispensing Practices
31 Community-Based Participation and Initiatives
32 Drug Seller Initiatives
33 Encouraging Appropriate Medicine Use by
Consumers
34 Medicine and erapeutics Information
35 Pharmacovigilance
Part III Management Support Systems
Planning and Administration
36 Pharmaceutical Supply Systems Assessment
37 Managing Pharmaceutical Programs
38 Planning for Pharmaceutical Management
39 Contracting for Pharmaceuticals and Services
40 Analyzing and Controlling Pharmaceutical
Expenditures
41 Financial Planning and Management
42 Planning and Building Storage Facilities
Organization and Management
43 Security Management
44 Medical Stores Management
45 Hospital Pharmacy Management
46 Pharmaceutical Management for Health Facilities
47 Laboratory Services and Medical Supplies
Information Management
48 Monitoring and Evaluation
49 Pharmaceutical Management Information Systems
50 Computers in Pharmaceutical Management
Human Resources Management
51 Human Resources Management and Capacity
Development
52 Designing and Implementing Training Programs
Index
viii
Preface
It is my great pleasure to present MDS-3: Managing Access to Medicines and Health Technologies. In the thirty years
since the original publication of Managing Drug Supply, the world has experienced remarkable changes as the global
health context has evolved. ink, for example, about the profound impact that HIV/AIDS alone has had. Advances
in science and medicine, donor funding for vast global health initiatives, the advent of innovative information
technologies, and a greater focus on building strong health systems have fundamentally aected our work. What
has not changed over the years is MSH’s commitment to identifying problems in access to and use of medicines and
designing and implementing relevant, eective responses. We hope that MDS-3 will be a valuable tool in the eort to
ensure universal access to quality medicines and health technologies and their appropriate use.
e new and updated information in MDS-3 reects the dramatic changes in the public health landscape. Nearly 100
experts from a wide range of disciplines and virtually every corner of the world have contributed to this third edition.
In addition to new country studies, references, and extensive revisions, MDS-3 oers new chapters on areas such as
pharmaceutical benets in insurance programs, pricing, intellectual property, drug seller initiatives, and traditional
and complementary medicine. e revisions and new chapters echo the wide variety of issues that are important to
health practitioners and policy makers today. Even the book’s new title depicts the need to broaden our focus from
medicines to include health technologies, such as test kits and laboratory supplies, and to embrace the concept of access.
Too oen people assume that if medicines and technologies are available, positive health outcomes will naturally result.
Access, however, encompasses not only product availability, but also the need to provide medicines and pharmaceutical
services that are safe, ecacious, cost-eective, and high quality. Equally important are aordability and acceptability,
including cultural and personal preferences.
We hope that MDS-3 will be used widely by those with an interest in improving access to medicines and health
technologies. To make the book accessible to as many users as possible, we are making the content available in several
formats. e easiest way to access MDS-3 is online at http://www.mds-online.org. e entire book can be searched
online, and individual chapters can be downloaded. MDS-3 is also available directly from MSH on ash drive or
CD-ROM for those without reliable Internet access or who prefer these media. We are working on an arrangement to
make print copies available as well.
As users of MDS-3, you are vital to ensuring that it remains a valuable and dynamic resource. Your suggestions for
enriching and updating the information and improving its presentation are greatly welcome. We will update individual
chapters as needed to provide new material in a timely manner. Please send suggestions to us at mds@msh.org.
We acknowledge with great appreciation all the authors, reviewers, and others whose eorts are reected in MDS-3.
Any contribution that MDS-3 makes is a direct result of their knowledge, experience, and deep dedication—and of
the hard work of those around the world who each day strive to help their countries and their programs realize the full
health impact of ensuring access to medicines and health technologies for all.
Jonathan D. Quick, MD, MPH
President and Chief Executive Ocer
Management Sciences for Health
February 2012
ix
How to Use MDS-3
MDS-3: Managing Access to Medicines and Health Technologies may seem intimidating, but you do not need to read it
from cover to cover. To ease accessibility, we have organized its content to present a sequential overview of major topics
and then within each section to provide more detailed explanations of fundamental concepts, denitions of basic terms,
and practical ideas for designing and implementing eective changes in pharmaceutical management systems.
e following features make the material accessible to readers looking for information in specic areas.
Overview chapters. Starting with Part II, Pharmaceutical Management, overview chapters introduce each element in
the pharmaceutical management framework: selection (Chapter 16), procurement (Chapter 18), distribution (Chapter
22), use (Chapter 27), and management (Chapter 37). ese overview chapters provide background information that
lays the foundation for more detailed discussions of specic topics in the the chapters that follow them.
Chapter summaries. Each chapter begins with a summary of its contents. Readers who are interested in a brief
overview of an area or of all aspects of managing access to medicines can read the relevant summaries.
Country studies. Reports of experiences in various countries illustrate points in the text. Although conditions in some
countries may have changed since these country studies were written, they provide useful examples of the ways in
which the pharmaceutical management process can operate, and in some cases, how it should not operate.
Boxes. Boxes are used to make information, such as the steps of a process, easy to locate and use. In addition, some
boxes contain general experiences or descriptions of relevant initiatives or resources.
Glossaries. Glossaries are included for the chapters on intellectual property (Chapter 3), insurance (Chapter 12),
selection (Chapter 16), procurement (Chapter 18), distribution (Chapter 22), use (Chapter 27), management
(Chapter 37), analyzing expenditures (Chapter 40), nancial management (Chapter 41), storage facilities (Chapter 42),
and computers (Chapter 51).
References and further readings. Each chapter contains a list of references cited in the text or that relate to topics the
chapter covers. Particularly useful references are indicated by a star.
Chapter annexes. Annexes provide sources of additional information and samples of pharmaceutical management
forms currently in use in various parts of the world.
chapter 1
Toward sustainable access to medicines
Summary 1.2
1.1 Introduction 1.3
1.2 Why worry about medicines? 1.3
Medicines save lives and improve health • Medicines
promote trust and participation in health services •
Medicines are costly • Medicines are dierent from other
consumer products • Substantive improvements are possible
1.3 Public health objectives and the essential medicines
concept 1.7
1.4 A paradigm for dening and improving access to
medicines 1.8
1.5 Lessons learned in pharmaceutical
management 1.9
National medicine policy provides a sound foundation
for managing pharmaceutical supply • Wise medicine
selection underlies all other improvements • Eective
management and good governance save money and improve
performance • Rational medicine use requires more
than medicine information • Systematic assessment and
monitoring are essential
1.6 Challenges for pharmaceutical management 1.12
Achieving nancial sustainability • Improving governance
and eciency in public pharmaceutical supply • Changing
the perceptions and behaviors of providers, patients, and the
public • Reorienting the role of government • Regulating
safety, ecacy, and quality
1.7 Managing pharmaceutical sector
improvements 1.18
References and further readings 1.18
illustrations
Figure 1-1 Waste in pharmaceutical management and potential
for improvement 1.7
Figure 1-2 Increasing access framework 1.9
Figure 1-3 Pharmaceutical management framework 1.10
Figure 1-4 Governance framework 1.15
Table 1-1 Mortality from infectious, chronic, and other
conditions in WHO member countries and in select
WHO regions, 2004 1.4
Table 1-2 Per capita pharmaceutical and health expenditures
in selected developing countries,
1990 and 2000 1.6
boxes
Box 1-1 Impact of essential medicines on common causes
of morbidity and mortality 1.5
Box 1-2 Goals for national medicine policies and
pharmaceutical management initiatives 1.8
Box 1-3 Recommended interventions to promote the
rational use of medicines 1.12
Box 1-4 WHO’s Good Governance for Medicines
program 1.14
country study
CS 1-1 Working with the private sector to improve malaria
outcomes in Tanzania, Ghana, and Nigeria 1.16
Part I: Policy and economic issues Part II: Pharmaceutical management Part III: Management support systems
Policy and legal framework
1 Toward sustainable access to medicines
2 Historical and institutional perspectives
3 Intellectual property and access to medicines
4 National medicine policy
5 Traditional and complementary medicine policy
6 Pharmaceutical legislation and regulation
7 Pharmaceutical production policy
8 Pharmaceutical supply strategies
Financing and sustainability
copyright
©
management sciences for health 2012
1.2 POLICY AND LEGAL FRAMEWORK
Most leading causes of death and disability in developing
countries can be prevented, treated, or at least alleviated
with cost-eective essential medicines. Despite this fact,
hundreds of millions of people do not have regular access
to essential medicines. Many of those who do have access
are given the wrong treatment, receive too little medicine
for their illness, or do not use the medicine correctly.
MDS-3 addresses practical ways in which government
policy makers, essential medicines program managers,
nongovernmental organizations (NGOs), donors, and
others can work to ensure that high-quality essential
medicines are available, aordable, and used rationally.
Medicines are of particular importance because they can
save lives and improve health, and they promote trust and
participation in health services. ey are costly, and spe-
cial concerns make medicines dierent from other con-
sumer products. Moreover, substantive improvements in
the supply and use of pharmaceuticals are possible.
Within a decade aer the rst modern pharmaceu-
ticals became available, eorts began to ensure their
widespread availability. From the mid-1950s to the
mid-1970s, basic pharmaceutical management concepts
began to evolve in countries as diverse as Cuba, Norway,
Papua New Guinea, Peru, and Sri Lanka.
In 1975, the World Health Organization (WHO) dened
essential medicines as those medicines that meet the
health needs of the majority of the population. In 1982,
Management Sciences for Health published the rst edi-
tion of Managing Drug Supply, which incorporated the
essential medicines concept and has become known as
the seminal guide to managing pharmaceuticals in devel-
oping countries. Over the last thirty years, countries have
acquired considerable experience in managing pharma-
ceutical supply. Broad lessons that have emerged from
this experience include the following—
• National medicine policy provides a sound founda-
tion for managing pharmaceutical supply.
• Wise medicine selection underlies all other
improvements.
• Eective management saves money and improves
performance.
• Rational medicine use requires more than medicine
information.
• Systematic assessment and monitoring are essential.
Although much has been achieved, challenges remain—
• Achieving nancial sustainability through greater
eciency and nancing mechanisms that increase
availability while ensuring equity (nancing options
include public nancing, health insurance, volun-
tary and other local nancing, and donor nancing)
• Improving eciency in public pharmaceutical sup-
ply through strategies that build on public-sector
strengths while incorporating greater exibility and
competitiveness
• Changing the behavior of providers, patients, and
the public to promote eective, safe, and economical
prescribing, dispensing, and patient use of medi-
cines
• Reorienting the role of government to improve the
availability, aordability, and rational use of medi-
cines in the private sector, which supplies 60 to 90
percent of the medicines consumed in many devel-
oping countries
• Regulating safety, ecacy, and quality through
adoption and enforcement of legislation and regula-
tions that ensure that all medicines meet basic qual-
ity standards
MDS-3 is organized around the four basic functions of
the pharmaceutical supply management framework—
• Selection
• Procurement
• Distribution
• Use
ese functions are supported by a core of management
support systems—
• Planning and administration
• Organization and management
• Information management
• Human resources management
Eective pharmaceutical management rests on a policy
and legal framework that establishes and supports the
public commitment to essential medicines supply and
is inuenced by economic issues (Part I of this manual).
Other major sections of the manual are devoted to each
of the main functions of the pharmaceutical manage-
ment framework (Part II) and management support
(Part III).
is manual provides concepts and approaches that
can produce measurable health improvements through
greater access to and more rational use of medicines.
Governments, private organizations, donors, and oth-
ers who use this manual must provide the will and the
resources to put these concepts and approaches into
action.
suMMary
1 / Toward sustainable access to medicines 1.3
1.1 Introduction
Interest in human health and illness is as old as humanity.
Scientic study of human anatomy and human diseases can
be traced to the Greek physician Hippocrates and earlier. Yet
as recently as one hundred years ago, the best that medicine
could oer was a handful of demonstrably eective prepara-
tions. Penicillin, one of the rst antibiotics, and chloroquine,
the rst modern antimalarial, are about seventy years old.
Medicines for common conditions such as diabetes are only
y years old. Oral contraceptives have been generally avail-
able for only forty years.
In industrialized countries, the age of modern phar-
maceuticals has eliminated or dramatically reduced mor-
tality from most common infections, allowed families to
plan their growth, extended the lives of millions of people
suering from chronic illnesses, and provided relief from
pain and suering for hundreds of millions more people.
From the rst mass production of penicillin in the 1940s
has grown a pharmaceutical industry valued at 600 billion
U.S. dollars (USD) annually. e research eorts of that
industry continually provide safer, more eective prod-
ucts. e industry’s distribution networks ensure ready
access to thousands of products for people throughout the
industrialized world.
In many other parts of the world, however, people have
not fully beneted from these medical advances. In the
late 1970s, 60 to 80 percent of people in developing coun-
tries were estimated as lacking regular access to even
the most essential medicines. By 2003, WHO estimated
that less than half the citizens in 32 percent of the world’s
poorest countries lacked regular access to essential medi-
cines, which improved on 1999 access estimates (WHO
2006c). Lack of access is directly related to income—
81 percent of the countries with the lowest access to medi-
cines also had the lowest incomes (WHO 2006c).
e large share of the world’s population that does not
benet from simple, safe, eective pharmaceuticals—and
the millions of children and adults who die each year from
common conditions that can be prevented or treated with
modern medicines—signal a fundamental failure of health
care systems.
ose who do have access to essential medicines oen
receive the wrong medicine, the wrong dosage, or a quan-
tity insucient for their needs. In some countries, many
modern medicines are dispensed without prescription by
untrained and unlicensed drug sellers. Even when patients
and consumers receive the correct medicine, half do not
consume it correctly (WHO 2002).
MDS-3 is concerned with practical ways in which gov-
ernment policy makers, essential medicines program
managers, NGOs, donors, and others can work to close
the huge gap between the need for essential medicines
and public access to them—between the vast number of
people who could benet from modern pharmaceuticals
and the much smaller number of people who actually
do benet. is manual is also concerned with closing
the gap between the availability of medicines and their
rational use.
is chapter focuses on the role of medicines in health
care and health policy. It describes the essential medicines
concept, reviews major lessons in pharmaceutical manage-
ment since the 1980s, and summarizes major challenges still
facing the pharmaceutical sector.
1.2 Why worry about medicines?
To clinicians facing the sick and injured on a daily basis,
the importance of medicines is obvious. Nonetheless,
summarizing the reasons that ministers of health, direc-
tors of health programs, donors, and others involved in the
health sector should be concerned with medicines is useful.
Accessible health services and qualied sta are necessary
components of any health care system, but medicines have
special importance for at least ve reasons—
• Medicines save lives and improve health.
• Medicines promote trust and participation in health
services.
• Medicines are costly.
• Medicines are dierent from other consumer products.
• Substantive improvements in the supply and use of
medicines are possible.
ese observations were the primary motivation for pre-
paring this manual. e following chapters focus on the
richness and diversity of opportunities for practical, eec-
tive improvements in pharmaceutical supply and use.
Medicines save lives and improve health
Most leading causes of discomfort, disability, and premature
death can be prevented, treated, or at least alleviated with
cost-eective essential medicines. Although the relative fre-
quencies of specic conditions vary among countries, out-
patient services throughout the world are presented with a
fairly common set of health problems for which essential
medicines have an important role: acute infections, skin dis-
eases, gastrointestinal complaints, musculoskeletal condi-
tions, and injuries.
Mortality gures across developing regions (see Table
1-1) reect a huge burden of illness that can be sub-
stantially reduced if carefully selected, low-cost pharma-
ceuticals are available and appropriately used. Essential
medicines signicantly aect the common causes of mor-
bidity and mortality, including acute respiratory infections,
diarrheal diseases, HIV/AIDS, measles, malaria, maternal
1.4 POLICY AND LEGAL FRAMEWORK
and perinatal mortality, tuberculosis, and cardiovascular
and other chronic diseases (see Box 1-1).
Not only are essential medicines eective against common
health problems, they are also cost-eective. Undeniably,
long-term health gains can be made by investing in pre-
vention through health education and other programs to
improve nutrition, sanitation, water supply, housing, envi-
ronment, and personal health habits. At the same time,
essential medicines provide a direct, low-cost response for
many diseases.
Medicines promote trust and participation in
health services
e credibility of health workers depends on their ability
to save a dying village elder with a course of penicillin, to
restore life to a limp child with oral rehydration, or to relieve
an irritating skin infection with a simple ointment. In addi-
tion to the direct eect on health, the availability of essen-
tial medicines attracts patients, who can then also receive
preventive and public health messages. e provision of
essential medicines is one element of primary health care
that families everywhere take an interest in and that brings
them to health facilities.
Over the years, household and patient surveys around
the world have found that pharmaceutical availability is a
major determinant of where patients go for health care and
how satised they are with that care. Availability of medi-
cines and supplies also aects the productivity of health
sta. When pharmaceutical supplies fail to arrive, patient
volume drops, and health workers are le idle. Irregular
pharmaceutical supply can be a greater constraint on pro-
gram eectiveness than inadequate numbers or inadequate
training of health workers.
Medicines are costly
Although medicines are cost-eective, they can be quite
costly for an individual, a household, a government health
system, or a country.
At the individual and household levels, medicines repre-
sent the major out-of-pocket health expenditure; 60 to 90
percent of household health spending may go toward medi-
cines (WHO 2000). In northern India, at least 57 percent
of a family’s average out-of-pocket cost of a newborn’s ill-
ness was for medicines (Srivastava et al. 2009). e trend
of private spending by households as the principal source
of worldwide pharmaceutical spending increased during
the 1990s (WHO 2004c). In addition to those direct costs,
income is lost when family members are sick, and this loss
reinforces the poverty-illness cycle. Women are especially
vulnerable because they are usually the main family care-
givers.
For ministries of health in most developing countries,
expenditures on medicines are second only to those made
on sta salaries and benets, which can cost up to half
of total health expenditures (WHO 2006d). Payment of
personnel costs is largely unavoidable as long as sta are
employed. Medicine expenditures, therefore, represent
the largest expenditure over which ministries have year-
to-year discretionary control. is fact makes medicine
expenditures both extremely important and extremely
vulnerable—particularly to uctuations in the availability
of public funding as well as to various political and eco-
nomic pressures, such as rampant ination and currency
uctuations.
At the national level, pharmaceuticals represent 10 to 20
percent of health expenditures for leading industrialized
countries. But for most developing countries, they may
Table 1-1 Mortality from infectious, chronic, and other conditions in WHO member countries worldwide and
in select WHO regions, 2004
Conditions all WHO member countries africa southeast asia
Respiratory infections 4,259 1,437 1,416
Diarrheal diseases 2,163 1,005 684
Tuberculosis 1,464 405 519
Malaria 889 806 36
HIV/AIDS 2,040 1,651 206
Other infections and parasites 2,963 982 1,229
Nutritional deficits 487 159 179
Cardiovascular disease 17,073 7,175 3,875
Diabetes mellitus 1,141 172 280
Malignant neoplasms 7,424 480 1,195
Maternal and perinatal conditions 3,707 1,236 1,367
Source: WHO 2008a.
1 / Toward sustainable access to medicines 1.5
represent 20 to 40 percent of total public and private health
expenditures (WHO 2006b).
In absolute gures, the sums that countries spend on
pharmaceuticals vary tremendously. In 2000, the world’s
population in low-income countries spent an average of
USD 4.4 per capita per year, whereas the population in
high-income countries spent an average of USD 396 per
capita (WHO 2004c). For example, Afghanistan spent
USD 9 on pharmaceuticals, Cambodia spent USD 11, and
Haiti spent USD 3; for industrialized countries in the same
year, the gure ranged from USD 272 in Norway and USD
253 in the United Kingdom to USD 382 in Switzerland and
USD 528 in Japan (WHO 2004c) (Table 1-2). In general,
medicine expenditures increase with gross national prod-
uct (GNP).
Medicines are different from other consumer
products
Because pharmaceuticals are produced by a competitive
industry that responds primarily to economic demand, one
might expect their production and sale could be le almost
wholly to the play of market forces (see Chapter 10). In that
case, politicians and lawmakers would have only the same
sorts of concerns that apply to other forms of trade—pre-
vention of fraud, protection of trademarks, and so forth.
HIV/AIDS still kills about 2 million people per year,
even though global initiatives to combat the epidemic
have increased dramatically. e widespread treatment
of HIV/AIDS with antiretrovirals (ARVs) in resource-
limited settings is relatively new, and prices for treatment
have dropped dramatically in recent years making it
available to far more people. Even with the increase in
ARV treatment, however, medicines to treat opportu-
nistic infections are still an important aspect of treating
patients with HIV/AIDS.
Respiratory infections, which accounted for more than
4.25 million deaths in 2004, are usually cured readily
with inexpensive oral antibiotics. About 20 percent of
all deaths in children under ve years of age are caused
by acute lower respiratory infections (pneumonia, bron-
chiolitis, and bronchitis); 90 percent of these deaths are
caused by pneumonia.
Diarrheal diseases, a top cause of childhood mortality,
can be prevented through improved water and sanitation.
Diarrhea can be treated in the home with simple oral
rehydration solution and selective use of antimicrobial
medicines. Recent case management advances such as
reformulated oral rehydration solution and zinc supple-
mentation have helped signicantly decrease mortality
caused by diarrhea.
Measles, another leading cause of childhood mortality, is
preventable through immunization. But when immuni-
zation is missed, much of the resulting mortality can still
be eliminated through the treatment of respiratory, diar-
rheal, and other potentially fatal complications.
Malaria threatens almost half the world’s population and
is responsible for nearly 1 million deaths each year; over
80 percent of fatal cases are in African children under
four years of age. Early diagnosis and treatment with
eective medicines can cure infections and save lives.
Maternal and perinatal mortality can be reduced
through prenatal care and nonmedicine interventions
such as high-risk case management. Postpartum hemor-
rhage can be avoided with the use of oxytocic drugs, and
maternal anemia, a major contributing factor to maternal
and perinatal morbidity and mortality, can be reduced
with preventive doses of iron folate preparations. In
addition, spacing the birth of children through family
planning (using largely oral, injectable, and implanted
contraceptives) improves both maternal and neonatal
outcomes.
Tuberculosis (TB), once on the decline, is now a lead-
ing cause of death worldwide from an infectious disease.
Although drug resistance is growing and second-line TB
drugs are costly, short-course chemotherapy is curative,
and the investment is highly cost-eective. Other strate-
gies to bring TB under control include testing for TB
drug resistance and treating TB/HIV co-infection.
Cardiovascular and other chronic diseases are rapidly
increasing in developing countries as socioeconomic
development, immunization, and other improvements
increase life expectancy. In some countries, such as
Russia, life expectancy has declined because of cardio-
vascular disease. Health services are facing a growing
demand for essential medicines to treat hypertension,
ischemic heart disease, diabetes, and other chronic dis-
eases.
Sources: Jamison et al. 2006; WHO 2008b.
Box 1-1
Impact of essential medicines on common causes of morbidity and mortality
1.6 POLICY AND LEGAL FRAMEWORK
But medicines are dierent and require special attention,
because—
• e consumer (patient or parent) oen does not
choose the medicine—it is prescribed by a clinician or
recommended by pharmacy sta.
• Even when the consumer chooses the medicine, he or
she is not trained to judge its appropriateness, safety,
quality, or value for money.
• Neither the average medical practitioner nor the aver-
age pharmacist is equipped to independently assess the
quality, safety, or ecacy of each new medicine.
• Fear of illness can lead patients to demand costly
medi cines from health workers, or to buy such medi-
cines for themselves, when cheaper medicines—or no
medicines—would achieve the same result.
• e consumer oen cannot judge the likely conse-
quences of not obtaining a needed medicine. is
problem is most troublesome when the decision maker
is a parent and the patient is a child.
ese knowledge gaps, anxieties, and uncertainties asso-
ciated with both acute and chronic illnesses create special
concerns about the supply and use of medicines.
e issues that make medicines dierent from other
consumer products also help make the pharmaceutical
sector a likely target for mismanagement, bribery, and
fraud. Contributing factors to this vulnerability to corrup-
tion include knowledge gaps and information imbalances
between manufacturers, regulators, health care provid-
ers, and consumers; a lack of legislation or regulation or
enforcement mechanisms; and the high value and volume
of medicines in the marketplace (see Cohen 2006 and
WHO 2009).
Substantive improvements are possible
In most health systems, the potential for improving the sup-
ply process is tremendous, reecting in part the magnitude
of current ineciencies and waste.
Figure 1-1 shows a hypothetical program in which an
annual expenditure of USD 1 million on pharmaceutical
supply results in only USD 300,000 worth of therapeutic
benet to the patient. Lack of careful selection, incorrect
quantication, high prices, poor quality, the, improper
storage, expiration of medicines, irrational prescribing, cor-
ruption, and incorrect medicine use by patients cause losses
totaling 70 percent of the original expenditure.
However, much can be accomplished with substantial
eort, a moderate amount of know-how, and relatively
little additional funding. Some pharmaceutical manage-
ment improvements require an initial investment in systems
development, training, physical infrastructure, and other
development initiatives, but the potential cost reductions
and therapeutic improvements are dramatic. Even small
improvements, when made in a number of related areas of
Table 1-2 Per capita pharmaceutical and health expenditures in selected developing countries, 1990 and 2000
Country
Per capita expenditures (usD)
1990 2000
Medicines Health Medicines Health
Bangladesh 2 6 5 14
Brazil 16 146 61 265
Chile 30 100 46 328
China 7 11 20 45
Costa Rica 37 132 42 280
Ghana 10 15 4 11
India 3 21 3 23
Indonesia 5 12 5 20
Kenya 4 16 7 30
Mexico 28 89 8 327
Morocco 17 26 20 54
Mozambique 2 5 2 12
Pakistan 7 12 5 18
Philippines 11 16 15 34
Turkey 21 76 58 150
Sources: Ballance, Pogány, and Forstner 1992; Murray and López 1994; WHO 2004c.
1 / Toward sustainable access to medicines 1.7
pharmaceutical management, can yield substantial overall
savings.
1.3 Public health objectives and the essential
medicines concept
Public health programs are concerned with using available
resources to achieve maximum health improvements for
the population. e perspective is not that of the individual
patient, who may well benet from a costly medicine, but
of the entire community or population, which will benet
most if safe, eective medicines are accessible to all who
need them.
Within a decade aer the rst modern pharmaceuticals
became available, eorts began to ensure their widespread
availability. From the mid-1950s to the mid-1970s, basic
medicine management concepts began to evolve in coun-
tries as diverse as Cuba, Norway, Papua New Guinea, Peru,
and Sri Lanka. In 1975, WHO dened essential medicines
as “indispensable and necessary for the health needs of
the population. ey should be available at all times, in the
proper dosage forms, to all segments of society.” In 1978, the
International Conference on Primary Health Care at Alma-
Ata, Kazakhstan, recognized essential medicines as one of
the eight elements of primary health care. (See Chapter 2 for
additional historical background.)
e rst WHO Model List of Essential Drugs, containing
about 200 products and a description of the essential medi-
cines concept, was published in 1977. Since 1977, the WHO
model list has been revised every two to three years, and as
of 2007, at least 156 countries had adopted essential medi-
cines lists (WHO 2007a).
Consistent with a public health perspective, the essential
medicines concept embraces the following guiding prin-
ciples—
• e vast majority of health problems for most mem-
bers of the population can be treated with a small,
carefully selected number of medicines.
• In practice, most doctors and other health profession-
als routinely use a small fraction of medicines pro-
duced. Training and clinical experience should focus
on the proper use of these few medicines.
• Procurement, distribution, and other supply activi-
ties can be carried out most economically and most
eciently for a limited list of pharmaceutical prod-
ucts.
• Patients can be better informed about the eective use
of medicines when the number of medicines they are
confronted with is limited.
Implementation of these principles occurs through
the adoption of national medicine policies and through
Figure 1-1 Waste in pharmaceutical management and potential for improvement
Original allocation:
USD 1,000,000
USD 1,000,000
Therapeutic benet
with current problems:
USD 300,000
USD 300,000
High prices
Incorrect medicine use
by patients
Irrational prescribing
Expiration of medicines
Improper storage
Theft
Corruption
Poor quality
Therapeutic benet
with improved management:
USD 700,00
USD 700,000
Better storage
Security systems
Quality assurance
Improved purchasing
Public education
Transparency and
good governance
Improved prescribing
Careful inventory control
Losses
from
problems
with
pharmaceutical
supply
Continuing
losses
from
unaltered
problems
Reduction
in losses
through
improved
manage-
ment
1.8 POLICY AND LEGAL FRAMEWORK
practical pharmaceutical management initiatives. e major
goals of such initiatives are outlined in Box 1-2.
1.4 A paradigm for dening and improving
access to medicines
Access to health care, including essential medicines, is a
fundamental human right. Realization of this right may
involve various combinations of public and private nanc-
ing and service provision. e public health challenge is to
work with the private sector and NGOs to achieve universal
access to essential medicines and rational use of medicines.
is work involves building mutual understanding, con-
structive partnerships, and the right incentives.
Access to health care can be dened as a construct that
encompasses distinct dimensions, which are distinguished
by sets of specic relationships (CPM 2003) (Figure 1-2).
Four dimensions of access have particular relevance to
essential medicines, vaccines, and other health commodi-
ties—
• Availability, dened by the relationship between
the type and quantity of product or service needed,
and the type and quantity of product or service
provided
• Aordability, dened by the relationship between
prices of the products or services and the user’s ability
to pay for them
• Accessibility, dened by the relationship between the
location of the product or service and the location of
the eventual user of the product or service
• Acceptability (or satisfaction), dened by the relation-
ship between the user’s attitudes and expectations
about the products and services and the actual charac-
teristics of products and services
In addition, a cross-cutting characteristic of access is—
• Quality of products and services, an essential compo-
nent of access cutting across all the dimensions, but
which specically applies to products in terms of their
safety, ecacy, and cost-eectiveness
Indicators for measuring these dimensions of access are
described in Chapter 36.
e pharmaceutical management framework (Figure 1-3)
provides the underpinning for improving access to medi-
cines as described in the paradigm above. Pharmaceutical
management involves four basic functions: selection, pro-
curement, distribution, and use. Selection involves review-
ing the prevalent health problems, identifying treatments of
choice, choosing individual medicines and dosage forms,
and deciding which medicines will be available at each level
of a health care system. Procurement includes quantifying
medicine requirements, selecting procurement methods,
managing tenders, establishing contract terms, assuring
pharmaceutical quality, and ensuring adherence to contract
terms. Distribution encompasses clearing customs, stock
control, stores management, and delivery to drug depots
and health facilities. Use comprises diagnosing, prescribing,
dispensing, and proper consumption by the patient.
In the pharmaceutical management framework (Figure
1-3), each major function builds on the previous function
and leads logically to the next. Selection should be based on
actual experience with health needs and medicine use, pro-
curement requirements follow from selection decisions, and
so forth. A breakdown in one part of the framework leads to
Health-related goals
• Make essential medicines physically available and
geographically accessible to the entire population.
• Ensure the safety, ecacy, and quality of medicines
manufactured and distributed in the country.
• Increase attendance at health facilities by increasing
the credibility and acceptance of the health system.
• Promote rational prescription, dispensing, and
patient use of medicines.
Economic goals
• Lower the cost of medicines to the government,
other health care providers, and the public.
• Reduce foreign exchange expenditures for pharma-
ceuticals without reducing the supply.
• Attain sustainable nancing through equitable fund-
ing mechanisms such as government revenues or
social health insurance.
• Provide jobs in pharmaceutical supply and possibly
production.
National development goals
• Increase skills of personnel in management, phar-
macy, and medicine.
• Improve internal communication systems.
• Create reliable supply systems that incorporate a mix
of public and private supply services.
Box 1-2
Goals for national medicine policies and pharmaceutical management initiatives
1 / Toward sustainable access to medicines 1.9
failure of the whole pharmaceutical management process.
Costs rise, shortages become common, and patients suer
when the separate tasks are performed not as part of a sys-
tem but independently and disjointedly.
At the center of the pharmaceutical management frame-
work is a core of management support systems: organization,
nancing and sustainability, information management, and
human resources management. ese management support
systems hold the pharmaceutical management framework
together. Although individual parts of the framework may
function independently for a short time, the framework as
a whole will soon cease to operate, and patient care will suf-
fer without a functional organizational structure, adequate
nancing, reliable information management, and motivated
sta.
Finally, the entire framework relies on policies, laws, and
regulations, which when supported by good governance,
establish and support the public commitment to essential
medicine supply.
1.5 Lessons learned in pharmaceutical
management
Since the 1980s, countries have acquired considerable expe-
rience in managing pharmaceutical supply. Although many
important lessons have emerged from this experience, ve
broad themes capture the most important insights—
• National medicine policy (NMP) provides a sound
foundation for managing pharmaceutical supply.
• Wise medicine selection underlies all other improve-
ments.
• Eective management and good governance save
money and improve performance.
• Rational medicine use requires more than just the dis-
semination of medicine information.
• Systematic assessment and monitoring are essential.
ese ve broad areas contain many specic lessons, some
of which follow and most of which are covered in detail in
the rest of the manual.
National medicine policy provides a sound
foundation for managing pharmaceutical supply
A national medicine policy is a guide for action; it is gener-
ally a document containing the goals set by the government
for the pharmaceutical sector and the main strategies for
reaching those goals. It provides a framework to coordinate
activities by the various actors in the pharmaceutical sec-
tor: the public sector, NGOs, the private sector, donors, and
other interested parties (see Chapter 4).
e NMP concept began receiving support during the
1980s, when piecemeal approaches to policy were leaving
important problems unsolved. A focused NMP, suited to
the needs of the particular country and with clear priorities,
was found to signicantly aect the availability and use of
pharmaceuticals in such countries as Australia, Bangladesh,
Colombia, and the Philippines.
Comprehensive, ocially adopted policies can focus
eorts to improve access to medicines, medicine use, and
Figure 1-2 Increasing access framework
strategies to
increase access
Education
•Patient
consultation
•Social marketing
Management
•Business
management
•Financial
management
regulation
•Standards
development
•Task shifting
Economic
•Insurance plans
•Pooled
procurement
(selected examples)
Safe
|
Efficacious
|
Cost-effective
|
Quality
Medical products and services
accessibility
•Location of products
and services
•Location of users
availability
•Supply of products
and services
•Demand for
products and
services
acceptability
•Characteristics
of products and
services
•Attitudes and
expectations of
users
affordability
•Price of products
and services
•Ability to pay
Source: CPM/MSH 2011.
1.10 POLICY AND LEGAL FRAMEWORK
medicine quality. Sometimes, however, the policy formu-
lation process engenders such strong opposition that all
energy becomes focused on the policy, eectively stalling
other useful but less controversial eorts to improve the
availability and use of medicines.
Formal NMPs provide a sound foundation for managing
essential medicines programs. Of equal or greater impor-
tance, however, is the underlying strategic planning process:
What are the long-term goals for the pharmaceutical sec-
tor? What strategies should be involved? How can key stake-
holders be engaged in the process? e experiences of the
last three decades suggest that governments and programs
with clear objectives and strategies can make progress in the
pharmaceutical sector.
Wise medicine selection underlies all
other improvements
Establishing and using a limited list of carefully selected
essential medicines is perhaps the single most cost-eective
action that any health care system or health care provider
can take to promote regular supply and rational use of medi-
cines (Chapter 16).
As mentioned, more than 150 countries reported having
adopted national essential medicines lists (WHO 2007a). In
contrast, in the mid-1970s, few countries had selective med-
icine lists organized by generic name. Many of the national
formularies that did exist were unselective and oen con-
tained more than one thousand products. Ministry of health
procurement lists were commonly dominated by brand-
name medicines.
Studies of the economic eect of essential medicines lists
and formulary lists demonstrate that considerable savings
can be achieved, primarily through careful choices for those
few high-unit-cost and high-volume items that consume
the major share of the pharmaceutical budget. Chapter 40
describes how to analyze medicine expenditures.
An essential medicines list or formulary list that identies
medicines by level of care becomes the basis for training in
therapeutics; for estimating pharmaceutical requirements;
for competitive procurement by generic name; for planning
distribution to health facilities; and for eorts to promote
rational, cost-eective medicine use. e national essential
medicines list or formulary list can also guide public educa-
tion eorts, local production, and private-sector medicine
management. e list, based on WHO criteria, should be
updated regularly (usually every two to three years), divided
by level of care, and accompanied by a clear policy on its
application for procurement, distribution, and use of medi-
cines (see Chapter 17).
Changing national policies to add or substitute a new
treatment or diagnostic tool is a complex decision for a
country’s ministry of health. Major policy changes, such as
switching to artemisinin-based combination therapy (ACT)
for malaria, require intensive preparation and planning that
involve multiple national and international stakeholders.
For example, uctuations in the demand for ACTs as coun-
tries changed their rst-line treatment policies, then a delay
in implementation, resulted in a global shortage of medicine
that could have been allayed with better planning and com-
munication.
Effective management and good governance save
money and improve performance
Eective management and good governance make a vital
dierence in all aspects of pharmaceutical supply, especially
with respect to the procurement and distribution of essen-
tial medicines. e basic principles of ecient procurement
and distribution have been known for several decades, but
Figure 1-3 Pharmaceutical management framework
Management supportUse Procurement
Selection
Distribution
Policy, law, and regulation
Source: CPM/MSH 2011.
1 / Toward sustainable access to medicines 1.11
the view of the public sector as the lead player in a country’s
pharmaceutical supply has evolved. Countries are increas-
ingly adopting the concept of multisector collaboration
among public, NGO, and private entities to improve e-
ciencies in supplying pharmaceuticals.
Examples of the positive consequences of good manage-
ment at the national level include savings in pharmaceuti-
cal costs through competitive procurement in El Salvador,
Ghana, and the eastern Caribbean; improved medicine
availability as a result of better quantication in Namibia and
Kenya; and more reliable delivery as a result of redesigned
distribution systems in South Africa.
Good pharmaceutical procurement practices include
restriction of purchases to the essential medicines list
(national formulary list), determination of order quanti-
ties based on reliable needs estimation, competitive tender-
ing from qualied suppliers, separation of key functions,
prompt payment, regular audits, and a formal system of sup-
plier qualication and monitoring (Chapter 18). WHO has
developed an assessment to measure transparency and gov-
ernance in a country’s pharmaceutical sector, including pro-
curement procedures; for example, an assessment showed
that four Southeast Asian countries all used an objective
quantication method and that the post-tender system to
monitor and report suppliers’ performance was eective.
However, WHO recommended that the appeals process for
rejected tender applicants be instigated or strengthened,
and noted that the procurement auditing process was weak
(WHO 2006a).
Eective distribution management comes from—
• Dening appropriate roles in the distribution system
for the public and private sectors
• Designing an ecient network of storage facilities with
the fewest number of levels appropriate to the coun-
try’s geography
• Selecting the appropriate strategy for delivery
• Keeping reliable records of medicine stocks and con-
sumption
• Allocating supplies based on actual workload and
treatment needs
• Maintaining accountability procedures and secure
storage at each level of the system
• Constructing or renovating facilities appropriate for
storing medicines
• Managing storage facilities to maintain pharmaceuti-
cal quality and eciently serve health units
• Making reliable transport arrangements
• Reinforcing reporting and supervision arrangements
As mentioned, the most ecient system may result from
collaboration among the public, private, and NGO sectors.
Kit system distribution has both benets and costs; it should
be used only when necessary to ensure that supplies reach
lower levels of the system. Chapter 26 describes how kit sys-
tems are used to distribute pharmaceuticals.
Rational medicine use requires more than
medicine information
Although 50 percent or more of pharmaceutical expen-
ditures may be wasted through irrational prescribing, dis-
pensing, and patient use of medicines, many methods for
promoting rational medicine use have never been scienti-
cally evaluated (Le Grand, Hogerzeil, and Haaijer-Ruskamp
1999). Among those methods that have been properly studied,
not many have had much measurable eect on medicine use
when implemented individually (Arnold and Straus 2005).
e actual use of pharmaceuticals is inuenced by a wide
range of factors, including pharmaceutical availability, pro-
vider experience, economic inuences, cultural factors,
community belief systems and patient attitudes, and the
complex interactions among these factors. Medicine use
patterns reect human behavior and must be viewed from
a social-science perspective rather than a biomedical per-
spective.
Pharmaceutical companies succeed in changing the hab-
its of doctors and patients because they understand what
inuences these habits. Interventions to promote rational
medicine use oen fail because they are based on the notion
that simply improving knowledge will improve medicine
use. Examples of interventions that are likely to fail include
dull medicine bulletins that drily present “the facts,” stan-
dard treatment manuals distributed to health sta without
an active orientation, withdrawal of dangerous or ineec-
tive products with no advice for prescribers on substitu-
tions, and campaigns to discourage injection use that do not
address the reasons why many patients prefer injections.
Fortunately, we have learned much in recent years about
principles for promoting rational medicine use. ese
principles involve informed, focused, active, and engaging
approaches for changing medicine-use practices by pre-
scribers, dispensers, and patients (Laing, Hogerzeil, and
Ross-Degnan 2001). Box 1-3 lists WHO’s recommended
interventions to promote the rational use of medicines.
Systematic assessment and monitoring are essential
One of the most basic, yet most signicant, advances in
pharmaceutical management has been the introduction of
objective standard indicators for assessing, comparing, and
monitoring medicine policies and management eective-
ness. Since their introduction in the early 1990s, medicine-
use indicators have been developed to assess virtually all
key aspects of pharmaceutical management and NMPs.
Examples of standard indicators include the percentage
of government pharmaceutical purchases conforming
to the national essential medicines list, the ratio of local
1.12 POLICY AND LEGAL FRAMEWORK
pharmaceutical prices to world market prices, the number
of medicines per patient prescription, and the percentage of
key medicines available at health facilities (see, for example,
MSH/RPM 1995; CPM 2003; WHO 2007b).
Measured at one point in time, such indicators allow a
program to compare itself to a target level of performance,
to identify areas of relative strength and weakness, and to
make comparisons with other programs for which data are
available. Measured over time, such indicators can be used
to set and monitor performance targets for pharmaceutical
sector improvements.
Systematic assessment and monitoring based on stan-
dard indicators are a routine part of planning, program
management, and donor evaluation in the eld of essential
medicines and pharmaceutical management. For example,
the Global Fund to Fight AIDS, Tuberculosis and Malaria
requires that grantees meet targets on certain indicators to
receive additional funds. Each country and program needs
to select, develop, and adapt indicators to suit local circum-
stances and needs, but the basic concept of objective indi-
cators should be incorporated into any essential medicines
program (see Chapter 48).
1.6 Challenges for pharmaceutical
management
Major challenges for policy makers and managers include
achieving nancial sustainability; improving eciency in
public pharmaceutical supply; changing the perceptions and
behaviors of providers, patients, and the public; reorienting
the role of government and the private sector to improve
access to medicines; and regulating safety, ecacy, and qual-
ity, which may be the biggest challenge of all.
Achieving financial sustainability
Financial sustainability is achieved only when expendi-
tures and nancial resources balance and are sucient to
support a given level of demand. If demand for medicines
exceeds the available resources, the health system is le with
only four options: improve eciency, increase nancial
resources, reduce demand, or accept a decline in quality of
care. When the components of nancial sustainability are
not in balance, it simply dees economic reality to prom-
ise constant availability of high-quality essential medicines
without improving eciency, increasing nancing, or limit-
ing demand.
Eciency means getting the most benet from available
resources. Much of this manual is devoted to improving
therapeutic eciency through better selection and use of
medicines and improving operational eciency through
better organization, procurement, and distribution of medi-
cines.
To achieve nancial sustainability, policy makers and
managers of essential medicines programs must become
familiar with economic concepts and methods related to
cost containment, eciency, cost-eectiveness analysis,
public expenditure decisions, the roles of the public and pri-
vate sectors, and the economics of regulation. High-income
countries increasingly rely on economic methods and per-
spectives. Countries with more limited resources must also
make maximum use of the insights oered by the eld of
pharmaco-economics.
• Establishing a mandated multidisciplinary national
body to coordinate policies on medicine use and moni-
tor their impact
• Formulating and using evidence-based clinical guide-
lines for training, supervision, and supporting critical
decision making about medicines
• Selecting on the basis of “treatments of choice” lists of
essential medicines that are used in drug procurement
and insurance reimbursement
• Setting up drug and therapeutics committees in dis-
tricts and hospitals and giving them the authority to
improve the use of medicines
• Promoting problem-based training in pharmaco-
therapy in undergraduate curricula
• Making continuing in-service medical education a
requirement of licensure
• Promoting systems of supervision, audit, and feedback
in institutional settings
• Providing independent information (including com-
parative data) about medicines
• Promoting public education about medicines
• Eliminating perverse nancial incentives that lead to
irrational prescribing
• Drawing up and enforcing appropriate regulation,
including that of promotional activities for medicines
• Reserving sucient governmental expenditure to
ensure equitable availability of medicines and health
personnel
Source: WHO 2006c.
Box 1-3
recommended interventions to promote the rational use of medicines
1 / Toward sustainable access to medicines 1.13
Health-sector reform is concerned with improving e-
ciency through changes in the organization and allocation
of health care resources. It is also concerned with health care
nancing.
People pay for health care in dierent ways: collectively,
through national health insurance or through the taxes they
pay on goods, services, or income; in groups, through pre-
miums paid for voluntary health insurance; or individually,
through user fees at government facilities or private out-of-
pocket health expenditures. In most countries, the primary
burden for health nancing falls directly or indirectly on the
people of the country; the proportion of health care that is
paid out of pocket actually increases in many low-income
countries, where more than 60 percent of the total health
spending comes from out of pocket (Gottret and Schieber
2006).
Local funding for recurrent health expenditures is oen
supplemented by external development assistance. In fact,
the poorest countries may nd it impossible to provide
certain basic health services, including essential medi-
cines, without some external assistance. External funding
is a growing source of nancing in low-income countries,
especially in sub-Saharan Africa and South Asia. Although
health aid increased from USD 2.6 billion in 1990 to USD
10 billion in 2003, experts are calling for increases in exter-
nal assistance ranging from USD 25 billion to 70 billion a
year to reach the UN Millennium Development Goals and
other, disease-specic treatment goals (Gottret and Schieber
2006). For example, the U.S. Institute of Medicine estimated
that instituting ACT for malaria worldwide would require
USD 300 million to 500 million each year (Committee on
the Economics of Antimalarial Drugs 2004), which would
clearly be impossible for developing countries to cover with
local funds.
Public nancing provides an essential foundation for a
country’s health system and, in particular, for health promo-
tion and preventive services. But providing free medicines
through public resources has proved unsustainable in many
developing as well as developed countries. Government
budgets are squeezed, and donor funds are directed to a
variety of other worthy causes. e policy of free medicines
is oen, in practice, a policy of shortages. Although global
initiatives to provide ARVs to people in developing coun-
tries have brought free HIV/AIDS treatment to many, the
sustainability of this arrangement is unknown. Most agree
that, even with the introduction of lower-priced ARVs,
HIV/AIDS treatment in developing countries will continue
only as long as external funding continues.
Full or partial cost recovery through user fees is one way
to supplement public nancing. Revolving pharmaceutical
funds and community medicine schemes linked to strength-
ening primary health care have been tried in countries in
Africa, Asia, and Latin America. Some programs have led to
a serious decline in utilization, with no visible improvement
in pharmaceutical availability. Yet some user-fee programs
increased both equity of access and quality. Some global
development organizations have called for the abolition of
user fees as a barrier to access to poor people (UNMP 2005),
but others point out that if the removal of user fees is not
compensated for by other funding, patients may be forced
to spend more on medicines or health care services in the
private sector (Gottret and Schieber 2006).
Social health insurance (compulsory health insurance or
social security), private health insurance, and community
health insurance schemes nance pharmaceutical supply for
a small but growing portion of the population in developing
countries. People in most high-income countries are already
covered by some form of public or private health insurance;
however, the median coverage is only 35 percent in Latin
America, 10 percent in Asia, and 8 percent in Africa (WHO
2004a). Health insurance coverage that includes pharma-
ceuticals has expanded access to medicines in many coun-
tries, including Argentina, China, Egypt, South Africa, and
Vietnam (WHO 2004b). WHO has committed to promot-
ing the provision of medicines benets through social health
insurance and prepayment schemes (WHO 2004b). Chapter
12 discusses health nancing through insurance in detail.
In the face of changing epidemiologic patterns, increasing
demand for modern health care, and growing populations,
the challenge for countries is to implement those pharma-
ceutical nancing strategies that best ensure equity of access
and a continuous supply of medicines. For many countries,
reaching this goal means taking a pluralistic approach—one
that uses dierent ways to serve dierent needs and dier-
ent groups and that combines the benets of public nanc-
ing, health insurance, voluntary nancing mechanisms, and
donor support.
Improving governance and efficiency in public
pharmaceutical supply
Aside from the problem of nancing, public-sector pharma-
ceutical supply in many countries continues to be plagued by
ineective management systems. ey oen lack sucient
qualied human resources and are characterized by systems
that are not transparent and do not promote accountabil-
ity. As such, they become susceptible to political pressures,
fraud, and abuse.
In fact, corruption is increasingly recognized as a barrier
to social and economic development, and many govern-
ments and international development organizations are
placing the issue high on development and health agendas.
For example, in 2004, WHO launched its program on good
governance in pharmaceutical systems (see Box 1-4); the
United Nations Convention Against Corruption became
effective in 2005; Transparency International’s Global
Corruption Report for 2006 focused on health systems;
and the Medicines Transparency Alliance came together in
1.14 POLICY AND LEGAL FRAMEWORK
2007. Figure 1-4 shows a framework for improving gover-
nance and accountability.
e international donor community has recognized
and is addressing the need to increase access to lifesaving
medicines: new funding sources, such as the U.S. President’s
Emergency Plan for AIDS Relief, the President’s Malaria
Initiative, UNITAID, and the Global Fund to Fight AIDS,
Tuberculosis and Malaria, are making unprecedented sums
of money available to procure medicines for deadly diseases.
However, the two greatest threats to successfully increasing
access to medicines are weak and vulnerable pharmaceuti-
cal supply systems and the worsening human resources cri-
sis. e scope of the challenge to countries in terms of the
drastic eect the new funding is having on pharmaceutical
systems is unparalleled.
Sustainability is the extent to which a program will con-
tinue to achieve its policy and pharmaceutical supply
objectives without additional outside nancial or technical
support. Key factors for program sustainability, in addition
to nancing, are motivated, capable sta; eective manage-
ment systems; and political support. Low pay, inadequate
training, lack of incentives, inappropriate recruitment, and
ineective disciplinary measures undermine sta perfor-
mance, which is already decimated in many countries by
the loss of trained human resources from “brain drain” and
HIV/AIDS.
e pharmaceutical sector is highly vulnerable to cor-
ruption and unethical practices, in part because pharma-
ceuticals have a high market value; regulating and
procuring pharmaceuticals is complex; and the sector
involves many international, national, and local entities.
Poor governance in the pharmaceutical system can
lead to severe health and economic consequences. For
example, corruption in the regulatory system can result
in approval of medicines that are inappropriate because
of safety, ecacy, quality, or price. Similarly, if inspection,
postmarketing surveillance, or quality-control systems
are corrupt, counterfeit and substandard medicines can
easily enter the marketplace, causing harm or even death.
Waste associated with corruption can also be a major
drain on the public budget and decrease the resources
available not only to buy medicines but also to pay health
care workers. Corruption aects the public’s trust in the
government as well as in the whole health profession.
Recognizing how these problems aect the health sec-
tor negatively, WHO initiated the Good Governance
for Medicines program in late 2004. e program oers
a technical-support package for governments to tackle
unethical practices in the public pharmaceutical sector.
e goal of the program is to curb corruption in pharma-
ceutical systems by applying transparent and accountable
administrative procedures and promoting ethical prac-
tices among health professionals.
Tackling corruption in the pharmaceutical sector
requires a long-term strategy. WHO has identied a
three-step approach—
1. Assess the level of transparency and vulnerability to
corruption of key functions in national pharmaceu-
tical regulation and management systems.
2. Use a national consultation process to develop a
national program on good governance for medicines
that increases transparency and accountability in the
pharmaceutical sector and promotes ethical prac-
tices.
3. Implement and promote the national good gover-
nance for medicines program.
From 2004 to 2007, WHO gradually introduced the
project in ten countries: Bolivia, Cambodia, Indonesia,
the Lao People’s Democratic Republic, Malawi, Malaysia,
Mongolia, Papua New Guinea, the Philippines, and
ailand. National assessors used the WHO transpar-
ency assessment tool to measure the level of transparency
in national medicines regulation and public-sector phar-
maceutical procurement systems.
Information collected from the rst four countries
where the program was introduced—the Lao People’s
Democratic Republic, Malaysia, the Philippines, and
ailand—revealed that although they have dierent
public-sector procurement and medicines regulation
proles, they have some common strengths and weak-
nesses. For example, all have publicly available standard
operating procedures for procurement, but none requires
members of the registration or selection committees to
ll out a conict-of-interest form.
WHO will continue to work with governments and
WHO regional oces to select new countries and activi-
ties related to the Good Governance initiative.
For additional information, access WHO’s Good
Governance website at http://www.who.int/medicines/
ggm/en/index.html.
Box 1-4
WHO’s Good Governance for Medicines program
1 / Toward sustainable access to medicines 1.15
Growing pressure to scale up access to medicines, com-
bined with the inux of funds mentioned above, is expos-
ing weaknesses in how developing countries procure and
distribute pharmaceuticals to their citizens. Examples
abound in which the conventional central medical stores
(CMS) approach to pharmaceutical procurement and dis-
tribution continues to result in chronic medicine short-
ages—even aer considerable investment has been made
in training, management systems, and physical infrastruc-
ture. Public-sector supply systems in aected countries—
primarily in Africa—have to adapt existing systems to
manage hugely increased volumes of medicines and com-
modities. Alternative strategies for public pharmaceutical
supply are attracting interest. ey include formation of
an autonomous supply agency, direct delivery, the primary
distributor system, various privatized models, and mixed
systems. Successful scaling up will require a dramatic
transformation of the systems traditionally used for pro-
curement and supply of medicines. Alternative strategies
for public pharmaceutical supply have been implemented
with varying degrees of success in countries such as Benin,
Botswana, Colombia, Guatemala, South Africa, Tanzania,
and Zambia.
With an autonomous supply system, an autonomous or
semi-autonomous agency manages bulk procurement, stor-
age, and distribution. With the direct delivery (non-CMS)
system, the government tenders to establish prices and
suppliers for essential medicines, which are then delivered
directly by suppliers to districts and major health facilities.
With the primary distributor system (another non-CMS
system), the government pharmaceutical procurement
oce establishes a contract with a single primary distribu-
tor as well as separate procurement contracts with pharma-
ceutical suppliers. e primary distributor is contracted to
manage pharmaceutical distribution by receiving medicines
from the suppliers and then storing and distributing them to
districts and major facilities. In fully privatized models, pub-
lic administration of pharmaceutical supply is minimized,
with independent pharmacies or other mechanisms pro-
viding medicines within or outside government facilities;
various nancing and reimbursement arrangements can be
used. Chapter 8 covers supply strategies in detail.
Selection, procurement, and distribution can each be
carried out in centralized, partially decentralized, or fully
decentralized systems. Decentralization aims to improve
the responsiveness, quality, and eciency of health services.
Improvements are far from certain, however. Problems with
attempts to decentralize pharmaceutical management func-
tions have included lack of local management and super-
visory capacity, increased costs (caused by loss of savings
from bulk purchasing), lack of local sta trained in phar-
maceutical management, inadequate nancial resources,
self-interested interference by local ocials, and poor phar-
maceutical quality (caused by diculty in selecting and
monitoring suppliers).
For managing pharmaceutical supply, a task-specic
approach to decentralization may be useful. Examples of
tasks that may be better performed centrally include devel-
opment of essential medicines lists, preparation of standard
treatment guidelines, management of competitive tenders,
selection and monitoring of suppliers, quality assurance,
and development of training programs in rational medicine
use. Tasks that can be decentralized include those that do
not require uncommon technical skills. Decentralization is
advisable when local information is required, local circum-
stances are important and variable throughout the country,
and local interests favor improved performance. Examples
of such tasks include adapting medicine lists or standard
treatments to local needs, quantifying medicine require-
ments, coordinating local distribution, conducting training
Figure 1-4 Governance framework
Developing policies and
legislation
Improving human resources
management to enhance
performance and ethical
practices
Strengthening organizational
structures for appropriate
decision making, authority,
and oversight
Incorporating good
governance practices into
systems and processes
Strategic vision
Participation
Transparency
Consensus orientation
Rule of law
Good governance
Equity
Efficiency
Responsiveness
Accountability
Source: Adapted from United Nations Development Programme (UNDP), Governance for Sustainable Human
Development, http://mirror.undp.org/magnet/policy/ (Geneva, 1997).
1.16 POLICY AND LEGAL FRAMEWORK
in rational medicine use, and monitoring medicine use at
health facilities.
e eectiveness of the pharmaceutical supply system in
achieving a reliable supply of essential medicines must be
continually and objectively assessed. Fundamental restruc-
turing of pharmaceutical supply arrangements challenges
the status quo and may threaten a variety of interests. But
continuing to support an ineective supply system wastes
precious resources and denies patients access to lifesaving
essential medicines.
Changing the perceptions and behaviors of providers,
patients, and the public
One of the greatest challenges is to change the way in
which providers, patients, and the public view and use
pharmaceuticals. Major problems, noted earlier, include
prescribing and dispensing incorrect, harmful, or unnec-
essary medicines; failure by patients to use needed medi-
cations correctly; and wasteful or harmful self-medication
practices.
In many African countries, informal medicine sellers are
the rst point of contact for caregivers seeking treatment
for childhood illnesses. ese individuals typically have
little or no health training and frequently misdiagnose
malaria, provide inappropriate treatment, give an incor-
rect dose, and/or give inaccurate advice. Several programs
designed to improve practices among this group for treat-
ing childhood illnesses have shown promising results.
Tanzania
Management Sciences for Health’s Strategies for
Enhancing Access to Medicines (SEAM) Program, in
collaboration with the Tanzanian government, created
a new category of accredited drug dispensing outlet
(ADDO) to improve access to aordable, quality medi-
cines and pharmaceutical services in retail drug outlets
in rural or peri-urban areas where there are few or no
registered pharmacies. To achieve this goal, the SEAM
Program took a holistic approach that combined chang-
ing the behavior and expectations of individuals and
groups who use, own, regulate, or work in retail drug
shops as well as that of community members. Major pro-
gram activities included changing behavior of dispens-
ing sta through training, education, and supervision;
improving awareness of community members regard-
ing quality and the importance of treatment adherence
through marketing and public education; and focusing
on regulation and inspection and improving local regula-
tory capacity.
Postintervention assessment results showed that—
• irty-two percent of malaria treatment encounters
at ADDOs included the sale of an appropriate rst-
line antimalarial, compared with only 16 percent at
baseline. Twenty-four percent of encounters were
dispensed exactly according to standard treatment
guidelines, compared with 6 percent at baseline.
• e average availability of antimalarials increased
from 74 to 90 percent in the ADDO region com-
pared with 71 percent availability in the control
region.
Aer the SEAM Program ended, the government of
Tanzania adopted the ADDO program and announced
the program’s nationwide rollout.
Ghana
e strategy in Ghana involved implementing a fran-
chise system called CAREshops among participating
chemical sellers’ shops to establish uniform standards,
train personnel, monitor adherence to franchise stan-
dards, and create business incentives for adherence
to those standards. e goal of this initiative was to
improve access to reasonably priced, quality-assured
essential medicines and health supplies and high-
quality dispensing services in underserved rural areas.
Other key elements of the franchising program include
a ten-week, ve-module training program, including
appropriate dispensing practices in malaria manage-
ment, designed and delivered to the selected group of
licensed chemical sellers.
Postintervention assessment results showed that—
• At endline, there was an increase from 50 percent to
62 percent in dispensing any antimalarial to simu-
lated malaria clients at CAREshops (compared with
a decrease from 58 percent to 55 percent in the con-
trol regions).
• However, only 18 percent of CAREshop facilities
dispensed the antimalarial exactly according to
treatment guidelines at endline, compared with 10
percent and 13 percent of chemical sellers in two
control regions. Clearly, additional training, supervi-
sion, and monitoring are still necessary.
Country study 1-1
Working with the private sector to improve malaria outcomes in Tanzania, Ghana, and Nigeria
1 / Toward sustainable access to medicines 1.17
Given the huge share of public and private pharmaceutical
expenditures that may be wasted through irrational medi-
cine use, governments, NGOs, and others must continue to
explore eective, sustainable ways of improving medicine-
use patterns. For example, the International Conferences on
Improving the Use of Medicines in 1997 and 2004 brought
together leading national and international policy mak-
ers, program managers, researchers, clinicians, and other
stakeholders to produce state-of-the-art consensus on inter-
ventions to improve medicines use in nonindustrialized
countries, to dene evidence-based recommendations for
program implementation, and to generate global research
agendas to ll gaps in knowledge (www.icium.org). See also
Chapters 29 and 33, which address rational prescribing and
use by the public.
Reorienting the role of government
Access to health care, including essential medicines, is a fun-
damental human right. Realization of this right may involve
various combinations of public and private nancing and
service provision. In high-income countries, public nanc-
ing of pharmaceuticals predominates. In low- and middle-
income countries, the public-private mix varies remarkably,
from over 90 percent public provision of medicines in
Slovakia and the Solomon Islands to roughly 90 percent
private market supply and nancing of pharmaceuticals in
Cambodia and Georgia (WHO 2004c).
From a public health perspective, therefore, the spe-
cic concerns with improving access to medicines in the
private pharmaceutical market are improving the avail-
ability, geographic accessibility, aordability, and accept-
ability of quality medicines and related services. Measures
to improve availability include certication and training of
pharmacy aides and other drug sellers; focus on eciency
in the supply chain, including the private sector; licens-
ing and incentives for wholesalers, pharmacies, and other
drug outlets; and community-based medicine schemes.
Innovative franchising and accreditation initiatives have
been used successfully to increase the quality of medi-
cines and pharmaceutical services from retail drug sellers,
which are oen more geographically accessible and there-
fore people’s rst source of health care (Country Study
1-1). Aordability can be improved with greater insurance
coverage, better price information, competitive procure-
ment and price competition through generic substitution,
regulation of producer and resale prices, and modication
of retail sales margins. Acceptability can be promoted by
regulating medicine information and marketing; including
essential medicines concepts in basic medical education;
providing focused continuing education for health pro-
fessionals; and actively educating the public and patients.
Finally, quality of services is increased by enforcing licens-
ing requirements for doctors, pharmacists, and other
health professionals, and quality of products is improved
by putting into place good procurement practices, such as
using prequalied suppliers, and an eective regulatory
system that includes monitoring, testing, and enforcement
(Chapter 6).
e public health challenge is to work with the private
sector and NGOs to achieve universal access to essential
medicines and rational use of medicines. is work involves
building mutual understanding, constructive partnerships,
and the right incentives.
However, three years aer implementation, the franchise
organization had not reached the break-even point and
continued to lose money, although many shops were
independently performing well. Discussions between the
original implementing organization and an outside orga-
nization to restructure the franchise business plan were
unsuccessful, and by the end of 2008, the head of the
implementing organization said that the franchise was in
serious nancial peril.
Nigeria
e Basic Support for Institutionalizing Child Survival
(BASICS) Program designed an intervention in Nigeria
that combined a short, highly focused training for pri-
vate-sector patent-medicine vendors with the promotion
of age-specic, color-coded, prepackaged antimalarials
for children under ve. ese activities were supported
by a comprehensive social marketing and behavior-
change strategy, which included mass media promoting
the new prepackaged antimalarials and medicine sellers
displaying shop identiers from the training. More than
eight hundred patent-medicine vendors were trained in
a two-month period at the relatively low cost of approxi-
mately USD 8 each. Training materials focused on imme-
diate treatment of children under ve with fever using an
appropriate-dose (preferably prepackaged) antimalarial.
Postintervention assessment results showed that—
• e number of patent-medicine vendors giving the
correct antimalarial and dose increased from 9 per-
cent to 53 percent.
• Patent-medicine vendor knowledge about the need
to use insecticide-treated nets tripled (from 21 per-
cent to 65 percent) between pre- and postinterven-
tion surveys.
Sources: Greer et al. 2004; MSH/SEAM 2008a; 2008b
1.18 POLICY AND LEGAL FRAMEWORK
Regulating safety, efficacy, and quality
Regulatory control, oen neglected in the pharmaceutical
sector of developing countries, is an indispensable founda-
tion for ensuring the safety, ecacy, and quality of pharma-
ceuticals in a country. Governments must ensure that all
pharmaceuticals available on the local market meet basic
standards. Moreover, the same quality standards applied
to the open market must be applied to medicines procured
through the public sector. Pharmaceutical legislation and
regulation should also establish basic professional standards
in both the public and the private sectors.
In industrialized countries, regulatory capacity has
developed in phases over many decades. Most develop-
ing countries also will require time to develop eective
regulatory capacity. Such capacity requires a rm legisla-
tive basis, trained personnel, specic technical resources,
adequate funding, and—perhaps most important—public
commitment to establishing and enforcing basic standards
(Chapter 6).
1.7 Managing pharmaceutical sector
improvements
is manual is meant to provide policy makers and manag-
ers with practical, accessible advice on a wide range of topics
relevant to managing pharmaceutical supply. e basic func-
tions of management are planning, implementation, and
monitoring. Eective planning requires thoughtful reec-
tion on basic goals, systematic assessment of the current
situation, identication of root causes of problems, creative
consideration of all reasonable strategies for improvement,
and selection of strategies based on dened criteria.
Program implementation is an interactive process that
involves organizing people, nances, and other resources
to achieve the desired results. e test of any policy or plan
is in its implementation. Gradual phasing-in of new initia-
tives can help build management systems, which can then
support full-scale implementation. Active decision making
and problem solving are fundamental to the implementa-
tion process.
Finally, ongoing monitoring and periodic evaluation
are needed to measure progress, to adjust implementation
plans, and to assess the eect of pharmaceutical manage-
ment improvements. Objective indicators and specic
program targets provide concrete measures against which
actual performance can be compared. Without such indi-
cators, judging the success and, therefore, the value of
human and nancial investments in pharmaceutical sector
improvements is dicult.
e experiences of countless countries and programs
demonstrate that substantive, sustainable improvements in
the supply and use of medicines are possible. But an equal
or greater number of negative experiences demonstrate that
success is by no means assured. Clear goals, sound plans,
eective implementation, and systematic monitoring of per-
formance are essential ingredients in pharmaceutical sector
development. n
References and further readings
H = Key readings.
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the Task Force on HIV/AIDS, Malaria, TB, and Access to Essential
Medicines, Working Group on Access to Essential Medicines.
Sterling, Va.: Earthcscan. <http://www.unmillenniumproject.org/
documents/TF5-medicines-Complete.pdf>
WHO (World Health Organization). 2010a. Continuity and Change:
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Geneva: WHO. <http://apps.who.int/medicinedocs/pdf/s16821e/
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H ————. 2010b. Measuring Transparency to Improve Good
Governance in the Public Pharmaceutical Sector: Assessment
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Geneva: WHO. <http://www.who.int/mediacentre/factsheets/
fs335/en/index.html>
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fs310_2008.pdf>
————. 2007a. Medicines: Essential Medicines. Fact Sheet No. 325.
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fs325/en>
————. 2007b. WHO Operational Package for Assessing, Monitoring
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————. 2006a. Measuring Transparency in Medicines Registration,
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chapter 2
Historical and institutional perspectives
Summary 2.2
2.1 e discovery of miracle medicines 2.2
2.2 e increasing gap in access to medicines 2.2
2.3 e rise of the essential medicines concept 2.3
UN agencies and WHO lead the way • e emergence
of generic pharmaceuticals • e movement accelerates •
e industry’s reaction • e campaign for rational use of
medicines
2.4 Global focus on AIDS, tuberculosis, and
malaria 2.6
e role of advocacy groups and community-based
organizations • Lack of systems to support access to
medicines for HIV/AIDS, TB, and malaria
2.5 Current organizational roles in essential
medicines 2.7
WHO and other UN agencies • Nongovernmental
organizations • Regulatory bodies • Industry
organizations
2.6 Clients, governments, producers, and beyond:
changes in the pharmaceutical eld 2.9
e evolving pharmaceutical industry • Intellectual
property laws • Public-private pharmaceutical
initiatives • Globalization and the Internet •
Ongoing policy changes
References and further readings 2.11
annex
Annex 2-1 Useful contact information 2.12
Part I: Policy and economic issues Part II: Pharmaceutical management Part III: Management support systems
Policy and legal framework
1 Toward sustainable access to medicines
2 Historical and institutional perspectives
3 Intellectual property and access to medicines
4 National medicine policy
5 Traditional and complementary medicine policy
6 Pharmaceutical legislation and regulation
7 Pharmaceutical production policy
8 Pharmaceutical supply strategies
Financing and sustainability
copyright
©
management sciences for health 2012
2.2 POLICY AND LEGAL FRAMEWORK
2.1 e discovery of miracle medicines
During and soon aer World War II, new and power-
ful medicines began to emerge in rapid succession from
laboratories around the world. Penicillin was isolated and
rst used clinically in 1941; chloroquine, rst investigated
in the mid-1930s, was released for trial against malaria in
1943; and streptomycin followed in 1944 as the rst eective
medicine for tuberculosis. Adding to the earlier benets of
smallpox and typhoid immunizations, diphtheria and teta-
nus toxoid vaccines were rst adopted during the war for
use in large military populations. Tetracycline and chlor-
amphenicol were introduced in 1948, isoniazid in 1951,
and erythromycin in 1952. Chlorpromazine signaled a new
era of mental health medicine therapy in the same year. In
1954, the sulfonylureas became the rst oral preparations
for treating diabetes, and nystatin emerged as an antifungal
agent. In 1955, eld trials of oral contraceptives took place
in Puerto Rico, leading to a virtual revolution that enabled
women to begin to eectively control family size.
In just over a decade, the whole eld of therapeutics was
revolutionized, putting into the hands of practitioners and
consumers new pharmaceutical compounds that could
cure or control problems in ways largely unknown in ear-
lier times. As both scientic and anecdotal evidence spread,
practitioners and patients demanded, and were willing to
pay for, the innovative and powerful products that the phar-
maceutical industry was patenting and producing.
2.2 e increasing gap in access to medicines
In this exciting period during the middle of the twentieth
century, many authors of popular books on pharmaceuticals
wrote of the revolution in medical care that modern medi-
cines had made possible: antibiotics seemed on the verge of
controlling deadly infections such as pneumonia and septi-
cemia; cortisone had arrived to suppress painful inamma-
tion; asthma was yielding to isoprenaline; one vaccine aer
another was appearing to stop fatal epidemics. Miracle was
the word many authors used to describe these eects.
From the global perspective, however, such miracles were
for the minority. Auent countries stood in stark contrast
to the rest of the world, where entire populations had little
access to medicines or were struggling to cope with a maze
of competitive products, many of which were obscure,
Concerns about medicines—or lack of medicines—can
be traced back for centuries. e discovery of “wonder
drugs” about the time of World War II, however, was a
milestone in pharmaceutical management. e dramatic
eectiveness of some new pharmaceuticals and the
intensive marketing of many others combined to catalyze
widespread use of modern medicines. A rapidly grow-
ing and protable industry, together with an enthusiastic
but largely uninformed public and an oen inadequately
regulated marketplace, resulted in excesses of promotion
and consumption, along with substantial levels of expen-
diture that necessitated new policy measures.
Despite the advent of wonder drugs, however, it had
become clear by the 1970s that the least-advantaged
nations were not even meeting the basic needs of their
people for essential lifesaving and health-promoting
medicines. rough the 1970s and 1980s, governments
and international organizations such as the World Health
Organization (WHO) began to redress this imbalance,
with support from nongovernmental organizations
(NGOs), largely through the promotion of essential
medicines programs.
In the 1990s and 2000s, the devastation caused by the
HIV/AIDS pandemic specically helped draw atten-
tion to the plight of people living in resource-limited
areas—especially sub-Saharan Africa—and the increased
interest in health care and funding for treatment in devel-
oping countries spawned a number of signicant global
initiatives to address inequities and increase access to
health care and essential medicines in the most-aected
countries. As the world responds with dramatically
increased nancial assistance to provide aordable medi-
cines for HIV/AIDS, tuberculosis (TB), and malaria,
there has been growing recognition that the eective-
ness of these multimillion-dollar initiatives is limited by
the capacity of health care and pharmaceutical supply
systems at the national and local levels. Constraints to
improving access to medicines include inadequate infra-
structure in facilities and a lack of trained sta and equip-
ment for those facilities.
Although dierences have always existed between the
way pharmaceutical policies have developed in indus-
trialized countries, on the one hand, and developing
countries, on the other, many elements of pharmaceuti-
cal policy are applicable everywhere. e increasingly
globalized economy is driving more uniform approaches
to pharmaceutical policy, especially as the many parties
engaged in the pharmaceutical arena work together in
global programs for the benet of all.
suMMary
2 / Historical and institutional perspectives 2.3
overpriced, outdated, ineective, or, frankly, dangerous. In
many countries, two contrasting problems existed side by
side: no medicines at all in the countryside, but hundreds
or thousands of medicines competing for prescribers’ and
customers’ attention in the cities. Medical and nursing sta
in some areas worked without the medicines they needed,
while practitioners in other areas faced a ood of expensive
products about which they had no reliable information or
that their patients could not aord.
2.3 e rise of the essential medicines
concept
An idea gradually emerged: why not concentrate rst on a
basic list of reliable medicines to meet the most vital needs—
understanding them, nding ways to pay for them, supply-
ing them to the people? e idea of working with a limited
range of medicines had long been used in places where no
alternative existed; doctors had learned to carry twenty vital
medicines in their bags, oceangoing ships commonly car-
ried 100 or fewer medicines, and in later years, some airlines
designed medicine kits for use in emergencies on long-
distance ights.
e idea was rst applied on a national scale before World
War II in Norway, which was then a poor country. Norway
decided to limit its list of approved medicines to those
most needed in medical practice and most aordable for
the population, avoiding unnecessary duplication. In the
developing world, Papua New Guinea had a policy based on
“essential drugs” by the early 1950s, Sri Lanka followed in
1959, and Cuba had a list of essential medicines by 1963.
How many medicines were needed for such a list? Sri
Lanka chose 500, similar in number to Norway’s original
list. Whatever choice was made, it provided a starting point;
one day, money might be available for more. Newly inde-
pendent countries, committed to providing universal health
care yet desperately short of resources, saw an essential
medicines policy as a means of moving ahead despite stub-
born obstacles.
It became clear that focusing on an essential medicines
list could also make better use of limited nancial resources.
e most basic medicines were oen well established
through longtime use, and because patents on many of them
had expired, several competing manufacturers were mak-
ing them and selling them at lower prices. Oen, a low-cost
medicine was as good as a newer product being sold at a cost
ten or y times higher.
By the mid-1970s, the essential medicines concept had
evolved into a practical policy suitable for worldwide use,
with one important modication. Rather than the view that
only essential medicines should be allowed on the market,
the view was now that any safe and ecacious medicine
should be allowed for sale, but that essential medicines
should be given priority. At this point WHO adopted the
concept. In 1975, WHO’s Director General dened essential
medicines as “those considered to be of utmost importance
and hence basic, indispensable, and necessary for the health
needs of the population. ey should be available at all
times, in the proper dosage forms, to all segments of society.”
Two years later, WHO issued its rst model list of 224
“essential drugs” (including vaccines). By then, many coun-
tries were nding the cost of medicines a concern; for exam-
ple, the government of Bangladesh was spending 60 percent
of its entire public health budget on medicines, yet much of
the poor population could still not get access to aordable
treatment. Oen, pharmaceuticals and raw materials had
to be imported from high-cost countries, and their prices
were further inated by substantial markups imposed by
importers, wholesalers, and retailers. In addition, thousands
of brand-name combination products, oen of questionable
ecacy and safety, were ooding the private sector. Now,
realizing that a limited list of essential medicines could help
solve most of those problems, public health services could
base their purchasing, supply, and training primarily on
items that were most needed and most aordable.
e pharmaceutical industry grew rapidly in the postwar
era. Substances that cured, prevented, or ameliorated many
problems were formulated into products that were protected
by patents, giving producers a long period in which to estab-
lish a dominant market presence and accumulate prots.
Sophisticated production and testing methods allowed the
formation of ecient, largely automated, high-volume man-
ufacturing processes, resulting in large prots that could be
plowed back into new-product research and the acquisition
of smaller rms. ese forces created an increasingly con-
centrated multinational industry.
Developing countries had another reason to give priority
to essential medicines. e rush to get new products to the
market resulted in inadequately tested medicines and many
cases of serious or fatal medicine-induced diseases. In 1960,
the introduction in Europe of the sleeping aid thalidomide
resulted in the birth of thousands of deformed children. In
1973, clioquinol, used to suppress diarrhea in Japan, was
found to cause blindness and paralysis. Even some widely
used and valuable medicines brought unexpected prob-
lems. For example, the antibiotic chloramphenicol, misused
widely in Latin America, caused aplastic anemia. ese
examples generated a growing recognition that pharmaceu-
ticals oen brought problems as well as great promise.
UN agencies and WHO lead the way
Although WHO’s role in promoting the idea of essential
medicines was historic, it was only the starting point for a
much broader trend involving other international organiza-
tions. By the 1970s, UN member states were urging inter-
national agencies to take up the problems of imbalances in
2.4 POLICY AND LEGAL FRAMEWORK
growth, inequities, and redistribution of resources in devel-
oping countries. In 1974, the International Labor Oce
adopted the idea of dening and meeting “basic needs”
in the developing world as a whole, not limited to medi-
cines alone. WHO also urged a broader approach aimed
at improving the health of rural and peri-urban popula-
tions. In Alma Ata in 1978, the WHO/UN Children’s Fund
(UNICEF) Conference on Primary Health Care adopted
the essential medicines concept as one of its basic tools.
In Geneva, the Division of Drug Policy and Management
came into being to develop the concept as part of national
pharmaceutical policy for member states. Important back-
ing also came from an interagency task force set up by the
United Nations (UN), which by 1979 recommended the
adoption of national medicines lists using generic names.
By this time, other UN agencies were also focusing on
medicines. e UN Conference on Trade and Development
(UNCTAD) supported the use of generic names, competi-
tive procurement, and cooperative purchasing arrange-
ments. The UN Industrial Development Organization
(UNIDO) emphasized local and regional cooperative pro-
duction. UNICEF, long active in directly providing medi-
cines through its supply division, embraced the essential
medicines idea with WHO in the late 1970s. Finally, the
mutually supportive role of such UN agencies became more
visible and eventually more coherent when a series of con-
ferences and task forces created a rough division of labor:
UNICEF would concentrate on supply, WHO on health
policy, UNCTAD on trade, and UNIDO on industrial devel-
opment.
The emergence of generic pharmaceuticals
By the 1980s, the patents on many medicines developed in
the two decades aer World War II began to expire, open-
ing the way for worldwide production and distribution.
Southeast Asia, especially, had a growing number of new
pharmaceutical rms with low overhead costs that began
to manufacture generic versions of well-known medicines
and sell them at a fraction of the original price. Because
they were working in countries where foreign patents
were not recognized, some of these manufacturers had
long-term experience in copying pharmaceutical prod-
ucts; not all maintained high standards of quality, however.
Nevertheless, public pharmaceutical supply systems found
that they could obtain much better prices by procuring the
new, low-cost generic versions of familiar medicines.
The movement accelerates
WHO’s Action Programme on Essential Drugs grew vigor-
ously in the early 1980s. By 1984, large amounts of extra-
budgetary funds from European donors were provided
specically to support projects in each region of the world
for strengthening medicine selection, procurement, and
distribution. Issues of pharmaceutical nancing were tack-
led, and standards were set for pharmaceutical information
and training. In 1985, the WHO Conference of Experts in
Nairobi broadened the approach with a new emphasis on
the need to use medicines rationally. at same year, the
Essential Drugs Monitor, an international newsletter advo-
cating an essential medicines policy in all its forms, began
publication. Such initiatives were heavily backed by vol-
untary eorts from the outside, notably by Health Action
International (HAI), an international coalition of NGOs
from some y countries with a special interest in pharma-
ceuticals.
The industry’s reaction
As they gained momentum, these dramatic developments
provoked mixed reactions from the international pharma-
ceutical industry. Major multinational corporations had
reaped substantial prots from selling their new products
in the industrialized world. However, even given the erce
competition among multinational pharmaceutical rms, a
low-cost solution to the problem of access to medicines in
the developing world had not evolved. One explanation was
that the industry had grown accustomed to serving auent
populations, where buyers generally accepted high prices in
exchange for the newest products, which they assumed were
the best. To cultivate that market, companies focused on
marketing and promoting their new products. Selling a rela-
tively small volume of pharmaceuticals to the most auent
part of the population was simpler and more protable than
trying to meet the needs of larger populations with limited
ability to pay.
Despite the limited coverage of the people in the devel-
oping world by the multinational pharmaceutical industry,
these countries constituted a potentially lucrative market,
with promise for the future. As developed countries intro-
duced stricter systems of pharmaceutical regulation and
were forced by the economic recession of the 1970s to look
critically at their own medicine costs, the largely unregu-
lated countries of the rest of the world provided a new pros-
pect for protability. e fact that the UN and WHO were
encouraging restrictive policies and beginning to formulate
ethical criteria for pharmaceutical marketing in the devel-
oping world seemed to threaten the multinationals’ future
prospects. Where the new generic manufacturers now saw
an opportunity, the traditional multinationals saw a threat.
One reaction of the producers of originator products was
to demand better patent protection, which came to fruition
with the World Trade Organization’s Agreement on Trade-
Related Aspects of Intellectual Property Rights in 1994 (see
Chapter 3).
e pharmaceutical industry’s direct reactions to essen-
tial medicines policies varied from hostile to mixed,
2 / Historical and institutional perspectives 2.5
with representatives declaring on occasion that the con-
cept was completely unacceptable. The Geneva-based
International Federation of Pharmaceutical Manufacturers
and Associations (IFPMA) suggested that the adoption of
an essential medicines list “would result in substandard
rather than improved medical care and might well reduce
health standards already attained.” e federation was
heavily backed in its protests by the U.S. Pharmaceutical
Manufacturers Association, which by 1985 was arguing
that the imposition of additional and arbitrary criteria
involving “essentiality” or “medical interest” would clearly
be contrary to the public interest. In retrospect, one major
problem was probably the failure to communicate to the
industry and practitioners what “essential medicines” really
meant. As noted, the essential medicines concept was not
a question of reducing access to medicines for those who
already enjoyed it, but of providing access for those who
had otherwise been without.
Subsequently, having accepted that for poorer countries
the essential medicines approach might be “practical, even
if regrettable,” the research-based segment of the pharma-
ceutical industry turned to limiting its application, insist-
ing that the concept applied only in the public sectors of
the least-developed countries. is segment of the industry
simultaneously discouraged WHO’s other policy initiatives,
notably those involving advertising standards, and contin-
ued to promote the view that generic medicines were likely
to be substandard and even dangerous.
Since 1985, however, the research-based multinational
industry and the trade as a whole have largely come around
to the view that they can earn a fair prot by providing low-
cost medicines—whether brand-name or generic—on a
large scale to essential medicines programs, with high sales
volume compensating for low prot margins. On some
fronts, the IFPMA has collaborated with essential medi-
cines programs, with WHO, and with donors. Tensions
between pharmaceutical manufacturers and international
organizations have shied from the essential drug concept
to other issues, such as intellectual property and parallel
importing.
The campaign for rational use of medicines
Aer access to essential medicines is addressed, proper use
remains a challenge, because waste by both prescribers and
users is common. e notion that if one medicine is good,
two are better (and three ideal) dies hard, and both prescrib-
ers and users are prone to overuse. e quantities of medi-
cines prescribed for a given illness are oen far more than
what is reasonably needed. Medicines are oen prescribed
when none is needed at all, because patients expect or
demand a pill or an injection, or because physicians or med-
ical assistants are anxious to be seen as doing something.
In some cases, half of medicines reaching the periphery are
wasted by irrational prescribing and by inappropriate use
by patients, who fail to follow the instructions given by pre-
scribers.
e notion that all pharmaceutical policies need to
promote the “rational use of medicines” was only slowly
accepted. Pharmaceutical policies had always centered on
medicines, not on patients. Pharmaceutical policies had
been the concern largely of administrators and pharmacists,
whereas medicine use was largely in the hands of physicians
and paramedical sta. e medical profession in particular
resented any suggestion that it might be acting irrationally
as a group or that it might be in need of guidance or control.
Medical personnel oen insisted on the “right” to prescribe
the medicine of their choice.
e rational use of medicines concept developed momen-
tum aer WHO’s 1985 Nairobi Conference of Experts used
it as its central theme. e conference emphasized the need
for the public to understand and use medicines better, par-
ticularly in view of all that was known about nonadherence
to treatment. In many cases, neither the prescriber nor
the patient was to blame for irrational use; the fault oen
resulted from lack of proper information and training, com-
pounded in some cases by fear, carelessness, or misleading
persuasion from the seller or others. With much of a nation’s
pharmaceutical supply potentially being wasted because of
irrational use, the eort to promote proper use, although
time-consuming, is vital to any eective health policy and
any well-managed economy.
Basic data on how medicines are actually being used in a
particular country and situation, why errors are made, and
the types of intervention that may improve the situation
are important aids in understanding and modifying medi-
cine use. WHO’s Collaborating Centre on Drug Utilization
Research developed methods—including some that can be
applied simply and quickly—for studying these matters, and
those methods have now been used in many parts of the
world (see WHO 2003). In 1989, the International Network
for the Rational Use of Drugs (INRUD) was formed to bring
together developing-country teams composed of decision
makers in ministries of health, researchers, health care pro-
fessionals, social scientists, and support groups. INRUD
continues to serve as a forum for joint country-level eorts
to investigate medicine-use problems, test strategies to
change providers’ and consumers’ behavior with regard to
specic problems, implement large-scale behavior-change
eorts, and share national experiences internationally with
colleagues. e International Conferences on Improving
Use of Medicines (www.icium.org) in 1997 and 2004 have
played a large role in the evolution of paradigms for promot-
ing rational use of medicines.
In 2001, WHO launched the Global Strategy for
Containment of Antimicrobial Resistance, which recog-
nizes antimicrobial resist ance as a global problem that must
be addressed in all coun tries (WHO 2001b). No country,
2.6 POLICY AND LEGAL FRAMEWORK
however eective it is at containing resistance within its
borders, can protect itself from the im portation of resis-
tant pathogens through travel and trade. Poor prescribing
practices and irrational use in any country now threaten
to undermine the potency of vital antimicrobials around
the world. In addition, the U.S. Agency for International
Development has recognized the critical importance of the
issue and supports a variety of programs that help contain
the spread of antimicrobial resistance.
e evolution of malaria treatment is an example of how
irrational use has created major problems with drug resis-
tance. During the past century, antimalarial drugs were used
on a large scale, generally as monotherapies, introduced in
sequence, and were used continually, despite unacceptably
high levels of resistance. In addition, many people have typi-
cally sought care for malaria through the private sector—
antimalarial medications are oen available at retail drug
outlets. Private prescribers and dispensers, however, are less
likely to follow standard treatment guidelines, and patients
will generally pay for and take only the medications needed
to feel better—not necessarily what constitutes the recom-
mended dose; for example, anecdotal evidence suggests
that some people prescribed artemisinin-based combina-
tion therapy (ACT) take only the artemisinin-based drug
because it is the one that makes them feel better, a practice
that negates the purpose of taking a combination of medi-
cines to slow the spread of drug resistance.
As discussed in Chapter 51, the lack of trained health pro-
fessionals in many countries makes it dicult to adequately
monitor rational medicine use, especially in the case of anti-
retrovirals (ARVs), which patients must take for the dura-
tion of their lives. is gap in human resources makes it that
much more crucial to educate patients as well as the entire
community about the importance of adherence and medi-
cine use and to explore the eectiveness of community-
based interventions (see Chapters 31 and 33).
2.4 Global focus on AIDS, tuberculosis,
and malaria
e devastation caused by the HIV/AIDS pandemic helped
draw attention to the plight of people living in resource-
limited areas—especially sub-Saharan Africa. e WHO’s
“3x5” initiative was the rst to declare a global target to
provide three million people living with HIV/AIDS in low-
and middle-income countries with antiretroviral therapy
(ART) by the end of 2005, with the ultimate goal of making
treatment accessible to all people. An additional incentive
for specic action has been the establishment of the UN
Millennium Development Goals; Goal 6 targets the end
of the spread of HIV by 2015 and universal treatment by
2010. By 2010, however, new infections were still outstrip-
ping gains made in treatment coverage (UN 2010).
e increased interest in health care and funding for treat-
ment in developing countries has spawned a number of sig-
nicant global initiatives to address inequities and increase
access to health care and essential medicines in the most-
aected countries.
Large-scale funding initiatives include the following—
• e Global Fund to Fight AIDS, Tuberculosis and
Malaria is a large multilateral funding program that
approved grants for over USD 3 billion in its rst two
years of existence. Of that money, more than 60 per-
cent has been distributed in Africa and almost 50 per-
cent has gone to procure medicines and commodities.
• e U.S. President’s Emergency Plan for AIDS Relief
(PEPFAR), announced in 2003, made a contribution of
USD 19 billion to sixteen countries—including twelve
in Africa. In 2009, PEPFAR became part of the Global
Health Initiative, which responds to a broad range
of global health needs. In response to the evolving
global HIV/AIDS situation, PEPFAR now places more
emphasis on overall health systems’ strengthening and
sustainability rather than emergency action.
• UNITAID, whose funding comes from taxes on air-
line tickets in six countries and from country and
foundation contributions, was established to support
the health-related Millennium Development Goals.
UNITAID’s model is based on long-term funding
commitments and the purchase of high volumes of
medicines and diagnostics used to leverage price
reductions. It disburses funds to international partners
working in health commodities procurement, such
as the William J. Clinton Health Action Initiative and
UNICEF.
Prominent partnerships and initiatives include the fol-
lowing—
• e AIDS Medicines and Diagnostics Service is a net-
work to support increased access to good quality and
eective treatments for HIV/AIDS by improving sup-
ply of ARVs and diagnostics in developing countries.
• e Stop TB Partnership’s Global Drug Facility helps TB
programs get quality-assured TB medicines at the best
prices, store them properly, distribute them in a timely
manner, and use them rationally.
• e Stop TB Partnership’s Green Light Committee works
to assure access to preferentially priced second-line
medicines for multidrug-resistant TB.
• e Roll Back Malaria Partnership, established in
1998, has a goal of achieving the malaria-specic
Millennium Development Goal, which is to halt and
begin to reverse the incidence of malaria, by 2015,
through a coordinated global approach toward pre-
vention and treatment, including the establishment
2 / Historical and institutional perspectives 2.7
of the Malaria Medicines and Supplies Service, which
facilitates access to aordable antimalarial medi-
cines and commodities such as insecticide-treated
mosquito nets, rapid diagnostic tests, and insecti-
cides. Also, the Global Fund’s Aordable Medicines
Facility–Malaria Initiative seeks to increase access to
aordable ACTs subsidies. Instituting subsidies for
ACTs will allow prices to be brought into line with
those of cheap, yet ineective medicines, such as
sulfadoxine-pyrimethamine, eventually driving them
out of the market.
The role of advocacy groups and community-based
organizations
Increased advocacy from various groups, such as multi-
lateral organizations, bilateral donors, nongovernmental
organizations from all levels, and civil society organizations,
has resulted in pressure to change policies and push phar-
maceutical issues onto national and international health
care agendas. Issues highlighted by these groups include
the need for new health technologies and medicines for
the three diseases, such as more sensitive TB diagnostics
and pediatric formulations of ARVs. e response to HIV/
AIDS, in particular, put into motion an advocacy movement
that has profoundly inuenced issues on a global scale.
e extreme impact of the AIDS pandemic fostered a
unique alliance of activists and people living with the infec-
tion acting as advocates within the community. In 1983, an
advocacy group in Brazil created a nongovernmental orga-
nization to ght AIDS, a year aer the rst case had been
diagnosed there, and more groups followed. In addition to
increasing prevention and treatment in poor and remote
communities, Brazilian activists are credited with assuring
adequate funding for ARVs and contributing to the coun-
try’s successful pricing negotiations with pharmaceutical
manufacturers (Homedes and Ugalde 2006). In 1987 in New
York City, the AIDS Coalition to Unleash Power (ACT UP)
was formed as an activist group dedicated to inuencing
AIDS-related policy. ACT UP was the most visible example
of how involvement at the community level and from people
living with HIV/AIDS could greatly aect public policy and
issues such as ARV access and aordability, demonstrat-
ing an impact that ranged far beyond the group’s New York
roots. Since 1998, the Treatment Action Campaign and its
allies in South Africa have led a lengthy and highly visible
public campaign to improve access to ART through the pub-
lic health sector.
Today, organizations around the world strive to mobilize
community support and action not only to improve the lives
of local families touched by HIV/AIDS, but to keep AIDS
issues—especially access to ARVs—high on the public
agenda. For example, the International HIV/AIDS Alliance
(www.aidsalliance.org), which was founded in 1993, works
with community organizations in more than forty devel-
oping countries to strengthen the local response to HIV-
related disease, including building community knowledge
of and demand for ART. e HIV/AIDS Alliance produces
a range of resources and tools to improve the eectiveness of
the community eort.
Lack of systems to support access to medicines for
HIV/AIDS, TB, and malaria
As the world has responded with increased nancial assis-
tance to provide aordable medicines for HIV/AIDS, TB,
and malaria, there is a growing recognition that the eec-
tiveness of these large initiatives is limited by the capac-
ity of health and pharmaceutical supply systems at the
national and local levels. Indeed, this challenge was borne
out by the ndings of a UN Millennium Project task force
with a mandate to combat HIV/AIDS, malaria, TB, and
other diseases and improve access to essential medicines.
e task force concluded that attempting to address indi-
vidual diseases through global programs cannot succeed
without the allocation of more resources for strengthen-
ing entire health systems, noting that “existing approaches
to combating AIDS, tuberculosis, and malaria, although
imperfect, are adequate to greatly reduce the eect of these
three diseases. However, the woeful state of health systems
in most developing countries prevents these eective inter-
ventions from reaching those in greatest need, even where
resources are available . . . Reliable provision of essential
drugs is a strong indicator of the eectiveness of the health
system” (Ruxin et al. 2005).
Although the additional nancial commitment for medi-
cines to treat these diseases is welcomed and necessary,
funding is never the only constraint and is now, oen, not
the major constraint. Other constraints to improving access
to medicines include inadequate infrastructure in facilities
such as clinics, hospitals, pharmacies, and laboratories and a
lack of trained sta and equipment for those facilities.
2.5 Current organizational roles in essential
medicines
Organizations that are active in the essential medicines eld
may be useful points of contact. Numerous organizations in
the public and private sectors oer a range of experience in
advocacy, in public policy development, and in education
and technical assistance. Several of these organizations are
discussed briey in the following sections. Organizations
(such as the World Bank, the regional development banks,
the Global Fund to Fight AIDS, Tuberculosis and Malaria,
and aid agencies in Europe and the United States) that pri-
marily nance development projects, including pharmaceu-
tical programs, are discussed in Chapter 14.
2.8 POLICY AND LEGAL FRAMEWORK
WHO and other UN agencies
WHO’s Department of Essential Medicines and Pharma-
ceutical Policies has played a leading role in promoting the
essential medicines concept. WHO publishes documents
on practices and methods as well as the Essential Medicines
Monitor newsletter on current developments around the
world. It convenes expert committees, holds workshops
and training sessions worldwide, and has supported some
country- specic pharmaceutical management programs,
largely with funds provided by interested donors.
WHO’s Department of Essential Medicines and Pharma-
ceutical Policies is also responsible for promoting phar-
maceutical quality, providing information on safety and
ecacy, and convening an expert committee that revises
the Model List of Essential Medicines every two to three
years, and now another list specically for children’s medi-
cines. It is responsible for the quality certication scheme
and good manufacturing practices standards. In addition,
its prequalication program plays a major role in promot-
ing quality medicines through evaluation and inspection
activities and by building national capacity for sustainable
manufacturing and quality monitoring.
Other WHO programs dealing with specic health
areas, such as diarrhea, immunizations, and HIV/AIDS,
have interests in essential medicines. e WHO regional
oces and individual country programs oen have addi-
tional technical sta in advisory positions.
e Pan American Health Organization is WHO’s
regional oce for the Americas. Its technical pharma-
ceutical management sta collaborates with ministries of
health, social security agencies, and other governmental
and nongovernmental institutions to strengthen national
and local health systems. Other regional oces, in the
Eastern Mediterranean, Africa, Europe, the Western
Pacic, and South East Asia, contribute to supporting
and managing essential medicines activities in their
regions.
UNICEF is actively involved in program and project
development internationally and at the country level.
Headquarters activities include technical supervision,
design, and support of country-level programs rang-
ing from large-scale procurement (through its Supply
Division, based in Copenhagen) to strategies for the pur-
chase, distribution, and use of medical supplies. In some
countries, UNICEF coordinates medicine procurement
and distribution for public health programs receiving
Global Fund grants.
e Interagency Pharmaceutical Coordination Group
includes senior pharmaceutical advisers from WHO,
the World Bank, the Joint UN Programme on HIV/
AIDS (UNAIDS), the UN Population Fund (UNFPA),
and UNICEF. e group, which meets every six months,
coordinates the pharmaceutical policies underlying their
technical advice to partner countries and plans and coor-
dinates the preparation of interagency statements and
technical documents.
In 2002, the UN Secretary-General commissioned the
UN’s Millennium Project to develop an action plan for
the world to achieve the Millennium Development Goals,
which were established in 2000. e eight Millennium
Development Goals, which have a target date of 2015,
range from halving extreme poverty to promoting gender
equality. e goals were agreed to by the world’s countries
and have formed the basis for a remarkable worldwide
eort to improve the lives of those living in extreme pov-
erty. Pharmaceutical management is a prominent compo-
nent in achieving several of the goals, such as reducing
child mortality, improving maternal health, and combating
HIV/AIDS and other diseases.
Nongovernmental organizations
Health Action International is an association of NGOs
founded in 1982 “working to increase access to essential
medicines and improve their rational use.” HAI and local
and regional aliates, such as Acción Internacional para la
Salud, are focal points for campaigns on essential medicines
action by governments and UN agencies and against indus-
try products and practices that counter the concept.
Healthy Skepticism, previously known as the Medical
Lobby for Appropriate Marketing, was formed in 1983 in
Australia. e organization tracks inappropriate and mis-
leading promotion of pharmaceutical products in developed
and developing countries and encourages the use of accu-
rate and consistent information about pharmaceuticals to
improve health-related decision making. e organization’s
AdWatch program publicizes techniques used in pharma-
ceutical advertising. Healthy Skepticism has been a stimu-
lus for other groups to monitor advertisi ng and promotion
of pharmaceuticals and other medical products. It has also
inuenced multinational corporations to modify their pro-
motional practices.
e International Network for the Rational Use of
Drugs works through national groups representing indi-
viduals from ministries of health, universities, NGOs, and
private-sector institutions to understand local medi-
cine-use problems and create reproducible activities that
improve medicine use. INRUD’s interdisciplinary focus
links clinical and social sciences and emphasizes the behav-
ioral aspects of medicine use, particularly as they concern
providers and consumers, the promotion of well-designed
research studies, and the sharing of experiences and tech-
nical expertise among participating individuals. INRUD
also promotes cooperation among donors interested in
funding activities that contribute to these objectives. e
INRUD secretariat at Management Sciences for Health
(MSH) is the coordinating body for the country core
2 / Historical and institutional perspectives 2.9
groups and publishes an annual newsletter, INRUD News
(www.inrud.org).
e International Society of Drug Bulletins (ISDB) is an
association of independent and ocial medicine informa-
tion bulletins that provides the medical community with the
most current information on individual medicines free from
funding and the inuence of the pharmaceutical industry.
ISDB helps countries develop independent, unbiased medi-
cine information bulletins and facilitates cooperation among
countries in promoting independent medicine information
(see Chapter 34).
rough its Center for Pharmaceutical Management, the
nonprot organization MSH is involved in pharmaceutical
sector assessments and analysis, research, technical assis-
tance, training, and publications to improve health through
the rational use of medicines. MSH sta members work with
international agencies and other NGOs, as well as directly
with the public and private sectors in many countries. MSH
produces training materials, soware for pharmaceutical
management, and publications such as this manual and
the widely recognized International Drug Price Information
Guide.
e International Pharmaceutical Federation (FIP) is a
global organization comprised of 122 national associations
of pharmacists and pharmaceutical scientists and 4,000 indi-
vidual members. FIP advocates globally on behalf of the role
of the pharmacist in the health care system. FIP is active in
promoting good pharmacy practice and pharmacy educa-
tion and gathering and disseminating important data on the
profession; a key resource is the 2009 FIP Global Pharmacy
Workforce and Migration Report.
e U.S. Pharmacopeia (USP) is the ocial public stan-
dards–setting authority for prescription and over-the-coun-
ter medicines manufactured or sold in the United States.
USP sets standards for the quality, purity, strength, and con-
sistency of these products, which are recognized and used
in more than 130 countries. USP also works in developing
countries to improve pharmaceutical quality and the infor-
mation available on medicines.
Médecins Sans Frontières (MSF), the humanitarian
medical organization, started its Campaign for Access to
Essential Medicines in 1999 to advocate for better access and
lower prices of essential medicines at the local, national, and
international levels. An example of MSF’s work is the annual
update of Untangling the Web of Price Reductions: A Pricing
Guide for the Purchase of ARVs for Developing Countries.
As noted in Chapter 8, missions and other NGOs pro-
vide a substantial portion of health care and pharmaceu-
tical supply services in many countries. e Ecumenical
Pharmaceutical Network (EPN) works to strengthen the
medicine-related activities of faith-based health care orga-
nizations in Africa. At the international level, the EPN acts
as an advocate for access to medicines and a clearinghouse
for information.
Regulatory bodies
The International Conference of Drug Regulatory
Authorities is a biennial forum of ocials from national
regulatory authorities. Its principal concerns include
mechanisms to guard against substandard, counterfeit,
and dangerous products. It also supports WHO’s certica-
tion scheme and guiding principles for small regulatory
authorities.
e International Conference on Harmonization (ICH) of
Technical Requirements for Registration of Pharmaceuticals
for Human Use is a collaborative eort by the regulatory
authorities of the European Union, the United States, and
Japan to harmonize technical issues related to the registra-
tion of pharmaceuticals in these countries. e conference
also makes recommendations on how to achieve greater
harmonization around the world in the interpretation and
application of related technical guidelines and require-
ments. e ICH norms do not always fully reect the needs
and capabilities of developing countries; however, WHO
promotes developing-country interests by serving in an
observer capacity, and the ICH Global Cooperation Group
works with drug regulatory authorities in nonmember
countries to facilitate the harmonization process in all coun-
tries.
Industry organizations
Most countries have individual national associations that
represent manufacturers, distributors, and private phar-
macies. ese associations are intended primarily to
protect members’ interests, but they provide support to
selected activities, such as training, local publications,
and community medicine outlets in some countries. e
IFPMA is an international advocacy group formed of
many national and regional pharmaceutical manufac-
turers’ associations and companies; it prepares position
papers for the industry, testies before international
organizations, acts as a public-relations resource for the
industry, and occasionally undertakes educational proj-
ects, such as quality-control training for developing-coun-
try sta. e International Federation of Pharmaceutical
Wholesalers plays a similar role with respect to pharma-
ceutical distributors.
2.6 Clients, governments, producers, and
beyond: changes in the pharmaceutical
eld
A review of the changes in the pharmaceutical eld over the
last forty years may suggest that a new symmetry among its
players is on the horizon; however, a look at the future sug-
gests a continuing process of evolution.
2.10 POLICY AND LEGAL FRAMEWORK
The evolving pharmaceutical industry
As noted previously, the multinational pharmaceutical
industry has become less hostile toward some national and
international pharmaceutical policy initiatives in recent
decades, while focusing more on intellectual property
issues. One reason for the shi in industry strategy has been
the declining rate of pharmaceutical product innovation.
Research-based companies are less condent that they can
build their future on a regular ow of innovative new medi-
cines; regulatory authorities have more diculty approving
new medicines to be marketed in their countries; and some
medicines have been withdrawn from the market because
of safety issues, such as the anti-inammatory drug Vioxx
(rofecoxib). For example, although the U.S. Food and Drug
Administration (FDA) approved an average of eighty-three
new medicines per year between 1998 and 2002, only one-
third were new chemical entities. Over that same period, the
FDA granted priority review to no more than seven medi-
cines per year that represented a treatment advance, and
the only real “breakthroughs” were usually “last-ditch treat-
ments” for rare conditions not responding to other therapy
(Angell 2004). Such medicines were likely to be used only
occasionally and would not provide a signicant income for
the innovator company. As for safety issues, of thirteen new
medicines that were removed from the U.S. market for safety
reasons over a decade, not one le a signicant therapeu-
tic gap (Sigelman 2002). In the case of Vioxx, estimates are
that it led to between 88,000 and 139,000 heart attacks in
the United States that would not otherwise have occurred
(Graham et al. 2005). With fewer new medicines emerg-
ing that carry the promise of major revenues, and with the
occasional safety disaster, the industry today hesitates to
rely on product innovation alone to assure a robust future as
much as it once did. As a result, most major pharmaceutical
developers are evaluating their research and development
practices and are considering changing their current devel-
opment paradigm (Kaitin 2010).
Another reason for a shi in industry policy is that devel-
oped countries have become increasingly critical of phar-
maceutical prices and expenditure. Many countries have
imposed rigid price controls on medicines or limits on the
permitted cost of a course of treatment or instituted other
interventions to control medicine prices (see Chapter 9 on
pharmaceutical pricing policies). Pharmaceutical compa-
nies now must not only persuade doctors to prescribe their
products but also convince critical therapeutics commit-
tees and pharmacy benet managers that their medicines
are suciently cost-eective to merit a place in treatment
manuals and reimbursement lists—examples of the prin-
ciple of essential medicines in practice.
New industry attitudes have also come as a result of
structural changes in the pharmaceutical industry itself.
Seeking to develop new business models to compensate for
market obstacles in industrialized countries, many compa-
nies have entered once unfamiliar areas; for example, some
research-based companies have started (or restarted) pro-
ducing generic medicines, either by diversifying their own
activities or by acquiring established generic manufacturers.
Intellectual property laws
e issue of access to medicines for HIV/AIDS, TB, and
malaria has had an impact on international trade activities.
Activists working to improve aordability of ARVs in devel-
oping countries rst highlighted the negative implications
of the World Trade Organization’s Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS) for
access to essential medicines in developing countries, result-
ing in the development of the Doha Declaration, which
addresses the right of all countries to protect the health of
their citizens (see Chapter 3).
e TRIPS agreement may make it dicult for resource-
limited countries to get access to new medicines at aord-
able prices. Although certain exibilities were included in
the agreement to help countries circumvent the intellectual
property restrictions and accommodate their public health
needs, without the necessary technical expertise, countries
have found it dicult to interpret the laws and implement
the appropriate policy mechanisms; however, govern-
ments are addressing this issue. For example, the regional
group representing countries of East, Central, and Southern
Africa created a model national pharmaceutical policy that
addresses ways for member countries to incorporate these
exibilities into their policies.
Public-private pharmaceutical initiatives
For a long time, the private and public pharmaceutical sec-
tors worked in relative isolation from each another; contact
was formal, critical, and sometimes hostile. In the nal years
of the twentieth century, however, a number of interna-
tional public-private partnerships were developed to create
positive and innovative collaboration in research, devel-
opment, and distribution, especially in serving the needs
of developing countries. Promising advances are emerg-
ing, particularly through initiatives under the auspices of
the United Nations and its specialized agencies, such as
WHO. Examples include the Global Alliance for TB Drug
Development and the Medicines for Malaria Venture. More
time is needed to determine the long-term value of these
partnerships, but increasing evidence suggests that such
public-private initiatives can be productive.
Globalization and the Internet
No more than y years ago, the world remained rig-
idly divided into nation-states, each with its own specic
2 / Historical and institutional perspectives 2.11
approach to its own specic problems; however, the process
of globalization has quickly broken down that compart-
mentalization. Many companies now operate worldwide,
developing policies and conducting activities that can only
partially be controlled by national governments; in fact,
some corporations have greater nancial resources than
many of the governments with which they do business.
e Internet is an example of a worldwide activity that
largely escapes national control. On the one hand, the
Internet allows users to circumvent undesirable practices
such as government censorship, but on the other hand, it
facilitates activities that hurt society at large, for example,
the dishonest advertising and sale of ineective and dan-
gerous medicines. Drug regulatory authorities and others
have been working to address the issue of pharmaceuti-
cals being sold through the Internet, as well as on ways to
increase access to reliable information through the Internet
(for example, see WHO/IMPACT 2009; WHO 2001a,
2002).
Ongoing policy changes
e changes in the political and economic environment dis-
cussed in this chapter mean that pharmaceutical manage-
ment must also adapt to new opportunities and challenges.
Of the tools and concepts described throughout MDS-3,
some originated in industrialized countries, others in the
developing world, and others in the international commu-
nity. Many have outgrown their origins, and the ideas and
experiences are increasingly becoming common ground
for solving important pharmaceutical management issues
throughout the world while continuing to evolve as that
world changes.
Although death and disability are always tragic, the ratio-
nale for national concern and action on essential medicines
is driven by the large gap remaining between what we know
and what we do. We know how medicines can help eliminate
unnecessary and preventable deaths and disability, yet mil-
lions continue to die of TB, which is essentially curable with
medical therapy. People living with HIV/AIDS can now
extend their lives with ARV medicines, but more than half
of those in need of treatment do not have access (UNAIDS
2009). Malaria, pneumonia, diarrhea, and hypertension
are manageable with basic medicines, yet they continue to
kill millions. Children are born unwanted and into pov-
erty merely because low-cost family-planning supplies are
unavailable.
e clear public health challenge is to continue to lead
public policy makers and managers toward a consistent
approach to essential medicines. e primary activity is to
identify and attack the major problems that are amenable
to solution with available resources. e strategies of many
national pharmaceutical programs in less advantaged
nations, and increasingly among decision makers in more-
advantaged settings, are converging: rst, to ensure that the
basic medicines that save lives and improve health are avail-
able to all; second, to ensure that they are used appropri-
ately; and third, to logically deal with the many medicines
that are not essential to public health, but may play a limited
or specialized role in health care. n
References and further readings
H = Key readings.
Angell, M. 2004. e Truth about the Drug Companies. New York:
Random House.
Foster, S. D. 1991. Supply and Use of Essential Drugs in Sub-Saharan
Africa: Some Issues and Possible Solutions. Social Science and
Medicine 32:1201–18.
Graham, D. J., D. Campen, R. Hui, M. Spence, C. Cheetham, G. Levy,
S. Shoor, and W. Ray. 2005. Risk of Acute Myocardial Infarction and
Sudden Cardiac Death in Patients Treated with Cyclo-oxygenase
2 Selective and Non-selective Non-steroidal Anti-inammatory
Drugs. Lancet 365(9458):475–81.
Homedes, N., and A. Ugalde. 2006. Improving Access to Pharma-
ceuticals in Brazil and Argentina. Health Policy and Planning 21(2):
123–31.
Kaitin, K. I. 2010.Deconstructing the Drug Development Process:
The New Face of Innovation.Clinical Pharmacolog y and
erapeutics87(3):356–61.
H Laing R., B. Waning, A. Gray, N. Ford, and E. ’t Hoen. 2003. 25 Years
of the WHO Essential Medicines Lists: Progress and Challenges.
Lancet 361:1723–9.
Mangham, L. J., and K. Hanson. 2010. Scaling Up in International
Health: What Are the Key Issues? Health Policy and Planning 25:85–
96.
Quick, J. D., H. V. Hogerzeil, G. Velasquez, and L. Rago. 2002.
Twenty-ve Years of Essential Medicines. Bulletin of the World
Health Organization 80(11):913–4. <http://www.who.int/bulletin/
archives/80(11)913.pdf>
Ruxin J., J. E. Paluzzi, P. A. Wilson, Y. Tozan, M. Kruk, and A.
Teklehaimanot. 2005. Emerging Consensus in HIV/AIDS,
Malaria, Tuberculosis, and Access to Essential Medicines. Lancet
365(9459):618–21.
Sigelman, D. W. 2002. Dangerous Medicine. The American
Prospect (Online) 13(17). <http://www.prospect.org/cs/
articles?article=dangerous_medicine>
Smith, M. K., and S. Tickell. 2003. e Essential Drugs Concept Is
Needed Now More an Ever. Transactions of the Royal Society of
Tropical Medicine and Hygiene 97(1):2–5.
UN (United Nations). 2010. e Millennium Development Goals Report
2010. New York: UN.
UNAIDS (Joint United Nations Programme on HIV/AIDS). 2009.
AIDS Epidemic Update 2009. Geneva: UNAIDS. <http://data.
unaids.org/pub/Report/2009/JC1700_Epi_Update_2009_en.pdf>
H UN Millennium Project. 2005. Prescription for Healthy Development:
Increasing Access to Medicines. Report of the Task Force on HIV/
AIDS, Malaria, TB, and Access to Essential Medicines Working Group
on Access to Essential Medicines. Sterling, Va.: Earthcscan. <http://
www.unmillenniumproject.org/documents/TF5-medicines-
Complete.pdf>
H WHO (World Health Organization). 2009. Report of the 17th Expert
Committee on the Selection and use of Essential Medicines: 23 to
27 March 2009. Geneva: WHO. <http://www.who.int/selection_
medicines/committees/expert/17/en/>
2.12 POLICY AND LEGAL FRAMEWORK
————. 2007. e Selection and Use of Essential Medicines: Report
of the WHO Expert Committee, 2007 (Including the 15th Model
List of Essential Medicines). Geneva: WHO. <http://www.who.int/
medicines/publications/essentialmeds_committeereports/en/>
H ————. 2004a. e World Medicines Situation. Geneva: WHO.
<http://www.searo.who.int/LinkFiles/Reports_World_Medicines_
Situation.pdf>
————. 2004b. WHO Medicines Strategy: Countries at the Core 2004–
2007. Geneva: WHO. <http://whqlibdoc.who.int/hq/2004/WHO_
EDM_2004.5.pdf>
————. 2003. Introduction to Drug Utilization Research. Geneva:
WHO. <http://www.who.int/medicines/areas/quality_safety/
safety_ecacy/Drug%20utilization%20research.pdf>
————. 2002. WHO and Top Publishers Today Launch “Access
to Research” Internet Initiative for Developing Countries. Press
Release WHO/7. Geneva: WHO. <https://apps.who.int/inf/en/
pr-2002-07.html>
————. 2001a. Pharmaceuticals and the Internet: Drug Regulatory
Authorities’ Perspective. Geneva: WHO. <http://whqlibdoc.who.int/
hq/2001/a74987.pdf>
————. 2001b. WHO Global Strategy for Containment of Antimicrobial
Resistance. Geneva: WHO. <http://www.who.int/csr/resources/
publications/drugresist/WHO_CDS_CSR_DRS_2001_2_EN/en/>
WHO/IMPACT (World Health Organization/International Medical
Products Anti-Counterfeiting Taskforce). 2009. Overview of
IMPACT Working Groups’ Documents and Activities. Geneva:
WHO. <http://www.who.int/impact/activities/overviewofIMPAC
Tworkingdocs.pdf>
Annex 2-1 Useful contact information
affordable Medicines Facility–Malaria
Global Fund to Fight AIDS, Tuberculosis
and Malaria
Chemin de Blandonnet 8
1214 Vernier
Geneva, Switzerland
Telephone: +41 58 791 17 00
Fax: +41 58 791 17 01
E-mail: amfmconsult@theglobalfund.org
http://www.theglobalfund.org/en/amfm
aIDs Medicines and Diagnostics service
HIV/AIDS Department
World Health Organization
20 Avenue Appia
CH 1211 Geneva 27 Switzerland
Telephone: +41 22 791 21 11
Fax: +41 22 791 31 11
E-mail: amds@who.int
http://www.who.int/hiv/amds/en
alliance for the Prudent use
of antibiotics
75 Kneeland Street
Boston, Massachusetts 02111 USA
Telephone: +1 617 636 0966
Fax: +1 617 636 3999
E-mail: apua@tufts.edu
http://www.tufts.edu/med/apua
Campaign for access to Essential
Medicines
Médecins Sans Frontières
Rue de Lausanne 78
P.O. Box 116
CH 1211 Geneva 21 Switzerland
Telephone: +41 22 849 84 05
Fax: +41 22 849 84 04
E-mail: access@msf.org
http://www.msfaccess.org
Clinton Health access Initiative
William J. Clinton Foundation
55 W. 125th Street
New York, New York 10027 USA
Telephone: +1 212 348 8882
Fax: +1 212 348 5147
http://www.clintonfoundation.org/
what-we-do/clinton-hiv-aids-initiative
Consumers International
24 Highbury Crescent
London N5 1RX United Kingdom
Telephone: +442072266663
Fax: +44 20 7354 0607
Additional offices in Africa, Malaysia, and
Chile
http://www.consumersinternational.org
Ecumenical Pharmaceutical Network
P.O. Box 738-00200
Nairobi, Kenya
Telephone: +254 20 444 4832/444 5020
Fax: +254 20 444 1090
Mobile: +254 72 430 1755
E-mail: info@epnetwork.org
http://www.epnetwork.org
Euro Health Group
Tinghøjvej 77
2860 Søborg, Denmark
Telephone: +45 3969 6888
Fax: +45 3969 5888
E-mail: eurohealth@ehg.dk
http://ehg.dk
Global Drug Facility
Green Light Committee (stop TB
Partnership)
Stop TB Partnership Secretariat
World Health Organization
HTM/STB/TBP
20 Avenue Appia
CH 1211 Geneva 27 Switzerland
Telephone: +41 22 791 46 59
Fax: +41 22 791 48 86
E-mail: gdf@who.int
http://www.stoptb.org/gdf
E-mail: glc_secretariat@who.int
http://www.who.int/tb/challenges/mdr/
greenlightcommittee/en/index.html
Global Fund to Fight aIDs, Tuberculosis
and Malaria
Geneva Secretariat
Chemin de Blandonnet 8
1214 Vernier
Geneva, Switzerland
Telephone: +41 58 791 17 00
Fax: +41 58 791 17 01
E-mail: info@theglobalfund.org
http://www.theglobalfund.org/
Health action International africa
Kabarnet Lane
P.O. Box 66054-00800
Nairobi, Kenya
Telephone: +254 20 386 0434/5/6
Fax: +254 20 386 0437
E-mail: info@haiafrica.org
http://www.haiafrica.org
Health action International Europe
Overtoom 60/II
1054 HK Amsterdam, The Netherlands
Telephone: +31 20 683 3684
Fax: +31 20 685 5002
E-mail: info@haiweb.org
http://www.haiweb.org
Health action International Latin america
(Acción Internacional para la Salud)
Apdo 41-128 Urb Javier Prado
Calle Mario Florian Mz 3 Lote 22, San Borja
Lima 41 Peru
Telephone/fax: +51 1 346 1502
E-mail: infoais@aislac.org
http://www.aislac.org
Healthy skepticism
34 Methodist Street
Willunga, South Australia 5172 Australia
Telephone/fax: +61 8 8557 1040
http://www.healthyskepticism.org
HIV/aIDs alliance
UK Secretariat / International
HIV/AIDS Alliance
1st and 2nd Floors, Preece House
91-101 Davigdor Road
Hove BN3 1RE United Kingdom
Telephone: +44 1273 718 900
Fax: +44 1273 718 901
E-mail: mail@aidsalliance.org
http://www.aidsalliance.org
2 / Historical and institutional perspectives 2.13
International Conference on
Harmonization (ICH) of Technical
requirements for registration of
Pharmaceuticals for Human use
ICH Secretariat
c/o IFPMA
15 Chemin Louis-Dunant
P.O. Box 195
CH 1211 Geneva 20 Switzerland
Telephone: +41 22 338 32 06
Fax: +41 22 338 32 30
E-mail: admin@ich.org
http://www.ich.org/index.xl
International Federation of
Pharmaceutical Manufacturers
and associations (IFPMa)
15 Chemin Louis-Dunant
P.O. Box 195
CH 1211 Geneva 20 Switzerland
Telephone: +41 22 338 32 00
Fax: +41 22 338 32 99
E-mail: info@ifpma.org
http://www.ifpma.org
International Network for the rational
use of Drugs
c/o Management Sciences for Health
4301 N. Fairfax Drive, Suite 400
Arlington, Virginia 22203 USA
Telephone: +1 703 524 6575
Fax: +1 703 524 7898
E-mail: inrud@msh.org
http://www.inrud.org
International Pharmaceutical
Federation (FIP)
Andries Bickerweg 5
2517 JP The Hague, The Netherlands
Telephone: +31 70 302 1970
Fax: +31 70 302 1999
E-mail:fip@fip.org
http://www.fip.org
International society of Drug Bulletins
103 Hertford Road
London N2 9BX United Kingdom
http://www.isdbweb.org
Karolinska Institutet
Department of Public Health Sciences
Division of International Health (IHCAR)
SE-17177 Stockholm, Sweden
Telephone: +46 8 524 800 00
Fax: +46 8 31 11 01
http://www.phs.ki.se/ihcar
Management sciences for Health
Center for Pharmaceutical Management
4301 N. Fairfax Drive, Suite 400
Arlington, Virginia 22203 USA
Telephone: +1 703 524 6575
Fax: +1 703 524 7898
E-mail: cpm@msh.org
http://www.msh.org
Médecins sans Frontières
Rue de Lausanne 78
CP 116-1211 Geneva 21 Switzerland
Telephone: +41 22 849 84 00
Fax: +41 22 849 84 04
http://www.msf.org
Medicus Mundi International Network
Murbacherstrasse 34
CH 4013 Basel, Switzerland
Telephone: +41 61 383 18 11 (Monday–
Wednesday)
E-mail: office@medicusmundi.org
http://www.medicusmundi.org
Pan american Health Organization
WHO Regional Office for the Americas
525 23rd Street, N.W.
Washington, D.C. 20037 USA
Telephone: +1 202 974 3000
Fax: +1 202 974 3663
http://www.paho.org
roll Back Malaria Partnership
(Secretariat hosted at WHO)
20 Avenue Appia
CH 1211 Geneva 27 Switzerland
Telephone: +41 22 791 58 69
Fax: +41 22 791 15 87
E-mail: inforbm@who.int
http://www.rollbackmalaria.org
uNaIDs
20 Avenue Appia
CH 1211 Geneva 27 Switzerland
Telephone: +41 22 791 36 66
Fax: +41 22 791 41 87
http://www.unaids.org/en
uNICEF
UNICEF House
Essential Drugs Unit
2 United Nations Plaza
New York, New York 10017 USA
Telephone: +1 212 326 7000
Fax: +1 212 887 7465
http://www.unicef.org
uNITaID
UNITAID Secretariat
World Health Organization
20 Avenue Appia
CH 1211 Geneva 27 Switzerland
Telephone: +41 22 791 55 03
Fax: +41 22 791 48 90
E-mail: unitaid@who.int
http://www.unitaid.eu
u.s. Pharmacopoeia
12601 Twinbrook Parkway
Rockville, Maryland 20852 USA
Telephone: +1 301 881 0666
http://www.usp.org
u.s. President’s Emergency Plan
for aIDs relief
Office of the Global AIDS Coordinator
SA-29, 2nd Floor
2201 C Street, N.W.
Washington, D.C. 20522 USA
Telephone: +1 202 663 2440
http://www.pepfar.gov
World Bank’s Multi-Country
HIV/aIDs Program
The World Bank
1818 H Street, N.W.
Washington, D.C. 20433 USA
Telephone: +1 202 458 0606
Fax: +1 202 522 7396
E-mail: actafrica@worldbank.org
http://go.worldbank.org/I3A0B15ZN0
World Health Organization
Collaborating Centre for Drug statistics
Methodology
Norwegian Institute of Public Health
P.O. Box 4404 Nydalen
N-0403 Oslo, Norway
Telephone: +47 21 07 81 60
Fax: +47 21 07 81 46
E-mail: whocc@fhi.no
http://www.whocc.no
World Health Organization
Department of Essential Medicines
and Pharmaceutical Policies
HSS/EMP
20 Avenue Appia
CH 1211 Geneva 27 Switzerland
Telephone: +41 22 791 21 11
Fax: +41 22 791 47 30
E-mail: empinfo@who.int
http://www.who.int/medicines/en
World Health Organization
Eastern Mediterranean regional Office
Abdul Razzak Al Sanhouri Street
P.O. Box 7608, Nasr City Cairo 11371 Egypt
Telephone: +20 2 2276 5000
Fax: +20 2 2670 2492
E-mail: inf@emro.who.int
http://www.emro.who.int
World Health Organization
regional Office for africa
Cité du Djoué, P.O. Box 06
Brazzaville, Republic of Congo
Telephone: +47 241 39100 or +242 770 02 02
Fax: +47 241 39503
E-mail: regafro@afro.who.int
http://www.afro.who.int
World Health Organization
regional Office for Europe
Scherfigsvej 8
DK 2100 Copenhagen Ø Denmark
Telephone: +45 3917 1717
Fax: +45 3917 1818
E-mail: postmaster@euro.who.int
http://www.euro.who.int
World Health Organization
regional Office for south East asia
World Health House
Indraprastha Estate
Mahatma Gandhi Marg
New Delhi 110 002 India
Telephone: +91 11 2337 0804
Fax: +91 11 2337 0197
E-mail: registry@searo.who.int
http://searo.who.int
World Health Organization
regional Office for the Western Pacific
P.O. Box 2932
1000 Manila, Philippines
Telephone: +63 2 528 8001
Fax: +63 2 521 1036
E-mail: pio@wpro.who.int
http://www.wpro.who.int
chapter 3
Intellectual property and access to medicines
Summary 3.2
3.1 e global pharmaceutical market 3.2
Categories of pharmaceuticals • Role of patents in the
pharmaceutical sector
3.2 Globalization of intellectual property standards and
access to medicines 3.3
History and evolution of intellectual property rights for
pharmaceuticals • Key concepts related to TRIPS
3.3 Constraints to establishing health-sensitive
intellectual property laws 3.10
Lack of technical expertise to incorporate TRIPS exibilities
into national law • Insucient domestic research and
manufacturing capacities • Insucient capacity for
medicine registration and regulation • TRIPS-plus
provisions
3.4 Access to medicines in the TRIPS era 3.14
Using available resources to develop expertise • Regional
collaboration
3.5 Intellectual property and R&D for new
medicines 3.16
Trends in new medicine innovation • Encouraging R&D
in neglected diseases • Technology transfer • Alternative
paradigms in R&D of pharmaceuticals
References and further readings 3.20
Glossary 3.21
illustration
Figure 3-1 Compulsory license granted in Zambia 3.8
boxes
Box 3-1 World Trade Organization 3.4
Box 3-2 Issues on intellectual property and pharmaceuticals
for policy makers 3.15
Box 3-3 Sources of information on intellectual property
rights and public health 3.17
Box 3-4 Using public-private partnerships to develop
medicines for neglected diseases 3.18
Box 3-5 How developing countries are approaching
R&D 3.19
country studies
CS 3-1 Using voluntary licenses in sub-Saharan Africa to
produce antiretroviral medicines 3.9
CS 3-2 Countries in Asia, Latin America and the Caribbean,
and Africa that are using TRIPS exibilities 3.11
CS 3-3 Dierences between bilateral trade agreements and
TRIPS 3.12
Part I: Policy and economic issues Part II: Pharmaceutical management Part III: Management support systems
Policy and legal framework
1 Toward sustainable access to medicines
2 Historical and institutional perspectives
3 Intellectual property and access to medicines
4 National medicine policy
5 Traditional and complementary medicine policy
6 Pharmaceutical legislation and regulation
7 Pharmaceutical production policy
8 Pharmaceutical supply strategies
Financing and sustainability
copyright
©
management sciences for health 2012
3.2 POLICY AND LEGAL FRAMEWORK
3.1 e global pharmaceutical market
e international trade in pharmaceuticals has expanded
dramatically since 1980. During the 1990s, trade grew
substantially faster than production. High-income indus-
trialized countries used to dominate international trade in
pharmaceuticals. In 1999, they accounted for 93 percent of
global exports by value. Between 1980 and 1999, middle-
income countries’ share of world exports fell, while the
export share of some low-income countries, such as India,
Pakistan, and Indonesia, more than doubled, from 1.1 per-
cent to 2.9 percent. High-income countries also dominated
imports. During the same period, their shares increased,
and the shares of both low- and middle-income countries in
world imports dropped signicantly (WHO 2004).
With the exception of Japan, the countries that contribute
most to world trade are also the world’s major producers: the
United States, the United Kingdom, Germany, and France.
Japan, the world’s second-largest producer, continues to
produce primarily for its domestic market.
Sales gures by value from 2005 indicate that North
America, Japan, and Europe accounted for almost 90 per-
cent of the world’s pharmaceutical purchases (IMS Health
2006). So although sub-Saharan Africa, for example, rep-
resents a huge proportion of the disease burden relative to
the rest of the world, its global pharmaceutical market share
is only 1 to 2 percent (Scheer and Pathania 2005; CIPIH
2006), which generally makes it an unattractive target mar-
ket for manufacturers. However, the number of emerg-
ing pharmaceutical markets increased from seven in 2006
In an era of increasingly globalized trade, pharmaceutical
patents play a key role in the availability and aordability
of medicines, as shown by the conict over access to anti-
retroviral medicines for people living with HIV/AIDS in
resource-limited countries. Patent protection can also be
a contentious issue in high-income countries, when high
medicine prices impede access to eective treatment.
Governments grant intellectual property rights as an
incentive to produce inventions that will benet society
as a whole. e varied extent of protection and enforce-
ment of these around the world became a source of
tension in international economic relations, leading
to international negotiations within the World Trade
Organization (WTO). ese negotiations resulted in
the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS), which is a set of trade rules
meant to introduce a global system to monitor and
enforce the protection of intellectual property rights
among WTO members.
TRIPS covers ve essential issues—
• How to apply basic principles of the trading system
and other international intellectual property agree-
ments
• How to give adequate protection to intellectual
property rights
• How to enforce such rights adequately in a country’s
own territories
• How to settle disputes on intellectual property
among members of the WTO
• What special transitional arrangements to apply
during the period when the new system is being
introduced
Developing countries expressed concerns regarding the
possible eect of TRIPS, including the following—
• TRIPS treats medicines like any other commodity,
but medicines are not ordinary consumer products.
• Prices will likely be higher for new medicines in
countries with no previous patent protection.
• Generic competition will be delayed in countries
with a previous patent term less than twenty years.
• e local pharmaceutical industry could be weak-
ened, and dependence on developed countries may
increase.
• TRIPS may not improve research and development
(R&D) decisions regarding treatments for the dis-
eases common in poor countries.
e minimum standards required by TRIPS resulted in
developing countries losing some capacity to regulate
pharmaceutical patents and control the cost of medi-
cines; however, the agreement le some exibility for
them to take measures to protect public health. Because
the provisions relating to patents and pharmaceutical
regulation are confusing and contentious, regulators
must acquire the relevant technical expertise to use
these exibilities within TRIPS to improve access to
medicines.
e international rules regarding intellectual property
are evolving quickly. Developing countries must actively
participate in discussions of the future of the intellec-
tual property system to ensure its appropriateness for
countries at very dierent levels of development. As the
rules evolve, their impact must be properly understood
if policies are to be based on relevant evidence.
suMMary
3 / Intellectual property and access to medicines 3.3
to seventeen in 2010, with China expected to become the
third-largest market by 2011—up from eighth-largest in
2006 (Campbell and Chui 2010).
Categories of pharmaceuticals
e world pharmaceutical market consists of several catego-
ries, characterized by dierent degrees of market competi-
tion. Innovative pharmaceutical products that are patented
(original brands) are protected from competition for the
life of the patent in the countries that recognize the patent.
Legal competition is limited to medicines that are therapeu-
tically equivalent (used to treat the same clinical indication)
but that have either a dierent composition or a dierent
manufacturing process from the original brand. At the other
end of the spectrum are pharmaceuticals known as generics.
Generally, generic pharmaceutical products are the chemi-
cal equivalent of the original brand product that are usually
manufactured without a license from the originator com-
pany. is large category includes pharmaceuticals whose
patents or other exclusivity rights have expired, pharmaceu-
ticals that have never been patented, and copies of patented
pharmaceuticals in countries where the drug is not patented
or where a compulsory license has been granted (see Section
3.2). e legality of copying patented products depends on
the manufacturing country’s patent legislation.
Generic medicines are usually sold under their generic
names and may be manufactured and marketed by many
companies. is market is highly price competitive because
buyers can choose among several sources of chemically
identical medicines. On the manufacturing side, the distinc-
tion between originator companies and generics manufac-
turers is oen blurred. In some cases, major research-based
international companies have generics manufacturing sub-
sidiaries producing “branded generics.” For some medi-
cines, these products account for a large share of the world’s
market in generics.
Another category comprises traditional or complemen-
tary medicine, which includes herbal medications. e use
of herbal products has increased, especially in developed
countries; however, regulation governing the quality, sale,
and use of such medicines varies widely. Countries are rec-
ognizing the large role that traditional medicine plays in
health care, and more countries are addressing the chal-
lenges of including traditional medicine in national health
policy, including protecting indigenous knowledge and
applying intellectual property rights. Chapter 5 discusses
traditional and complementary medicines.
Role of patents in the pharmaceutical sector
In an era of increasingly globalized trade, pharmaceutical
product patents play a key role in the availability and aord-
ability of medicines, as shown by the conict over access to
antiretroviral medicines for people living with HIV/AIDS
in resource-limited countries. Patent protection can also be
a contentious issue in high-income countries, when high
prices for branded medicines impede access to eective
treatment.
A patent is an exclusive right that a government gives to an
inventor, preventing others from making, using, oering to
sell, selling, or importing an invention or inventive process
for a dened period. e patent does not give an inventor
the right to make, use, or sell the invention. e inventor
may have to comply with other laws and regulations to make
use of the claimed invention. For example, a pharmaceutical
company may obtain a patent on a new medicine, but it will
be unable to market the medicine in a country without the
government’s regulatory approval.
e patent gives the inventor the opportunity to recoup
his or her investment in R&D in exchange for publicly dis-
closing the underlying information about the invention.
e concept behind patenting medicines is that the exclu-
sive marketing rights provided by a patent allow high prices
during the patent term, which generate prots that fund
the R&D necessary to create and bring new pharmaceuti-
cal products to the market. erefore, patients who buy
patented pharmaceuticals (or their employers, their insur-
ers, or their governments) pay a premium that is in theory
designed to support the research process. When a patent
expires, generic products enter the market and force prices
down through competition.
One of the functions of a patent is to serve as a nan-
cial incentive for creators of inventions that benet society
(CIPIH 2006). However, people living in developing coun-
tries and their governments have little purchasing power,
which removes real incentive to the global private sector to
invest in developing medicines that treat diseases endemic
in developing countries—also known as tropical and
neglected diseases. Section 3.5 discusses R&D issues.
Developing countries and nongovernmental organiza-
tions have argued that patents on pharmaceuticals in the
developing world raise prices and thereby reduce access to
lifesaving treatment. In contrast, the research-based phar-
maceutical industry and many developed countries have
argued that the larger problem in resource-limited countries
is an insucient health service infrastructure.
3.2 Globalization of intellectual property
standards and access to medicines
Ideas and knowledge are increasingly important parts of
trade. Most of the value of new medicines and other high-
technology products lies in the amount of invention, inno-
vation, research, design, and testing involved. Creators can
be given the right to prevent others from using their inven-
tions, designs, or other creations—and to use that right to
3.4 POLICY AND LEGAL FRAMEWORK
negotiate payment in return from others using such intel-
lectual property rights. ese intellectual property rights,
which include not only patents but also copyrights and
trademarks, reward the results of innovation and creativity
in many areas, including music, science, and authorship.
Governments give creators intellectual property rights as
incentive to produce inventions that will benet society as
a whole. e extent of protection and enforcement of these
rights varied widely around the world, and as the focus on
intellectual property in trade intensied, these dierences
became a source of tension in international economic rela-
tions. New, internationally agreed-upon trade rules for
intellectual property rights were viewed as a way to intro-
duce more order and predictability and to settle disputes
more systematically.
History and evolution of intellectual property rights
for pharmaceuticals
Intellectual property rights were important to chemi-
cal rms in nineteenth-century Europe and to U.S. and
European pharmaceutical companies in the twentieth
century. Because these companies particularly wanted pat-
ent protection, they began lobbying governments on the
design of such protection. Large companies focused more
and more on the use of intellectual property rights as part
of their business strategy, which gave them an increasingly
greater incentive to inuence how such rights evolved.
World Trade Organization agreements. In the 1980s,
this context gave rise to collaboration among U.S.,
European, and Japanese companies, including pharmaceu-
tical and chemical companies, in campaigning for the inclu-
sion of an agreement on intellectual property rights in the
WTO’s Uruguay Round of Multilateral Trade Negotiations.
(See Box 3-1 for information on the WTO.) ose nego-
tiations produced the Agreement on Trade-Related Aspects
of Intellectual Property Rights and the Agreement on
Technical Barriers to Trade. From its origin in 1989 until
it was finalized in 1994, TRIPS evolved into a detailed
international agreement containing industrialized-country
standards of intellectual property protection, requiring
multilateral trade negotiations among all WTO members.
The Agreement on Technical Barriers to Trade seeks to
ensure that technical standards, testing, and certication
procedures do not create unnecessary obstacles to trade.
is agreement can aect the development of production
capabilities in developing countries by aecting their ability
to export.
WTO agreements, including TRIPS, are treaties that cre-
ate international obligations among the members. TRIPS
e World Trade Organization (WTO) is the interna-
tional organization that deals with the rules of trade
between nations at a global or near-global level. At the
center of the organization are the agreements that the
members comprising the majority of the world’s trading
countries or customs unions (158 members as of July
2008) negotiate and sign. ese agreements provide the
legal ground rules for international commerce. WTO
membership requires nations to adopt the terms of
the twenty-six existing agreements and mandates that
members’ national laws conform to the global standards.
e content of the WTO’s twenty-six agreements covers
many aspects of national law related to trade in goods,
services, and intellectual property.
e majority of the WTO’s current agreements come
from the 1986–94 negotiations called the Uruguay
Round and earlier negotiations under the General
Agreement on Taris and Trade. Although dicult to
achieve with so many diverging points of view, the WTO
generally makes decisions based on member consensus.
e highest decision-making authority within the WTO
is the Ministerial Conference, composed of members’
ministers of trade, who meet at least once every two years
to negotiate any matter under any of the multi lateral
trade agreements. Other meetings involving various
committees, working groups, and special sessions occur
between full meetings. e Council for Trade-Related
Aspects of Intellectual Property Rights, which deals
with TRIPS-related issues, reports directly to the WTO
General Council. e World Health Organization
(WHO) has an observer-status seat on the TRIPS
council.
e WTO is unique as an international organization
in that it has a dispute settlement body, the decisions of
which are nal and binding on members. is capacity
gives the WTO the power to enforce trade rules.
Because many of the agreements have important impli-
cations for public health, WHO has established a new
department called Trade, Foreign Policy, Diplomacy,
and Health to promote greater policy coherence between
trade and health policy, so that international trade and
trade rules maximize health benets and minimize health
risks, especially for poor and vulnerable populations.
Box 3-1
World Trade Organization
3 / Intellectual property and access to medicines 3.5
introduced intellectual property rules into the multi lateral
trading system for the rst time and attempted to narrow
the gaps in the way these rights are protected around the
world and to bring them under common international
rules. Consequently, TRIPS globalizes a set of intellectual
property principles and harmonizes intellectual property
regulation by establishing minimum levels of protec-
tion that each government has to give to the intellectual
property of other WTO members. To the chemical and
pharmaceutical companies that had been promoting it,
TRIPS was a major step in the globalization of standards
of protection for patents, copyrights, trade secrets, and
trademarks.
Previously, patenting essential public goods such as medi-
cines and food was considered contrary to the public inter-
est. When the WTO launched the Uruguay Round of trade
negotiations in 1986, more than y countries were not
granting product patents on pharmaceuticals. Aer TRIPS,
all WTO member countries had to reform their domestic
intellectual property laws to conform to the new obligations
of the agreement.
Many questions arose regarding the (mainly develop-
ing) countries that seemingly had little to gain by agree-
ing to these terms of trade. Lacking intellectual property
experts in their WTO delegations, most developing states
did not have a clear understanding of the ramications
of the TRIPS negotiations. Some countries were inter-
ested in agreeing to TRIPS in exchange for concessions
that would expand their exports of agricultural or textile
products. However, because TRIPS required countries to
recognize patents on pharmaceutical products—oen for
the rst time—it had implications for both the cost of pat-
ented medicines and the long-term outlook of the gener-
ics industries in those countries. In addition, TRIPS covers
many more issues relevant to public health, including tra-
ditional medicines, biotechnology, genetic materials, medi-
cal devices, and technology transfer.
e Doha Declaration. Although one of TRIPS’ stated
goals was to reduce tensions arising from intellectual prop-
erty protection, patent protection for pharmaceuticals and
its eects on public health—and particularly access to medi-
cines—has remained a highly controversial issue. Debate in
developing countries reected growing concerns about the
implications of TRIPS regarding access to medicines, which
were seen as signs of the conict between the recognition
of intellectual property rights and essential public health
objectives.
Developing countries expressed concerns regarding
TRIPS’ possible eect that included the following—
• TRIPS treats medicines like any other commodity, but
medicines are not ordinary consumer products.
• Prices will likely be higher for new medicines in coun-
tries with no previous patent protection.
• Generic competition will be delayed in countries with
previous patent terms less than twenty years.
• e local pharmaceutical industry could be weakened,
and dependence on developed countries may increase.
• TRIPS may not improve R&D decisions regarding
treatments for the diseases common in poor countries.
e medicine access issue and related advocacy resulted
in the Declaration on TRIPS and Public Health at the WTO
Ministerial Conference in Doha in November 2001. e
Doha Declaration, as it is known, arms the right of devel-
oping countries to protect the health of their populations,
declaring that TRIPS “can and should be interpreted and
implemented in a manner supportive of WTO members’
right to protect public health and, in particular, to promote
access to medicines for all.” e right to health is embed-
ded in international, regional, and national human rights
instruments, including the constitution of WHO, the United
Nations Universal Declaration of Human Rights, and vari-
ous national constitutions.
Despite initial resistance by some developed countries,
the Doha Declaration was adopted by consensus. It is one
of the important benchmarks in trade history, because it is
regarded as elevating public health above trade with respect
to national intellectual property law. In addition, the Doha
Declaration resulted from the success of civil society in
focusing attention on these issues and from developing
countries’ solidarity in standing up collectively for their con-
cerns about the intellectual property regime under TRIPS.
e Doha Declaration was not intended to amend TRIPS.
Rather, it aims to clarify the relationship between TRIPS
and public health policies of WTO member countries and
to conrm the rights retained under the agreement, particu-
larly by dening the exibility allowed in certain key policy
areas. e declaration can make it easier for developing
countries to adopt measures necessary to ensure access to
health care without the fear of legal consequences. However,
the Doha Declaration is not self-executing, and countries
therefore need to make the legal amendments necessary
to implement it. Developing countries in particular should
be encouraged (and provided the relevant technical assis-
tance) to review their legislation to ensure that they incor-
porate into national laws any exibilities allowed by TRIPS
to address public health concerns.
Key concepts related to TRIPS
TRIPS covers ve essential issues—
• How to apply basic principles of the trading system
and other international intellectual property agree-
ments
• How to give adequate protection to intellectual prop-
erty rights
3.6 POLICY AND LEGAL FRAMEWORK
• How to enforce those rights adequately in a country’s
own territories
• How to settle disputes on intellectual property among
members of the WTO
• What special transitional arrangements to apply dur-
ing the period when the new system is being intro-
duced
TRIPS includes an enforcement mechanism through
economic sanctions for countries that fail to comply with
the minimum standards for protecting intellectual prop-
erty rights. When intellectual property disputes between
countries arise because of dierences in the interpretation
of TRIPS, the WTO provides a dispute settlement process
that includes negotiation, dispute settlement decision mak-
ing, and an appeal process. Trade sanctions may be imposed
only if the dispute settlement process has run its course and
the losing country has failed to comply with the decision.
As mentioned, TRIPS introduced minimum standards
for protecting and enforcing nearly all forms of intellectual
property rights, including those for pharmaceuticals. As a
minimum-standards agreement, however, TRIPS allows
members to protect intellectual property more extensively
if they choose. Members are free to determine how best to
implement the provisions of the agreement within their
own legal system and practice (see Correa 2000). e key
concepts for pharmaceuticals are described in the following
subsections.
Patent protection. Under TRIPS, member countries
must provide patent protection for a minimum of twenty
years from the ling date of a patent application for any
pharmaceutical product or process that fullls the criteria
of novelty, inventiveness, and usefulness. National legisla-
tion and practices dene what can be patented, and coun-
tries must establish their own criteria for what constitutes a
“new” and “inventive” product.
Countries should recognize that patentability standards
that are too broad can contribute to extending the patent
life of a new medicine through designating new or inven-
tive uses as described above or dierent dosages. is prac-
tice is called evergreening. To limit this extension of rights
to original patent holders, national patent legislation needs
to ensure that public health needs are taken into account.
Similarly, incremental innovation, or “me-too” drugs, is
within the same chemical class as one or more other phar-
maceutical products already on the market; however, the
pharmaceutical industry feels that me-too drugs advance
safety and ecacy and support the development of novel
products (Wertheimer and Santella 2009).
Transitional arrangements. TRIPS provides transitional
periods during which countries must bring their national
legislation and practices into conformity with its provi-
sions. e compliance dates for WTO members were 1996
for developed countries; 2000 for developing countries;
2005 for developing countries that had not introduced pat-
ents for pharmaceuticals before joining the WTO, such as
India; and 2016 (for medicines only) and July 2013 for least-
developed countries (LDCs) in recognition of these coun-
tries’ economic, nancial, administrative, and technological
constraints to conforming.
Generic medicines. Aer a patent expires (or a license
is issued), copies of a medicine can legally be made. ese
are called multisource medicines—or generics—and should
be chemically equivalent to the original brand medicine.
Promoting generic medicines within a country requires
appropriate legislation and regulations, reliable quality-
assurance capacity, professional and public acceptance of
generic medicines, and economic incentives and informa-
tion for both prescribers and consumers.
Under the TRIPS regime, a dierent manufacturing pro-
cess for a chemically equivalent pharmaceutical product
would be blocked if the originator company still held a
product patent on the chemical entity. Currently, a dier-
ent chemical entity may pose therapeutic competition to an
existing medicine, and a dierent company may hold such
a patent. In some cases, however, an originator company
will place a patent not only on the chemical entities in the
ingredients, but also on the resulting metabolite that pro-
duces the desirable therapeutic eect (Correa 2000). Such
metabolite patents may block pharmaceuticals in the same
therapeutic category if they share a common metabolic
path way.
Trade liberalization can increase competition and reduce
prices for generic medicines that are already on the mar-
ket. But inappropriately implementing TRIPS-compliant
national legislation can delay new generic products, which
can result in large economic costs. e prompt introduc-
tion of generic medicines can be facilitated by draing
appropriate legislation and regulations on patentabil-
ity, such as using exceptions to permit early testing and
approval of generics and compulsory licensing (see follow-
ing subsections).
As an alternative to promoting generics, some brand-
name pharmaceutical manufacturers have volunteered to
lower their prices in certain markets (for example, selling
certain medicines in developing countries at greatly reduced
prices compared to prices in major markets); however, such
programs usually feature multiple restrictions. Some com-
panies have gone further by donating medicines for particu-
lar programs (see Chapter 15).
Compulsory licensing (TRIPS Article 31). As a provi-
sion of TRIPS, compulsory licensing occurs when a gov-
ernment authorizes the production of a patented product
or the use of a patented process without the patent holder’s
consent as long as certain conditions are met, such as the
license being used predominantly (that is, 51 percent) for
the domestic market. e patent holder, however, retains
intellectual property rights and “shall be paid adequate
3 / Intellectual property and access to medicines 3.7
remuneration” according to the circumstances. In other
words, compulsory licensing allows local manufacturers
in resource-limited countries to make close-to-marginal-
cost versions of patented medicines to address public health
needs, if they give a royalty payment to the patent holder.
Generally, the grant of a compulsory license requires prior
negotiation with the patent holder. However, grounds for
governments to grant compulsory licenses without any
previous negotiation may include public interest, national
emergencies such as epidemics, public noncommercial use,
or remedying anticompetitive practices.
In the pharmaceutical sector, compulsory licenses have
been used to stimulate price-lowering competition and to
ensure the availability of needed medicines. For example,
if a new product introduced to the market were to play an
important role in public health, such as a vaccine against
HIV/AIDS or malaria, a country’s national law could grant a
compulsory license under Article 31 of TRIPS. Compulsory
licensing, however, is not always a solution for resource-
limited countries. For instance, when prior authorization
from the patent owner is required, as is the normal case,
negotiations can be lengthy and complicated, and a country
may not have the necessary legal expertise. In addition, the
manufacturing process for a pharmaceutical product may
be protected under a separate patent or as a trade secret.
Finally, countries may lack the technical expertise or facili-
ties necessary to copy and manufacture the product or to
attain the economies of scale that make such a decision fea-
sible (see Chapter 7 on production policy).
Despite the constraints, a country’s comprehensive patent
legislation should adequately provide for granting compul-
sory licenses to strengthen its position, even if the country
rarely uses the provision. Now, most developed countries
and many developing countries include compulsory licens-
ing in their national legislation; for example, in 2010,
Colombia successfully used the threat of compulsory licens-
ing to reduce by two-thirds the price of Kaletra, an antiretro-
viral, while the United States has used the threat to mitigate
anticompetitive situations.
Figure 3-1 shows the exact text from a compulsory license
granted in Zambia in 2004.
Voluntary licensing (TRIPS Article 40). A volun-
tary license is an agreement negotiated between the pat-
ent holder and another company for manufacturing and
marketing. TRIPS Article 40 authorizes the regulation of
anticompetitive features of voluntary licenses. Regulation
could favor export and regional production, nonexclusiv-
ity, technology-transfer requirements, access to condential
test data, and disclosure of reasonable royalty rates. Usually,
eorts must rst be made to obtain a voluntary license on
reasonable terms and conditions before a party obtains a
compulsory license (see Country Study 3-1).
Parallel importation (TRIPS Article 6). Parallel impor-
tation occurs when a third party, without the consent of the
patent holder, imports a medicine that has already been put
on the market abroad more cheaply by the patent holder or a
licensee. e practice is based on the principle that the pat-
ent holder has been compensated through the rst sale of the
product and that further control over the resale of the prod-
uct would unreasonably restrain trade and competition. In
other words, having been paid, the patent holders are said to
have “exhausted” their rights. If the importing country’s pat-
ent system provides that the patent holder’s right has been
exhausted when the patented product has been placed on the
market in another country, the patent holder cannot prevent
parallel importation into the importing country. TRIPS per-
mits WTO members to determine their own rules regarding
exhaustion—international exhaustion permits parallel trade
and may permit importation of a medicine produced under
compulsory license in another country.
Because most pharmaceutical companies set prices for
the same products at dierent levels in dierent countries,
parallel importation promotes competition for the patented
product by allowing the importation of equivalent pat-
ented products marketed at lower prices in other countries.
However, companies have been pressuring governments not
to import medicines from countries that produce generic
versions, claiming that the practice is a breach of the TRIPS
agreement. Article 6 of TRIPS explicitly states that practices
relating to parallel importation cannot be challenged under
the WTO dispute settlement system, provided that no dis-
crimination exists on the basis of the nationality of the per-
sons involved; however, preexisting or new “TRIPS-plus”
legislation (see below) oen species national exhaustion.
Here, the patent holder has exclusive marketing rights, and
resale is permitted only within the country aer rst sale.
Preferential pricing oers are frequently linked to the pre-
vention of parallel importation between developing and
developed markets.
Exceptions to rights conferred (including Bolar excep-
tion) (TRIPS Article 30). TRIPS species the rights given
to a patent owner but allows limited exceptions, subject to
specified conditions in Article 30. Of particular interest
regarding access to medicines is the so-called Bolar excep-
tion to patent rights that allows a country to complete all
of the procedures and tests that are necessary to register a
generic product before the patent expires on the original
medicine. Allowing generics manufacturers to conduct the
tests needed to prepare their applications for regulatory
approval during the term of the patent enables them either
to market their products immediately upon expiration of
the patent or, for example, to apply for a compulsory license
during the term of the patent.
Protection of undisclosed test data (TRIPS Article
39.3). In many countries, national regulatory agencies
require originator pharmaceutical companies to submit
extensive data showing the safety and efficacy of a new
product before it is approved for the market. ese data
3.8 POLICY AND LEGAL FRAMEWORK
Figure 3-1 Compulsory license granted in Zambia
republic of Zambia
MINIsTry OF COMMErCE, TraDE aND INDusTry
The Government of Zambia, conscious that the HIV/AIDS pandemic constituted a serious handicap in the national struggle against hunger,
illness, under development and misery;
and taking into consideration that high rates of morbidity and mortality have put Zambia among the ten countries in Africa most hit by this
disease. Current estimates are that, at the end of 2003, over 917,718 Zambians were infected by HIV of whom an unestimated number are
suffering from full-blown AIDS. The AIDS death toll is so far in excess of 835,904 and about 750,504 children have been orphaned by this
pandemic, creating a situation where 75% of households in Zambia are caring for at least one orphan and that children aged below 14 years
headed more than 130,000 poverty stricken households out of a total of 1,905,000, and that;
in spite of the multiplicity and diversity of vigorous prevention campaigns, the spread of the virus is still on an upward trend as shown by
the high number of infections;
Taking into account the gravity of the situation being faced by most African Countries, including Zambia, the need to ensure access to drugs
at affordable prices, while respecting the protection of intellectual property, is well recognised. For this reason;
On 14 November, 2001 the World Trade Organisation, while recognising Members’ commitment to the TRIPS Agreement, declared the
right of each Member State to take measures aimed at protecting public health and in particular to promote access to medicines for all, by
utilising to the full, the flexibilities in the TRIPS Agreement relating to among others, the granting of compulsory licences, in cases which
constitute a national emergency or other circumstances of extreme urgency and of public health crisis including those relating to HIV/AIDS,
tuberculosis, malaria or other epidemics which can represent a national emergency or other circumstances of extreme urgency.
Considering further that;
A triple compound of Lamivudine, Stavudine and Nevirapine has proved, in the last few years to be one of the most effective and
economical anti-retroviral treatment, but that the three different international owners of such single drugs failed to reach an agreement to
produce this combination, and therefore;
The Ministry of Commerce, Trade and Industry of the Republic of Zambia making use of the provisions of Section forty of the Patent Act,
Chapter 400 of the Laws of Zambia, and Statutory Instrument No 83 of 2004 titled “The Patents (Manufacture of Patented Antiretroviral
Drugs) (Authorisation) Regulations, 2004” Regulation 3, has decided to grant a Compulsory Licence No. CL 01/2004 to PHARCO LTD, a
company incorporated in Zambia, which has already presented a project proposal for the local manufacture of the mentioned triple
compound under the names of Normavir 30 and Normavir 40.
It is further understood that the use or vending of the above mentioned drugs is subject to Regulation 4 of Statutory Instrument No 83
of 2004, titled “The Patents (Manufacture of Patented Antiretroviral Drugs) (Authorisation) Regulations, 2004” and therefore cannot be
exported to any place outside Zambia.
Communication of this decision will be given to the applicant and to the patent right holders.
In consideration that the mentioned product, a triple combination of drugs, is not marketed in Zambia by the International Patent owners
and that it is in the national interest to keep the final price as low as possible, the total amount of royalties due to the patent right owners
shall not exceed 2.5% of the total turnover of the mentioned products at the end of each financial year of PHARCO LTD.
The Ministry of Commerce, Trade and Industry shall in accordance with Section forty one of the Patent Act notify the concerned parties of
the expiration of the present Compulsory Licence as soon as conditions of national emergency and extreme urgency created by the HIV/
AIDS pandemic will come to an end, or upon expiry of the period of emergency stipulated in Statutory Instrument No 83 of 2004 titled “The
Patents (Manufacture of Patented Antiretroviral Drugs) (Authorisation) Regulations 2004.”
The Government of the Republic of Zambia reserves the right to review the Compulsory Licence should the conditions and circumstances
under which it is granted change.
Dipak K. Patel, MP Ref: MCT/104/1/1c
MINISTER Date: 21/09/04
Source: www.cptech.org/ip/health/c/zambia/zcl.html
3 / Intellectual property and access to medicines 3.9
are the result of many years of research and are sometimes
very expensive for the originator company to produce.
Sometimes, such as in the case of the cancer medicine pacli-
taxel, a government has underwritten much of the product’s
R&D. In addition, a multinational company may simply
acquire the innovation from an academic institution or bio-
technology company.
TRIPS Article 39.3 obliges member countries to protect
this condential test data from “unfair commercial use”
including disclosure, except where necessary to protect the
public. Countries vary in how they implement the require-
ments of Article 39.3. Whereas some countries permit
pharmaceutical regulatory authorities to rely on the origi-
nal test data to register generic equivalents, others, such as
the United States and European Union countries, grant the
originator company a time-limited period that excludes reg-
ulatory authorities from using existing test data to register
generic products without consent. ese laws are known as
data exclusivity laws.
e originator company is unlikely to consent to its data
being used to register a generic equivalent to its product, and
although generic competitors could replicate clinical trials
at considerable cost, another signicant barrier relates to the
ethics of conducting redundant trials on patients. erefore,
data exclusivity laws provide a form of market protection for
the originator company.
Consequently, controversy exists about how Article 39.3
should be implemented to ensure the protection of public
health. e disagreement centers on whether the phrase
“unfair commercial use” means that regulatory agencies
can use original data to assess generic product applications,
as long as they do not disclose the data to the competitor.
is interpretation would imply that Article 39.3 does not
require data exclusivity. On the contrary, the research-based
pharmaceutical industry and some trade representatives
have argued for the alternative interpretation that Article
39.3 does require data exclusivity.
Exclusive marketing rights (TRIPS Article 70.9). As
noted, when TRIPS was launched in 1996, many countries
did not oer patents for pharmaceutical products. ese
countries were given a transition period to phase in patent
protection for pharmaceuticals. However, TRIPS Article
70.9 says these countries have to accept patent applications
for pharmaceuticals, even though they are not obligated to
examine the applications or grant any patents until the end
of the transition period.
In cases where the country takes advantage of the transi-
tion period, Article 70.9 requires that when a patent applica-
tion has been led for a product in that country, the WTO
member must grant exclusive marketing rights to the pat-
ent applicant for a period of ve years aer obtaining mar-
keting approval, as long as the product has been patented
and received marketing approval in another WTO member
country. e rights can expire before the end of the ve years
if either a patent is granted (in which case the patent holder
would rely on the patent instead of the exclusive marketing
rights) or the patent application is rejected. Exclusive mar-
keting rights, therefore, are considered a mechanism for the
patent applicant to obtain payment for use of the product
until the patent is granted.
Least-developed countries have been granted a waiver to
Article 70.9—extending the transition period until 2016.
A number of companies in Africa have obtained vol-
untary licenses from originator pharmaceutical pro-
ducers (in some cases through advocacy eorts) to
locally manufacture antiretroviral medicines for HIV/
AIDS. South Africa led the way with several generics
pharmaceutical companies receiving voluntary licenses
from patent holders of antiretroviral medicines. Aspen
Pharmacare, which is South Africa’s largest pharmaceu-
tical manufacturer, and Cipla Medpro are two of the
companies that secured the rights to distribute generic
HIV/AIDS medicines to other countries in sub-Saharan
Africa. Voluntary licenses from several dierent pat-
ent holders allow the generics companies to produce
medications that combine multiple products into one
tablet (xed-dose combination), which helps patients
adhere to treatment. In addition, the U.S. Food and
Drug Administration qualied Aspen Pharmacare,
which allowed U.S.-government-funded organizations
in Africa to purchase generic antiretrovirals for the rst
time.
In Kenya, Cosmos Limited was the rst producer to
receive voluntary licenses from GlaxoSmithKline and
Boehringer Ingelheim to produce generic versions of
lamivudine, zidovudine, and nevirapine. One of the ben-
ets of producing the products locally is that the packag-
ing will include instructions printed in both English and
Kiswahili, but more important, the supply and availabil-
ity should become more reliable, and prices are expected
to fall. As part of the voluntary licensing agreements,
Cosmos will be able to sell the generic medicines to ve
other sub-Saharan countries.
Country study 3-1
using voluntary licenses in sub-saharan africa to produce antiretroviral medicines
3.10 POLICY AND LEGAL FRAMEWORK
Decision on the implementation of paragraph 6 of
the Doha Declaration. Although developing countries
have the right to exercise the flexibilities under TRIPS,
they often find using these flexibilities in public health
policy a challenge. For example, paragraph 6 of the Doha
Declaration recognized that while developing countries can
issue compulsory licenses, TRIPS did not take into account
the diculties they faced because of a lack of manufactur-
ing capacity. Many developing countries and LDCs cannot
produce either active ingredients or formulations because
of lack of technology, equipment, human resources, or
other domestic production capacity. Although these coun-
tries may issue compulsory licenses to import generic
versions of patent-protected medicines, TRIPS rules con-
strain the ability of countries that do have the capacity to
manufacture generics, such as India, to export such prod-
ucts. Manufacture must be primarily for the domestic
market. erefore, countries without sucient manufac-
turing capacity in pharmaceuticals could issue a compul-
sory license for the importation of products they cannot
manufacture, but they may not be able to nd sources for
importing aordable new medicines.
Consequently, aer the adoption of the Doha Declaration,
WTO members spent almost two years in negotiations that
culminated in the Decision on Implementation of Paragraph
6. at decision is intended to permit all LDCs (as desig-
nated by the United Nations) and developing countries
with insucient or no manufacturing capacity to import
a particular medicine to make eective use of compulsory
licensing. e Paragraph 6 Decision allows nonproducing
countries to issue a compulsory license to import medicines
in accordance with a special compulsory license for export
issued in the exporting country. However, making use of
this exibility is a complex process, and both importing and
exporting countries will need to pass the legislation to make
it possible.
e terms of the Doha decision were made a perma-
nent feature of TRIPS through an amendment including
a new article, 31bis. Essentially, the Paragraph 6 Decision
and the amendment eliminate the requirement that phar-
maceutical products manufactured under a compulsory
license be “predominantly for the supply of the domestic
market.” In addition, to prevent duplicating payment to
the patent holder, the amendment eliminates the need to
remunerate the patent holder in the importing country
if the patent holder in the exporting country has already
been remunerated.
A publication from WHO gives more information on how
countries can implement the Paragraph 6 Decision (Correa
2004).
Decision on the implementation of paragraph 7 of the
Doha Declaration. Paragraph 7 permits LDCs to extend
the transition period for pharmaceutical patents beyond
what is dened in TRIPS to the year 2016. Part of the moti-
vation for paragraph 7 concerns the rights of LDCs to pro-
mote technology transfer by giving them additional time to
build a technological base for their pharmaceutical sectors.
In addition, Article 66.2 seeks to provide benets specic to
LDCs by requiring developed countries to oer incentives
to private companies and other institutions in their terri-
tories to engage in technology-transfer activities.
Practically, however, the only LDCs that can take advan-
tage of the extension in paragraph 7 are those that do not
grant patents for pharmaceuticals. For example, Angola and
Eritrea are the only countries of thirty African LDCs that
do not grant patents for pharmaceuticals (Correa 2002). To
take advantage of the benet, other LDCs that already grant
pharmaceutical patents must amend their legislation and
not grant product patents until 2016.
Another consequence of paragraph 7’s transition exten-
sion concerns the requirement to grant exclusive marketing
rights (TRIPS Article 70.9). Aer the Doha Declaration,
ambiguity existed regarding whether a transition extension
for pharmaceuticals applied to exclusive marketing rights as
well as to patents. To clarify the situation, WTO members
approved a waiver that exempts LDCs from having to pro-
vide exclusive marketing rights for any new medicines dur-
ing the period without patent protection.
3.3 Constraints to establishing health-
sensitive intellectual property laws
Although the adoption of the TRIPS minimum standards
resulted in developing countries losing some policy ex-
ibilities in regulating pharmaceutical patents and control-
ling the cost of medicines, the agreement le some room
for countries to take measures to protect public health.
Furthermore, at Doha, WTO members rearmed the right
of each member to fully use the provisions of the agree-
ment that provide exibility for protecting public health;
however, the provisions relating to patents and pharma-
ceutical regulation are confusing even to specialists in the
eld of intellectual property law and medicine regulation.
erefore, countries with little capacity for interpreting
and acting on international trade agreements are most at
risk in terms of losing access to medicines. Regulators and
legislators must acquire the relevant technical expertise to
use the exibilities, such as compulsory licensing and par-
allel importation, to improve access to medicines in their
countries.
Substantial legal and administrative obstacles exist to
introducing and implementing these complex provisions.
Several constraints that developing countries face at the
national level in their eorts to use TRIPS exibilities are
mentioned below, but countries can address many of these
constraints by adopting complementary policy and legal
measures.
3 / Intellectual property and access to medicines 3.11
Lack of technical expertise to incorporate TRIPS
flexibilities into national law
Countries can use the exibilities oered by TRIPS only if
they incorporate them into their legislation; however, many
developing countries have not done so for various reasons,
including a lack of technical expertise and information on
best practices. Resource-limited countries are generally not
aware of the measures undertaken by their counterparts
around the world. As a result, countries within a region with
similar access problems may adopt dierent strategies, with
varying degrees of success. Country Study 3-2 summarizes
the extent to which TRIPS exibilities are being used in
forty-nine dierent countries. For example, while 100 per-
cent of the countries surveyed in Africa provided for govern-
ment or noncommercial use in their laws, less than half the
countries in Asia or Latin America/Caribbean had done so.
Insufficient domestic research and manufacturing
capacities
Most developing countries have limited pharmaceutical
research and manufacturing capacities. e challenge for
these countries is how to enlarge their capacity for research
through increased investment in basic sciences, R&D,
and technological innovation. As technology evolves and
becomes an important tool for development, it also becomes
more of a means of gaining competitive advantage.
Developing countries face signicant barriers that may
block their own R&D eorts or opportunities for collabora-
tion with other countries, such as insucient numbers of
trained researchers and inadequate research support at local
universities or institutions. In addition, an individual coun-
try’s interest in bolstering indigenous, national manufactur-
ing capacity may limit regional, multicountry collaboration
Although TRIPS establishes minimum standards that
WTO members must follow related to intellectual
property rights, certain exibilities in the agreement
allow exemptions to developing countries, especially
regarding pharmaceutical patents. However, taking
advantage of these exibilities requires that the eligible
countries amend their national intellectual property
rights legislation.
An analysis of forty-nine countries in Asia, Latin
America and the Caribbean, and Africa looked at the
extent to which countries have incorporated the TRIPS
exibilities aecting pharmaceuticals and public health.
Updated use of exibilities in selected African coun-
tries is also available (Munyuki and Machemedze 2010;
UNAIDS, WHO, and UNDP 2011).
Country study 3-2
Countries in asia, Latin america and the Caribbean, and africa that are using TrIPs exibilities
National law provisions
Countries implementing selected TrIPs exibilities
asia (n = 13)
Latin america/
Caribbean (n = 19) africa (n = 17)
Pharmaceutical products are patentable 10 (77%) 18 (95%) 11 (65%)
Data protection 6 (46%) 16 (84%) 6 (35%)
Government or noncommercial use allowed 7 (54%) 9 (47%) 17 (100%)
Exhaustion of rights
•National exhaustion 2 (15%) 4 (21%) 6 (35%)
•International exhaustion (allowing parallel
importation)
6 (46%) 13 (68%) 7 (41%)
•No exhaustion 3 (23%) 1 (5%) 1 (6%)
Early working exception 4 (31%) 6 (32%) 5 (29%)
Compulsory licensing grounds
•Failure to work/exploit 10 (77%) 14 (74%) 15 (88%)
•Anticompetitive practice 5 (38%) 14 (74%) 5 (29%)
•Dependent patents 7 (54%) 10 (53%) 10 (59%)
•Demand not met on reasonable terms 3 (23%) 5 (32%) 13 (76%)
•Public interest 10 (77%) 15 (79%) 8 (47%)
•National emergency 5 (38%) 11 (58%) 6 (35%)
•No provision 2 (15%) 0 (1 unk nown) 0
Source: Musungu and Oh 2006.
3.12 POLICY AND LEGAL FRAMEWORK
to produce medicines unless the benets of investment in
R&D and procurement of locally manufactured products
can be shared across the region.
Insufficient capacity for medicine registration
and regulation
Pharmaceutical registration is the process by which a coun-
try’s regulatory authority assesses the safety, quality, and e-
cacy of medicines to approve their use. Countries normally
require that all medicines oered for sale in their territories
be registered locally. Although the ultimate role of medicine
regulation is to protect public health, national regulatory
authorities in developing countries oen lack the facilities
and expertise needed to review medicines destined for their
national markets.
Regulatory authorities handle applications for new chem-
ical entities, generic medicines, new xed-dose combination
products, and even herbal medicines. Innovative new prod-
ucts, including important antimalarials and antiretroviral
medicines for HIV/AIDS, require more complex assessment
than their generic equivalents; therefore, most countries
carry out a fast-track review based on prior approval by U.S.
or EU regulatory agencies. Where a comparable product is
Many countries that trade with the United States are
members of the WTO and therefore are obligated to
abide by the TRIPS provisions. However, they may
enter into bilateral trade agreements that commit
them to more stringent intellectual property rules than
TRIPS (TRIPS-plus) in exchange for concessions in
other areas of trade—oen access to the U.S. market
for agricultural or manufactured goods. Evaluating the
implications of bilateral trade agreements on public
health can be dicult. e benets and costs associ-
ated with protecting pharmaceutical patents vary by
country, and these agreements will take many years to
take full hold. e public health community has raised
concerns regarding these bilateral agreements and their
possible eect on access to medicines, especially how
they may limit the availability of generic medicines in
developing countries.
e following are key dierences in intellectual prop-
erty provisions between bilateral trade agreements and
TRIPS:
Use of compulsory licenses. Under TRIPS, governments
may issue a compulsory license to obtain generic medi-
cines by temporarily overriding a patent. Compulsory
licensing is an important tool for governments to protect
the public interest or to remedy anticompetitive behav-
ior. Four bilateral agreements now limit the use of com-
pulsory licensing to emergencies, antitrust remedies, and
cases of public noncommercial use.
Test data protection. Getting approval to market medi-
cines requires a company to submit test data to regula-
tory authorities to prove a medicine’s safety and ecacy.
e protection of such data diers from country to
country. TRIPS requires only that test data be protected
against “unfair commercial use.” However, most bilateral
agreements require governments to guarantee exclusive
use of test data for pharmaceutical products for ve years,
which is the U.S. standard. Furthermore, some free-trade
agreements require an additional data exclusivity period
for new uses of already approved medicines, and some go
even further by prohibiting generic manufacturers from
using test data submitted to a regulatory authority in
another territory—even outside the trade agreement ter-
ritory. ese new test data provisions may be an obstacle
for governments using compulsory licensing.
Patent terms. Bilateral agreements mandate the exten-
sion of patent protection beyond the current twenty-year
limit mandated in TRIPS to compensate for procedural
delays in granting patents or in securing marketing
approval for pharmaceuticals.
Use of parallel imports. Parallel importation allows a
government to import pharmaceuticals that have been
placed on the market more cheaply in foreign markets,
which can help reduce medicine prices. TRIPS allows
WTO members to establish their own national policies
regarding whether to permit parallel importation of pat-
ented medicines. By contrast, many bilateral agreements
allow patent holders to prevent parallel importation.
Bolar exception. TRIPS does not limit generics compa-
nies from starting the process of entering a new market
before a patent has expired. Generics producers oen
take this action so they can be ready to sell their prod-
uct immediately aer the patent expires. Most bilateral
agreements prevent marketing approval of a generic
medicine during the patent term without the consent of
the patent holder, which could make compulsory licenses
an ineective way to allow competition from generics
manufacturers.
Country study 3-3
Dierences between bilateral trade agreements and TrIPs
3 / Intellectual property and access to medicines 3.13
Dierences between bilateral trade agreements and TRIPS: specic examples
Intellectual
property
provisions
u.s.-Vietnam
(2001)
u.s.-Jordan
(2001)
u.s.-singapore
(2003)
u.s.-Chile
(2003)
u.s.-Morocco
(2004)
u.s.-australia
(2004)
u.s.-Dr-CaFTa
a
(2005); u.s.-
Bahrain (2006)
Patent term Extension given for delays caused by
regulatory approval process.
Extension given for delays caused by regulatory approval process. In addition, extension given when a delay in the
granting of the patent exceeds four years from the filing of the application (five years for U.S.-Chile) or two years after
a request for examination (three years for U.S.-Chile).
Grounds for issuing
compulsory licenses
Compulsory licenses limited to national emergencies, as antitrust
remedy, and for public noncommercial use.
TRIPS standards apply. Same as U.S.-
Singapore.
TRIPS standards
apply.
Link between
patent status and
pharmaceutical
marketing approval
No specific provision. Patent owner must
be notified when
marketing approval
is sought during the
patent term.
Marketing approval of a generic medicine is prohibited during the patent term, unless authorized by the patent
owner. In addition, the patent holder must be notified of the identity of the generic company requesting marketing
approval.
Test data protection
for pharmaceutical
products
Data exclusivity for a
“reasonable” period,
normally not less
than five years.
TRIPS standards
apply. In addition,
length of protection
should be the same
as in the originator’s
country.
Data exclusivity
for five years. In
addition, where
pharmaceutical
regulators rely on
foreign marketing
approvals, data
exclusivity applies
automatically at
home.
Data exclusivity for
five years.
Data exclusivity for
five years. Additional
three-year data
exclusivity triggered
by “new clinical
information.”
Data exclusivity for five years. In addition,
data exclusivity applies in all free-trade
agreement member countries, once first
obtained in another territory. In the case
of U.S.-Bahrain, additional three-year
data exclusivity triggered by “new clinical
information” (with equivalent provisions on
cross-border application).
Parallel imports No specific provision. TRIPS standards
apply.
Patent holders may
limit parallel imports
of pharmaceutical
products through
licensing contracts.
TRIPS standards
apply.
Patent holders may limit parallel imports
through licensing contracts.
TRIPS standards
apply.
Source: Fink and Reichenmiller 2005.
a
Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.
Country study 3-3
Dierences between bilateral trade agreements and TrIPs (continued)
3.14 POLICY AND LEGAL FRAMEWORK
already on the market, the assessment of generic medicines
tends to take place at the national level (see Chapter 6).
When a country’s pharmaceutical regulatory process is
unwieldy, that can delay the entry of needed medicines in a
particular market and act as a barrier to access as well as to
growth of the local pharmaceutical industry. Many devel-
oping countries have no reliable fast-track procedure for
registering new essential medicines, such as antiretroviral
medicines. e requirement for local clinical trials can also
deter and delay registration. With growing demand for rapid
registration of new and more complex medicines, pharma-
ceutical regulatory capacity needs to develop in a way that
also protects public health.
Procurement is also aected. A country’s procure-
ment agency must determine whether a medicine is
locally under patent before it can import a generic ver-
sion of the medicine; however, nding this informa-
tion can be complicated and dicult (Tayler 2004). e
procurement agency can ask the national patent oce
to help, but sta may not have the capacity to under-
take such a request. Professional rms will search for
patents, but the fees may be prohibitive. Médecins Sans
Frontières has published the patent landscapes for HIV/
AIDS medicines in developing countries, although it
notes that it cannot promise complete accuracy. WHO’s
AIDS Medicines and Diagnostics Service maintains a drug
regulatory database and additional information related
to HIV/AIDS products (http://www.who.int/hiv/amds/
patents_registration/en/index.html). Other organizations
have called for the creation of a global patent database,
including the World Health Assembly in its Global Strategy
and Plan of Action on Public Health, Innovation and
Intellectual Property (WHO 2008).
TRIPS-plus provisions
“TRIPS-plus” refers to the incorporation into national leg-
islation of intellectual property rights that are stricter than
those mandated by TRIPS. is includes eorts to extend
patent life beyond the twenty-year TRIPS minimum, limit
compulsory licensing in ways not required by TRIPS,
limit exceptions that facilitate the prompt introduction
of generics, and extend the period of data exclusivity.
Because the public health eect of TRIPS requirements
has yet to be fully assessed, WHO recommends that
developing countries be cautious about enacting legisla-
tion that is more stringent than the TRIPS requirements.
From a public health perspective, countries that are not
bound by TRIPS should evaluate TRIPS requirements
and incorporate into national legislation and trade-related
practices those elements that clearly benet national pub-
lic health interests.
Existing intellectual property protection in many
resource-limited countries is oen stronger than the mini-
mum required by TRIPS; so in countries such as Kenya
and Malawi, the existing legislation is already considered
TRIPS-plus (DFID 2004). ese countries will not be able
to use TRIPS-compliant exibilities unless they amend
their national legislation. Moreover, almost all devel-
oping countries will need to change their legislation to
take advantage of the import/export mechanisms in the
Paragraph 6 Decision.
Free-trade agreements. One form of TRIPS-plus is bilat-
eral and regional free-trade agreements that have intellectual
property components. Most developing-country members
face diculties in trade negotiations, where they are asked
to accept obligations in the public health sector in exchange
for concessions in areas such as market access for agricul-
tural products, which may be important to their economies
(see Country Study 3-3). For example, both Vietnam and
Cambodia entered into bilateral trade agreements with the
United States that contain intellectual property require-
ments, including compliance with TRIPS standards, when
these countries were not members of the WTO.
International patent law harmonization. An indirect
inuence on the evolution of TRIPS-plus provisions is the
World Intellectual Property Organization (WIPO) Patent
Agenda initiative. WIPO is a specialized agency of the
United Nations whose primary objective is the promotion of
creative intellectual activity and the facilitation of the trans-
fer of technology to developing countries. e WIPO Patent
Agenda initiative comprises a set of interrelated activities
designed to harmonize the international patent system
by building a legal framework that would create some-
thing comparable to a global patent. Such a system would,
in essence, reduce the need for countries to have national
patent oces, but more important, it would eliminate the
exibilities permitted by the TRIPS agreement that allow
developing countries exceptions to rules on patents—essen-
tially creating TRIPS-plus standards for everyone. A WIPO
forum in 2006 allowed stakeholders to present their argu-
ments both for and against the harmonization eorts and
how such eorts might aect public health (WIPO 2006).
Opinions on the benefits of harmonization have been
sharply divided, and as of 2011, the WIPO standing com-
mittee was still trying to nalize recommendations for an
international patent system.
3.4 Access to medicines in the TRIPS era
e globalized intellectual property system is one factor
among many that aects access to pharmaceuticals in devel-
oping countries. Sometimes, countries may adopt policies
that adversely inuence access, such as applying taris or
taxing medicines. Other restraints include a lack of human
and nancial resources, reliance on the public sector, and
absence of an adequate infrastructure to supply and admin-
3 / Intellectual property and access to medicines 3.15
ister medicines eectively. For example, in sub-Saharan
Africa, medicines for HIV/AIDS treatment are increas-
ingly available from multiple sources: Indian-manufactured
copies of patented antiretrovirals, generic purchases,
brand-name purchases, and donations from pharmaceuti-
cal companies; bilateral and multilateral programs provide
funding for procurement. Still, less than half the patients
who need treatment are getting it, in part because of weak
pharmaceutical management infrastructures and too few
trained health professionals.
As intellectual property rights are strengthened glob-
ally, the cost of medicines in developing countries is likely
to increase unless eective steps are taken to facilitate their
availability at lower costs. Moreover, countries need to adopt
a range of policies to improve access to medicines. Additional
resources to improve services, supply mechanisms, and
infrastructure are critical. Countries need to ensure that
their intellectual property protection legislation does not run
counter to public health policies and that other economic
policies are in harmony with health policy objectives.
Box 3-2 includes a list of issues for country-level policy
makers to keep in mind regarding intellectual property
rights and access to medicines.
Using available resources to develop expertise
A lack of clarity oen exists about the options available
on the patent status of medicines and importing generic
medicines from foreign producers. Within developing-
country governments, experience in implementing TRIPS
and its exibilities is limited, and the political will to act
is oen low. Making changes to a country’s intellectual
property regime requires eective cooperation between
different government departments, including health,
trade, and industry, which may have limited experience in
developing common policy.
e international rules regarding intellectual property
are developing quickly. Active participation by develop-
ing countries in discussions of the future of the global
intellectual property system is essential to ensure both
Governments should—
• Avoid provisions in bilateral trade agreements that
could reduce access to medicines in developing
countries
• Increase funding for research projects run by public-
private partnerships and by developing countries,
and make that funding more sustainable
• Develop advance-purchase schemes for vaccines,
medicines, and diagnostics
• Incorporate digital libraries of traditional medical
knowledge into their patent oces’ data to ensure
that data contained in them are considered when
patent applications are processed
• Make available reliable information on the patents
they have granted
• Amend their laws to allow compulsory licensing for
export consistent with TRIPS
• Eliminate taris and taxes on health care products
Governments of developing countries should—
• Identify a trade and pharmaceuticals focal point
within the ministry of health
• Establish contacts, perhaps a working group, with
trade and other key ministries
• Obtain reliable specialized legal advice
• Develop a mechanism to monitor the health eect of
new trade agreements
• Promote health research that is in line with public
health needs
• Promote the use of research exemptions as part of
their patent law
• Invest appropriately in health-delivery infrastruc-
ture
• Improve nancing of the purchase of medicines and
vaccines
• Make use of compulsory licensing provisions where
they will promote innovation or access to medicines
National patent and related legislation should—
• Promote standards of patentability that take health
into account
• Establish process and product patents for twenty
years
• Incorporate exceptions, trademark provisions, data
exclusivity, and other measures to support generic
competition
• Permit compulsory licensing, parallel importation,
and other measures to promote availability and
ensure fair competition
• Permit requests for extension of the transitional
period for TRIPS implementation, if needed and if
eligible
• Carefully consider national public health interests
before instituting TRIPS-plus provisions
Sources: WHO 2001; CIPIH 2006.
Box 3-2
Issues on intellectual property and pharmaceuticals for policy makers
3.16 POLICY AND LEGAL FRAMEWORK
the legitimacy of standard setting and its appropriateness
to countries at very dierent levels of development. As the
rules evolve, their impact must be properly understood if
policies are to be based on relevant evidence.
Box 3-3 contains a list of organizations and resources that
provide information on intellectual property rights and
public health.
Regional collaboration
e constraints on national eorts to implement TRIPS
exibilities to improve public health show that developing
countries need signicant additional resources and techni-
cal assistance. One way to provide such support is through
regional mechanisms that can complement national eorts.
A regional approach to using the TRIPS exibilities cre-
ates better policy conditions for addressing the challenges
of implementing TRIPS exibilities, which can be daunting
for each individual country. Politically, a collective regional
position on matters of public health and access to medicines
can provide bargaining advantage for developing countries
in their negotiations within WTO and with developed-
country trading partners.
A regional approach to the use of TRIPS exibilities
could enable similarly situated countries to address their
constraints jointly by drawing on each other’s expertise
and experience and by pooling and sharing resources and
information. Policies that are likely to benet signicantly
from regional collaboration in implementing TRIPS ex-
ibilities include those related to production of pharmaceu-
ticals, regulatory approval of medicines, market surveillance
and maintenance of quality standards, and import rules
and competition issues (Musungu, Villanueva, and Blasetti
2004).
3.5 Intellectual property and R&D for new
medicines
Patent protection is an incentive for R&D for new medicines.
e patent-holding company has exclusive rights over the
product for a dened period, protecting it from competition
in the country where the patent is recognized. Patent protec-
tion allows the manufacturer to set prices according to what
the market will bear, which is likely to be well above produc-
tion cost for medicines that treat widespread and severe ill-
nesses in high-income markets. e temporary monopolies
that patents create reward rms for taking expensive risks in
developing new medicines.
Trends in new medicine innovation
Following years of rapid innovation from 1980 to the mid-
1990s, evidence suggests an overall decline in the output
of global R&D into new medicines. Although R&D spend-
ing tripled between 1990 and 2000, the annual number
of new medicines approved fell from its peak of more
than y in 1996 to thirty-two in 2000, the lowest output
in more than twenty years (WHO 2004). e increasing
costs of R&D and the decrease in productivity have been
factors in encouraging mergers between pharmaceutical
companies. Rising R&D costs are also prompting manu-
facturers to develop strategic alliances with small research
companies, particularly biotechnology companies, reect-
ing the emerging commercial potential of genomics-based
discoveries.
In general, patents are most eective at attracting invest-
ment in products that have commercial prospects, leaving
important gaps where R&D is the most commercially risky.
e diseases and conditions that aect people in the world’s
major markets largely determine where the pharmaceutical
industry’s investments go. Of the 1,393 new chemical enti-
ties developed between 1975 and 1999, only 16 were for the
treatment of tropical diseases and tuberculosis (Trouiller et
al. 2002). e Global Forum for Health Research highlights
the fact that only 10 percent of R&D spending is directed
to the health problems that account for 90 percent of the
global disease burden—the so-called 10/90 gap (see http://
www.globalforumhealth.org). For example, no new class of
anti-tuberculosis medicine had been developed in almost
twenty years, despite the high global burden of this disease.
erefore, the debate centers around how to reach a balance
between meeting the high costs of pharmaceutical R&D and
creating incentives to stimulate access to those medicines in
poor and developing countries.
Encouraging R&D in neglected diseases
Various initiatives are being used to encourage R&D into
medicines for neglected diseases. Public-sector or donor
funds or research mandates oen address gaps in research
that are not adequately provided for by intellectual prop-
erty rights incentives. Some “push” mechanisms work by
reducing costs and risks, including tax credits, grants, and
support for clinical trials. “Orphan” medicine laws are
examples of this type of mechanism. Another mechanism,
called a “pull” initiative, creates a market for medicines or
increases their protability; for example, when a company
develops a medicine for a neglected disease and in return
gets the right to extend the patent on one of its more prot-
able products. Another type of proposal to tackle the prob-
lem of R&D for these forgotten medicines is the creation of
public-private partnerships that mobilize expertise, capac-
ity, and funding from both the public and private sectors
(see Box 3-4). In fact, recent research has shown that two-
thirds of projects developing medicines for neglected dis-
eases involve these sorts of public-private collaborations
(Moran 2005).
3 / Intellectual property and access to medicines 3.17
Business and Industry Advisory Committee to the OECD
(BIAC). BIAC is the business community’s representa-
tive to the Organisation for Economic Co-operation and
Development (OECD). BIAC’s members are the major busi-
ness organizations in the OECD member countries. BIAC
ensures that business and industry needs are adequately
addressed in OECD policy decisions. http://www.biac.org
Commission on Intellectual Property Rights. e British
government set up the commission to look at how intellec-
tual property rights might work better for developing coun-
tries. e commission’s nal report (in seven languages) and
supporting documents are available on its website. http://
www.iprcommission.org
Commission on Intellectual Property Rights, Innovation
and Public Health. e World Health Assembly (WHO’s
highest body) set up this independent commission in 2003
to collect and analyze data and proposals on intellectual
property rights, innovation, and public health. e com-
mission presented its nal report in April 2006. Documents
relating to the commission’s work are available on its website.
http://www.who.int/intellectualproperty/en
Knowledge Ecology International. Knowledge Ecology
International is a nonprot organization that focuses on
issues related to intellectual property and health care. Its
website includes links to many intellectual property docu-
ments and several related listservs. http://www.keionline.org
Health Action International/WHO Drug Prices Project.
is project seeks to gather and publicize accurate data on
pharmaceutical price structure as a rst step to negotiation,
management, and policy to bring prices down and make
medicines more aordable. http://www.haiweb.org/
medicineprices
Intellectual Property Watch. is nonprot, independent
news service reports on the interests and activities that inu-
ence the design and implementation of international intel-
lectual property policies. http://www.ip-watch.org/index.php
International Federation of Pharmaceutical
Manufacturers and Associations (IFPMA). IFPMA is a
global organization that represents research-based pharma-
ceutical, biotechnology, and vaccine companies and national
industry associations in developed and developing coun-
tries. http://www.ifpma.org
International Generic Pharmaceutical Alliance (IGPA).
IGPA is a network of associations representing manufactur-
ers of generic medicines; it comprises the generic medicine
associations of Canada, Europe, India, Japan, and the United
States, with Brazil, Jordan, Taiwan, and South Africa having
observer status. http://www.egagenerics.com
IPRsonline.org. IPRsonline.org is an Internet portal
containing a selection of online documents and resources
related to intellectual property rights and sustainable devel-
opment, including discussion papers from various organiza-
tions, a calendar of related events, latest news on intellectual
property rights, and links to listservs and relevant institu-
tions. http://www.IPRsonline.org
Médecins Sans Frontières Campaign for Access to
Essential Medicines. e campaign is an advocacy eort
to promote policies to lower medicine prices and push for
increased research into neglected diseases. http://www.
accessmed-msf.org
Pharmaceutical Research and Manufacturers of America
(PhRMA). is industry organization represents the United
States’ leading pharmaceutical research and biotechnology
companies. http://www.phrma.org
Science and Development Network. is Internet-based
network, also known as SciDev.Net, provides up-to-date
information on science- and technology-related issues that
aect developing countries, including news, policy briefs,
key documents, and feature articles. It includes a section
devoted to intellectual property. http://scidev.net
South Centre. South Centre is an intergovernmental orga-
nization that promotes the interests of developing countries
by analyzing development problems and experience and
providing intellectual and policy support on global issues
including trade, development, and intellectual property
rights. http://www.southcentre.org
World Health Organization (WHO). In 2006, WHO mem-
ber states established an Intergovernmental Working Group
(IGWG) on Public Health, Innovation and Intellectual
Property. e working group’s mandate was to prepare a
global strategy and plan of action on public health, inno-
vation and intellectual property to address conditions dis-
proportionately aecting developing countries. Documents
related to IGWG activities can be found on its website http://
www.who.int/phi/documents/en/. In addition, the website
of WHO’s unit on Trade, Foreign Policy, Diplomacy and
Health includes an updated list of related publications and
links to other WHO sites related to globalization. http://
www.who.int/trade/en
World Intellectual Property Organization (WIPO).
is specialized agency of the United Nations administers
twenty-three international treaties dealing with dierent
aspects of intellectual property protection. It also provides
technical assistance to member countries needing help with
developing national systems for intellectual property. http://
www.wipo.org
World Trade Organization (WTO). is international
organization deals with the rules of trade between nations at
a global or near-global level. See Box 3-1 for a detailed dis-
cussion. http://www.wto.org
Box 3-3
sources of information on intellectual property rights and public health
3.18 POLICY AND LEGAL FRAMEWORK
ese mechanisms ll some important gaps between
the opportunities that face commercial medicine manu-
facturers, on the one hand, and the global burden of
disease, on the other. Strong public-sector involvement
is needed to ensure that new medicines are created to
address priority health problems in developing countries.
To help address such issues, WHO created an intergov-
ernmental working group to develop a framework that
identies and prioritizes needs-based research for dis-
eases that disproportionately aect developing countries.
As a result of the group’s work, in 2008 the sixty-rst
World Health Assembly adopted Resolution WHA 61.21:
Global Strategy and Plan of Action on Public Health,
Innovation and Intellectual Property. In 2009, the World
Health Assembly adopted Resolution WHA 62.16: Final
Agreement on Stakeholders in the Plan of Action on
Public Health, Innovation, and Intellectual Property.
e global strategy and plan of action comprises eight
elements, which are designed to promote innovation,
build capacity, improve access, and mobilize resources.
Additional information and materials are available at
WHO’s website: http://www.who.int/phi/implementation/
phi_globstat_action/en/index.html.
Technology transfer
Technology transfers involve knowledge sharing between
developed and developing countries. TRIPS recognizes that
“the protection and enforcement of intellectual property
rights should contribute to the promotion of technological
innovation and to the transfer and dissemination of technol-
ogy” and suggests that developed-country members intro-
duce incentives to encourage technology transfer by private
companies.
As encouraged by TRIPS, the transfer of technology
is potentially an important source of growth in develop-
ing countries. One of the reasons that developing coun-
tries do not use the compulsory licensing mechanism in
TRIPS is because of a lack of mechanisms for technol-
ogy transfer. Although compulsory licensing permits an
invention to be used without the consent of the patent
holder, it does not guarantee that the country will have
Some partnerships act like pharmaceutical companies
that develop their own medicines, whereas others act
more like funding agencies. An example of the former
type of partnership is the Drugs for Neglected Diseases
Initiative, started by Médecins Sans Frontières, with the
support of several ministries of health, research insti-
tutes, and pharmaceutical manufacturers—including
partnerships with southern research centers. Initially
focused on treatment for sleeping sickness, leishmani-
asis, and Chagas disease, this nonprot research organi-
zation develops or adapts medicines for patients suering
from several dierent diseases with little prot-making
potential. e initiative’s rst commercial development,
in collaboration with Sano-Aventis SA, is a new anti-
malarial medicine. is inexpensive, xed-dose combi-
nation of artesunate and amodiaquine was launched in
2007 and by 2011, more than 80 million treatments had
been distributed.
e Medicines for Malaria Venture, founded in 1999, is a
public-private partnership concerned with the discovery,
development, and registration of new medicines for the
treatment and prevention of malaria; similarly, the Global
Alliance for TB Drug Development is committed to deliv-
ering new anti-tuberculosis medicines; it has three medi-
cine candidates in clinical trials, including moxioxicin,
which is the nearest to approval. Moxioxicin should
shorten the treatment duration for drug-sensitive, adult
tuberculosis cases. e business model of the nonprot
pharmaceutical company Institute for One World Health
is to take promising leads on new medicines that lack a
protable market and complete the development process.
e company then collaborates with other companies
and nonprot hospitals and organizations in the develop-
ing world to conduct medical research and to manufac-
ture and distribute the newly approved therapies.
In the vaccines area, the International AIDS Vaccine
Initiative researches and develops HIV vaccine can-
didates by directing and nancing partnerships with
private companies and academic and government
agencies, including those in developing countries; the
Malaria Vaccine Initiative operates in a similar fashion
for malaria vaccine projects. Further downstream in
the R&D process, the Global Alliance for Vaccines and
Immunization works to enhance the commercial attrac-
tiveness of vaccines by stimulating demand in develop-
ing country markets, strengthening infrastructure, and
guaranteeing some product purchase. e idea is that
a strong advance commitment to purchasing safe and
eective vaccines will reduce the nancial risks faced by
private-sector manufacturers and help redirect research
toward the vaccines that are a priority for resource-
limited countries.
Box 3-4
using public-private partnerships to develop medicines for neglected diseases
3 / Intellectual property and access to medicines 3.19
the appropriate technology available, including facilities
for manufacturing.
Increasingly, technology transfer is a component in non-
prot initiatives and public-private partnerships that involve
developing-country governments and the private sector. For
example, several R&D companies are linking with industry
partners in India, China, and elsewhere to increase the sup-
ply of patented medicines. In the cases of South Africa and
Kenya, advocacy eorts on the part of governments and civil
society resulted in patent holders granting voluntary licenses
to local manufacturers. WHO, international philanthropic
groups, and nongovernmental organizations are brokering
collaborations between R&D and generics companies.
In all of these partnerships, both the research-based
company and the developing country stand to benet. For
example, a company benets from being seen as committed
to corporate social responsibility, and developing-country
partners get increased access to scientic technology and
skills, new products for new markets, and experience in
working with international standards.
Alternative paradigms in R&D of pharmaceuticals
In addition to public-private partnerships, a dierent R&D
paradigm for pharmaceuticals is the use of an open collab-
orative model, such as the Human Genome Project’s suc-
cessful international eort to sequence the human genome,
which used a nonproprietary system sanctioned by the
governments of six major countries. One of the innova-
tive aspects of this model is the publicly available results,
which has been a growing trend in biomedical research (see
additional discussion in Chapter 34). e collaborative and
transparent nature of this kind of openly accessible research
is appealing, but its application to pharmaceutical R&D is
still unclear.
Others have suggested creating a global decision-making
process to name targets for R&D funding, with each individ-
ual country deciding how it will meet those targets (Hubbard
and Love 2004). e theory is that to meet the R&D targets,
some countries will choose public-sector management of
investments, while others will rely on a more private (prot
or nonprot) approach. Most will choose mixed approaches.
Another idea is to set up a global fund to pay for research
into medicines for neglected diseases; such medicines would
then be supplied free or at greatly discounted prices to
resource-limited countries. One R&D paradigm or another
is unlikely to be chosen explicitly. Box 3-5 illustrates how
some developing countries are approaching R&D for new
medicines.
UNITAID is working to establish an international patent
pool that would, in theory, increase access to patents and
promote the development of more aordable medicines in
developing countries. e concept of the pool is for patent
holders to give up their patents and allow their intellectual
Only 4 percent of the entire global spending on health
research is by low- or middle-income countries, and the
majority is public-sector funded. Researchers in all but
the most technologically advanced countries nd devel-
oping new and innovative pharmaceutical products dif-
cult without adequate infrastructure or equipment, and
few countries have the regulatory framework to oversee
the process of ensuring pharmaceutical quality, ecacy,
and safety. However, developing and transitional coun-
tries such as India, Indonesia, South Africa, and Brazil
have created successful industries specializing in the
manufacture of generic medicines, while a few countries
have even developed new medicines.
For example, in the 1970s, Pliva, a small Croatian com-
pany, developed a new antibiotic called azythromycin,
which looked promising in animal trials. Pliva did not
have the resources necessary to mass produce and mar-
ket the new medicine in the world market. It patented the
product globally, which led to a licensing agreement with
the U.S. pharmaceutical giant Pzer to market the medi-
cine worldwide, while Pliva retained marketing rights in
Eastern Europe. Zithromax became one of Pzer’s top
antibiotic products.
Although this kind of R&D success may not be realistic
for every small company, other ways exist to make prog-
ress. For instance, the generic pharmaceutical industry
in India was the rst to create a xed-dose combination
of antiretroviral medicines for HIV/AIDS, which is
less expensive, and by simplifying the dosage improves
patients’ ability to adhere to their treatment. Scientists
in other countries, such as South Africa and China,
are focusing their R&D eorts on taking centuries-old
herbal preparations used in traditional medicine and cre-
ating modern medicines. Some of these R&D eorts are
advancing with the help of public-private partnerships,
with large pharmaceutical companies providing the tech-
nology and expertise, and some are using a combination
of state and private nancing or nonprot foundation
funding to develop their pharmaceutical sectors.
Source: Fleck 2005.
Box 3-5
How developing countries are approaching r&D
3.20 POLICY AND LEGAL FRAMEWORK
property rights to be managed by the pool under certain
conditions. By giving up a period of exclusive marketing
rights, patent holders receive royalties from the pool in
exchange for a license to produce the medicine in a devel-
oping country (UNAIDS 2009). WHO’s Expert Working
Group on Research and Development Financing rated the
patent pool model high for operational eciency, feasibility,
and impact on health in developing countries. As it is based
on the voluntary donation of intellectual property, however,
questions remain about the quantity and quality of intellec-
tual property that patent holders would choose to donate,
particularly outside the area of HIV/AIDS. For the pool to
work well, a minimum critical mass is needed, and it is not
clear whether this would be achieved voluntarily for many
diseases (WHO 2010). n
References and further readings
H = Key readings.
Abbott, F. M. 2001. e TRIPS Agreement, Access to Medicines and the
WTO Doha Ministerial Conference. Geneva: Quaker United Nations
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Glossary
Bioequivalence: Two pharmaceutical products are bioequivalent
if they are pharmaceutically equivalent and the rate and extent of
bioavailability are similar to such a degree that their eects can be
expected to be essentially the same.
Bolar (early working) exception: An exception to patent rights
allowing a third party to undertake, without the authorization
of the patentee, acts in respect of a patented product necessary
for the purpose of obtaining marketing approval for the sale of
a product.
Compulsory license: A license to exploit a patented invention
granted by the state upon request of a third party.
Data exclusivity: A legal provision that data collected (for exam-
ple, the results of clinical trials) for obtaining marketing approval
may not be used for a specied period by the regulatory authori-
ties to grant approval to a generic equivalent.
Data protection: An obligation imposed on third parties to pro-
tect test data, such as the results of clinical trials, that are usually
collected to comply with government regulations on the safety,
ecacy, and quality of a broad range of products (for example,
drugs, pesticides, medical devices). For example, TRIPS provides
for the protection of such data against unfair commercial use.
Dierential pricing: e practice of setting dierent prices for
dierent markets, typically higher prices in richer markets and
lower prices in poorer markets.
Doha Declaration: e Declaration on the TRIPS Agreement
and Public Health agreed upon at the Doha WTO Ministerial
Meeting in 2001.
Downstream research: Applied research usually directed at the
development of a product or process with a potential commercial
application.
Evergreening: A term popularly used to describe patenting strate-
gies that are intended to extend the patent term on the same com-
pound.
Exhaustion of rights: Principle whereby the right holder’s intel-
lectual property rights in respect of a product are considered
exhausted (that is, he or she can no longer exercise any rights)
when that product has been put on the market by the right holder
or by an authorized party.
Incremental innovation: Innovation that builds incrementally on
previous innovation, as compared with “breakthrough” innova-
tion, which is a completely novel means to prevent, treat, or cure
a particular disease.
Intellectual property rights: Rights awarded by society to indi-
viduals or organizations over inventions, literary and artistic
works, symbols, names, images, and designs used in commerce.
ey give the titleholder the right to prevent others from making
unauthorized use of their property for a limited period.
Interchangeability: A pharmaceutical product that is therapeuti-
cally equivalent to a comparator (reference) product.
Parallel imports: e purchase of a patented medicine from a law-
ful source in an exporting country and its importation without
seeking the consent of the “parallel” patent holder in the import-
ing country.
Patent: An exclusive right awarded to an inventor to prevent oth-
ers from making, selling, distributing, importing, or using the
invention, without license or authorization, for a xed period of
time. In return, the patentee discloses the invention to the pub-
lic. ree requirements usually exist for patentability: novelty;
inventive step or nonobviousness (knowledge not obvious to one
skilled in the eld); and industrial applicability or utility.
Patent pools: An agreement between two or more patent owners
to license one or more of their patents to one another or third
parties.
Source: Adapted from CIPIH 2006.
chapter 4
National medicine policy
Summary 4.2
4.1 Introduction 4.2
4.2 What is a national medicine policy? 4.3
What should a medicine policy accomplish? • What
approaches should be used? • Why do medicine policies
dier by country? • Who are the main participants in
developing and implementing a national medicine policy?
4.3 C omponents of a national medicine policy 4.5
Legislative and regulatory framework • Choice of essential
medicines • Supply • Aordability • Financing
strategies • Rational medicine use • Human resources,
monitoring, evaluation, and research
4.4 S etting priorities 4.9
4.5 Formulating a national medicine policy 4.12
Step 1. Organize the policy process • Step 2. Identify and
analyze problems • Step 3. Set goals and objectives •
Step 4. Dra the policy • Step 5. Circulate and revise
the policy • Step 6. Obtain formal endorsement for the
policy • Step 7. Launch the policy
4.6 Implementing a national medicine policy 4.15
4.7 Monitoring and evaluating a national medicine
policy 4.17
4.8 C onstraints and facilitating factors 4.18
Assessment guide 4.19
References and further readings 4.19
illustration
Figure 4-1 Structure of a complete national medicine
policy 4.3
boxes
Box 4-1 List of stakeholders who provided input in the
2004 revision of Ghana’s National Medicine
Policy 4.6
Box 4-2 Components of a national medicine policy 4.7
Box 4-3 Objectives of Malawi’s 2009 National Medicine
Policy 4.13
Box 4-4 Access to essential medicines as part of the
fulllment of the right to health 4.14
country studies
CS 4-1 Using operations research to develop and implement
the Lao P.D.R. National Drug Policy 4.10
CS 4-2 Innovative approaches in formulating and
implementing a national medicine policy in
Australia 4.16
CS 4-3 When things go wrong with national medicine
policies: the case of Yemen 4.17
Part I: Policy and economic issues Part II: Pharmaceutical management Part III: Management support systems
Policy and legal framework
1 Toward sustainable access to medicines
2 Historical and institutional perspectives
3 Intellectual property and access to medicines
4 National medicine policy
5 Traditional and complementary medicine policy
6 Pharmaceutical legislation and regulation
7 Pharmaceutical production policy
8 Pharmaceutical supply strategies
Financing and sustainability
copyright
©
management sciences for health 2012
4.2 POLICY AND LEGAL FRAMEWORK
4.1 Introduction
For many decades, pharmaceutical policies were developed
in a piecemeal fashion, where they existed at all. At one
moment, a country may have developed a regulation on
pharmaceutical advertising—at another moment, a decree
on the places where medicines can be sold. One country
might concentrate on sound manufacturing practice—
another country on the problem of providing very poor
populations with access to medicines. Only gradually did
people come to realize that the issue of medicines and their
proper place in society needed to be looked at as a whole.
If a policy covered only select issues in the pharmaceuti-
cal sector, problems could soon arise with other issues; in
fact, a one-sided approach might actually make a situation
worse.
In the 1970s, for example, eorts were made in certain
countries to solve problems involving pharmaceutical pro-
curement and distribution without examining the ways in
which medicines were being prescribed or used by patients.
e result in some instances was that access to medicines
improved, but people did not know how to use them ratio-
nally. Similarly, essential medicines policies developed for
the public sector only were ineectual because they did not
address how the private and public sectors could comple-
ment each another. More recently, some East African
countries’ diculties in collecting direct taxes have led
to a heavier reliance on import duties and manufacturing
taxes, including those from medicines. is policy makes
imported pharmaceuticals more expensive and discourages
local production, resulting in the availability of fewer low-
cost medicines in the marketplace.
ese experiences suggested that pharmaceutical prob-
lems might be better tackled within a common frame-
work created through the development of a comprehensive
national medicine policy. e overall goal of an NMP should
be to promote equity and sustainability of the pharmaceuti-
cal sector (WHO 2003). Its general objectives can be simply
A national medicine policy (NMP) is a political commit-
ment and a guide for action that shows how the govern-
ment will ensure that ecacious and safe medicines of
good quality are aordable, accessible, and rationally
used. e NMP provides a framework for coordinating
the activities of all the parties involved, such as the pub-
lic and private sectors, nongovernmental organizations
(NGOs), donors, and other interested stakeholders; it
also denes the role that the public itself should play.
e medicine policy of one country may be similar in
many ways to the medicine policies of other countries,
but because their starting situations will vary, the policies
will likely dier in what they emphasize and in how prob-
lems can best be tackled. A national government will be
the principal agency responsible for creating the overall
NMP and putting it into practice; however, collaboration
will be needed with prescribers, dispensers, consumers,
and those who make, market, distribute, and sell medi-
cines. Sometimes, disagreements among the parties will
be unavoidable because their interests dier, but ideally a
wide partnership will develop, because an eective medi-
cine policy is ultimately in the best interests of all.
is chapter examines the components of an NMP.
Countries must choose the elements most relevant to
their situation and most realistic, given their available
human and nancial resources. At the outset, govern-
ments will need to give priority to solving current prob-
lems, such as a lack of relevant laws and regulations and
diculty in implementing and enforcing laws and regu-
lations that already exist; issues of nance, supply, cost,
and pricing; and rational use of medicines. Less pressing
matters may be addressed later.
is chapter reviews the main steps in formulating an
NMP including—
• Organizing the process
• Identifying and analyzing problems
• Setting goals and objectives
• Draing the policy
• Seeking wide agreement on the policy
• Obtaining formal endorsement of the policy
• Launching the policy
Formulating a policy is one thing; putting it into eect
is another. No single, best way to implement an NMP
exists, but this chapter shares the approaches that some
countries have taken.
Experience shows that the essential medicines concept
is central to a successful national medicine policy. e
core of the concept is using an established list of essen-
tial medicines based on standard treatment guidelines,
leading to a better supply of medicines, more rational
prescribing, and lower costs. Finally, the success of an
NMP will depend heavily on political commitment by
the government and support from all stakeholders in the
pharmaceutical sector.
suMMary
4 / National medicine policy 4.3
stated: a national medicine policy should ensure that eec-
tive and safe medicines of good quality are accessible and
aordable to the entire population and that they are ratio-
nally used.
e 1980s saw the idea of an NMP emerging as a posi-
tive concept, and the World Health Organization (WHO)
and World Bank became active in developing the idea
further. Now the idea that every country should try to
achieve optimal availability, quality, and use of medicines
for patients and consumers is widely accepted. By 2007,
more than 130 countries had formulated NMPs, about 60
percent of which had an updated implementation plan in
place (WHO 2010).
4.2 What is a national medicine policy?
An NMP is a political commitment to a goal and a guide for
action. It is a written document specifying the medium- to
long-term goals set by the government for the pharmaceu-
tical sector, their relative importance, and the main strate-
gies for attaining them. Moreover, it provides a framework
for coordinating activities of the pharmaceutical sector:
the public and private sectors, NGOs, donors, and other
interested parties. (Figure 4-1 illustrates the structure of a
national medicine policy.) e NMP should be incorporated
into the national health system to ensure that NMP goals
and objectives are addressed in broad national health plans,
A.
Input to Drug Policies
D.
Objective
C.
Channels
B.
Policy Tools
E.
Corrective
Mechanisms
Pharmaceutical IndustryUniversities, Schools
Dispenser (Pharmacist, MD) Prescriber (MD)
Ind. Information Res. Funds Registration Quality
Education ADR Study Costs Distribution Advertising
Acceptable, Aordable, Accessible Drugs
That Are Rationally Used
Courts of Justice
Mass Media
Consumer Bodies
Public Acceptance
Consensus on
DUR Methods
DUR Studies
Sta Training Policy Audits
Legal
Global Trends
National Drug Policies
Methods
Research/Therapy
Ocial Guidelines
Studies of Future
Policy Needs
Foreign Inuences
Lobbies
DUR = drug use review; ADR = adverse drug reaction; Ind. = Independent; Res. = Research.
Figure 4-1 Structure of a complete national medicine policy
This figure shows how many different elements are linked in the construction of a national medicine policy. No individual country’s policy is
likely to be structured in exactly the same way, and many national medicine policies are simpler. The chart can, however, be useful in analyzing
the situation and looking for solutions. For example, the area of rational prescribing can be analyzed by examining the linkages illustrated. The
figure shows that the prescriber is likely to receive information, advice, and persuasion from various sources: the institution where he or she was
educated, the drug regulatory agency, formularies, industry representatives, and others. Can the quality of influencing sources be improved? Do
they reinforce or contradict one another? Is some better form of guidance needed if the prescriber is to improve rational prescribing practices?
4.4 POLICY AND LEGAL FRAMEWORK
including disease-specic programs, and that resources are
allocated eciently. An NMP should also express the gov-
ernment’s commitment to promoting good governance
practices, including increased transparency and account-
ability.
In the developed world, most countries do not have
written NMPs, yet many are successful in pursuing phar-
maceutical sector goals. However, even in those countries,
some experts advocate drawing up a document that clearly
outlines the objectives of an NMP; for example, Australia
launched an ocial NMP in 1999. In countries where
resources are severely limited, an integrated approach
to solving problems helps make the best use of limited
resources.
What should a medicine policy accomplish?
e overall purpose of an NMP is usually expressed in gen-
eral terms, without necessarily touching on every aspect of
the policy. e purpose stresses the most important objec-
tives in the simplest way. In Nigeria, the medicine policy
states that the goal is “to make available at all times to the
Nigerian populace adequate supplies of drugs that are
eective, aordable, safe and of good quality; to ensure the
rational use of such drugs; and to stimulate increased local
production of essential drugs” (Federal Ministry of Health,
Nigeria/WHO 2005). In Ghana, the overall goal of the pol-
icy is “to improve and sustain the health of the population of
Ghana by ensuring the rational use and access to safe, eec-
tive, good quality and aordable pharmaceutical products”
(Ministry of Health, Ghana, 2004).
Although specic objectives dier according to the priori-
ties recognized by the government, the most common fol-
low the essential medicines concept and are directly health
related—
• To make essential medicines available and aordable
to those who need them
• To ensure the safety, ecacy, and quality of all medi-
cines provided to the public
• To improve prescribing and dispensing practices and
to promote ethical practices among health profession-
als and the correct use of medicines by health workers
and consumers
e core of the essential medicines concept is that the use
of a limited number of medicines that have been carefully
selected based on agreed standard treatment guidelines
leads to a better supply of medicines and more rational pre-
scribing, as well as to lower medicine costs.
e national medicine policy may also include economic
goals (for example, to reduce the use of foreign exchange
for pharmaceutical imports, or to provide jobs in areas such
as dispensing, prepackaging, or production of pharma-
ceuticals) and national development goals (for example, to
improve internal transportation and communication sys-
tems, develop national pharmaceutical production, or to
take a stand on intellectual property rights in this particu-
lar eld). Regardless of a country’s specic circumstances, a
comprehensive NMP should clearly specify the roles of both
the public and the private sectors.
In addition, the policy should be concerned with e-
ciency (delivery of the maximum level of services given a
certain level of resources); equity (fairness in access); sus-
tainability (the ability to provide continued benets into
the future without relying on external support); and trans-
parency, with clear lines of accountability. Finally, the NMP
should address the issue of access to essential medicines as
part of the government’s obligation to fulll its citizens’ right
to health (see Section 4.4).
What approaches should be used?
In addition to indicating the broad political choices that
the government has made regarding the pharmaceutical
sector, a general medicine policy should dene some spe-
cic objectives—outcomes to achieve within a given time
frame. Each objective must be linked to some clear ideas
about how it will be obtained. For instance, the supply
of essential medicines can be improved in the public sec-
tor by increasing the pharmaceutical budget, introducing
cost-sharing mechanisms, or allocating more resources to
underserved populations. Pharmaceutical supply can also
be increased through the private sector by introducing eco-
nomic incentives for pharmaceutical manufacturing and
distribution. Some of these strategies can be introduced in
the national policy document, whereas others may need
to be worked out separately, aer additional research and
consultation. Including too much detail in the national
policy may make it dicult to read and understand. e
optimal solution is likely to involve applying dierent
approaches in the private and public sectors. is com-
bination of dierent approaches and strategies forms the
core of an NMP.
Why do medicine policies differ by country?
Objectives and strategies may dier from country to
country for various reasons. Dierences may exist in the
structure of the health care system, the number of trained
pharmacists and physicians, the capacity of the drug regu-
latory authority, the way in which pharmaceuticals are
distributed, or the level of funding available for pharma-
ceuticals. e biggest dierences in the scope of medi-
cine policies lie between industrialized countries and least
developed countries.
In most industrialized countries, health care coverage is
broad, and access to medicines per se is not a prominent
4 / National medicine policy 4.5
issue (although cost is likely to be a concern). e annual
public and private expenditure on medicines is high, per-
haps 500 U.S. dollars (USD) per person or more (WHO
2004b). e role of the government here is to set up rules
for the operations of the private sector without becoming
directly involved in medicine provision or in the pharma-
ceutical industry. is model requires the existence of an
active private sector that is capable of developing, manufac-
turing, marketing, and distributing medicines to the entire
population. erefore, in these settings, pharmaceutical
policies are oriented heavily toward containing costs while
ensuring rational use in the interests of both public health
and the economy, and the regulations should focus on the
quality assurance of pharmaceutical products and services
as well as on cost containment.
Although many middle-income countries have experi-
enced improvements in indicators that measure pharma-
ceutical access, WHO estimates that almost one-quarter
of the population in middle-income countries still lacks
access to essential medicines (WHO 2004b). Whereas least
developed countries are aorded equity pricing for some
medicines, such as those for HIV/AIDS, middle-income
countries that are ineligible for such discounts pay higher
prices; however, in 2009, only one-third of these countries
were instituting economic policies that could help make
medicines more aordable (Stevens and Lineld 2010).
In the least developed countries, total spending on phar-
maceuticals is less than USD 5 per person per year (WHO
2004b). e private sector has traditionally failed to supply
aordable, high-quality medicines to the majority of the
population. Consequently, governments have attempted to
supply and distribute essential medicines through the public
sector, oen with donor support. In addition, policies oen
focus on such matters as ensuring the proper use of a basic
range of essential medicines and encouraging the private
sector to play a more constructive role in supplying those
medicines.
Who are the main participants in developing and
implementing a national medicine policy?
e national government is the essential driving force in
designing and implementing medicine policies. rough its
medicine policy, the state seeks to guarantee the availability
and accessibility of eective, high-quality essential medi-
cines for the population and to ensure that they are prop-
erly used. is goal holds true whether the government is
directly involved in procurement and distribution of medi-
cines, empowers parastatal or private institutions to carry
out this function, or acts mainly as a regulatory authority for
a largely private pharmaceutical market.
e government is not, however, the only actor involved
with the NMP. A partnership is required, involving gov-
ernment ministries of health, nance, and industry; health
professionals, including doctors and other prescribers and
pharmacists; public and private wholesalers and retailers;
academia; NGOs and consumer groups; and the pharma-
ceutical industry (national and multinational). Consulting
with provincial and district personnel and traditional
medicine practitioners is important. In addition, gov-
ernmental agencies, such as the drug regulatory author-
ity and government-sponsored health care and insurance
schemes, must be involved. e involvement of such
diverse groups and conicting interests means that devel-
opment and implementation of a sustainable NMP is not
easy. Reaching full agreement with all the parties on every
matter is ideal but not always possible. With patience and
goodwill, however, an environment conducive to success
can be created.
e ministry of health should establish a specic oce
that is responsible for coordinating the NMP review and
implementation process. e oce should arrange regu-
lar NMP stakeholder committee meetings to assess imple-
mentation and policies. Working groups may be needed to
analyze the eect of the NMP on specic areas. In addition,
the NMP oce should be given the capacity to monitor and
evaluate the implementation process and coordinate neces-
sary action plans with stakeholders.
e consultations and national discussions that lead to
the production of the medicine policy document are very
important because they create a mechanism to bring all
parties together and achieve a sense of collective owner-
ship of the nal policy. is “buy-in” is crucial in view of the
national eort that will later be necessary to implement the
policy. e policy process is just as important as the policy
document (WHO 2001). (Box 4-1 lists all of the stakeholders
involved with the most recent revision of Ghana’s National
Medicine Policy.)
e development and implementation of an NMP is a
highly political process, requiring careful analysis to under-
stand who the advocates are, who the opponents are, and
what each group’s strategies are. Mobilizing alliances and
coalitions and creating constituents inside and outside the
government are necessary to mobilize political will during
the process.
4.3 Components of a national medicine
policy
e areas of pharmaceutical policy unavoidably overlap, but
the main components include legislation and regulation,
choice of medicines, supply and nancing policies, and a
means of encouraging rational medicine use. Some coun-
tries also have a tradition of local production (or they have
ambitions in this area), and that factor can also be a key issue
in a national medicine policy. ese components form the
basic framework, with other components added according
4.6 POLICY AND LEGAL FRAMEWORK
to local conditions. Each component is essential but not suf-
cient in itself to ensure access. Box 4-2 summarizes these
basic components of a national medicine policy, which are
discussed further in the following sections.
Legislative and regulatory framework
e formulation of a medicine policy should be followed
by the enactment of appropriate legislation and the intro-
duction of regulations to provide a legal basis for the policy
and make it enforceable. An NMP is usually a declaration of
intent rather than a law, so the strategies set out in the policy
may need to be supported by appropriate laws and regula-
tions. In the Philippines, for example, one policy objective
was to extend the use of generic medicines, and many activi-
ties related to that objective were reinforced by a new law on
generics.
Legislation should provide the basis for ensuring that
pharmaceutical products are of acceptable quality, safety,
and ecacy and specify an agency to be responsible for this.
Regulations, which are more exible than legislation, should
dene the actors in the system and their responsibilities:
regulations should state who can produce or import phar-
maceuticals, who can prescribe them, and which medicines
can be sold without the need for a prescription. Regulations
should also state who can store and sell pharmaceuticals,
and which institution is responsible for monitoring and
enforcing regulations. Several legislative models and struc-
tures have been devised for the regulation of medicines, as
discussed in Chapter 6.
As noted, making a policy, or even a law or regulation,
provides no guarantee that it will be implemented. Too
oen, laws and regulations are not enforced, and the pen-
alties and sanctions that the law provides are not imposed.
Sometimes this failure results from lack of resources or lack
of political will; sometimes an element of corruption exists.
Although a commitment to good governance and the need
to ght corruption should be included as a cross-cutting
item throughout the NMP, some countries may also have
a separate component that specically denes how a good
governance program will be implemented (Anello 2006).
Another reason for failure may be that the government’s
rules are impractical or dicult to enforce. In this case, a
careful review of the main regulations applying to the phar-
maceutical sector may lead to proposals to amend them so
that they are better adapted to local realities and can be bet-
ter enforced.
Appropriate legislation and regulation should be accom-
panied by a functioning quality assurance system; pharma-
ceuticals of low quality, either imported or locally produced,
should never reach the patient. Quality assurance calls for
a transparent pharmaceutical registration system and a
well-organized and -trained inspection administration that
is independent of commercial pressures and a system of
quality control backed by one or more laboratories (see
Chapter 19).
• Accra Metropolitan Health Directorate
• Association of Ghana Industries
• Customs, Excise and Preventive Service
• Dangme West District Administration, Greater Accra
• Danish International Donor Agency
• Department for International Development
• European Union, Ghana Delegation
• Faculty of Law, University of Ghana
• Faculty of Pharmacy, Kwame Nkrumah University of
Science and Technology
• Food and Drugs Board
• General Practice Pharmacist Association
• Ghana Registered Nurses’ Association
• Ghana Standards Board
• Government and Hospital Pharmacists Association
• Greater Accra Regional Directorate of Pharmaceutical
Services
• KAMA Health Services, Accra
• Komfo Anokye Teaching Hospital
• Lady Pharmacists Association
• Ministry of Environment, Science and Technology
• National Centre for Pharmacovigilance
• National Drug Information Centre
• Pharmaceutical Manufacturers Association of Ghana
• Pharmaceutical Society of Ghana
• Pharmacy Council of Ghana
• Pharmacy Department, Korle-Bu Teaching Hospital
• Save the Children Fund, UK (Ghana Oce)
• School of Medical Sciences, Kwame Nkrumah
University of Science and Technology
• e World Bank, Ghana Oce
• United Nations Population Fund
• University of Ghana Medical School, Korle-Bu
• Upper West Regional Directorate of Pharmaceutical
Services
• Veterinary Council of Ghana
• Volta Regional Health Administration
• World Health Organization Headquarters, Geneva
Box 4-1
List of stakeholders who provided input in the 2004 revision of Ghana’s National Medicine Policy
4 / National medicine policy 4.7
Legislative and regulatory framework
• Legislation and regulations
• Drug regulatory authority
• Medicine registration and licensing
• Pharmaceutical quality assurance, including inspec-
tion and enforcement
• Pharmacovigilance
• Regulation of prescription and distribution
• Infrastructure for good governance in medicines
Choice of essential medicines
• Principles of essential medicine selection
• Selection process (market approval and selection
based on national morbidity patterns)
• Selection criteria (sound and adequate evidence,
cost-eectiveness)
• Use of essential medicines lists
• Traditional and herbal medicines
Supply
• Local production
• Supply system strategies and alternatives, including
mix of public and private sectors
• Procurement mechanisms
• Inventory control, including prevention of the and
waste
• Distribution and storage
• Disposal of unwanted or expired medicines
Rational use of medicines
• Multidisciplinary national body to coordinate medi-
cine use policies
• Standard treatment guidelines as the basis for select-
ing essential medicines and training health profes-
sionals
• Independent medicine information
• Rational medicine use training for health personnel
• Education about rational use of medicines for con-
sumers
• Promotional activities
Affordability
• Taxes or taris on essential medicines
• Distribution margins and pricing
• Measures to encourage competition through gener-
ics and price information and negotiation
• Trade-related intellectual property mechanisms
Financial strategies for medicines
• Role of government in the pharmaceutical market
• Pharmaceutical nancing mechanisms (public
nancing, user charges, health insurance, donor
assistance)
• Measures to improve eciency and cost-
eectiveness
Human resources development
• Role of health professions
• Role of government in planning and overseeing
training and development of human resources for
the pharmaceutical sector
• Human resources management and development
plan
• Education, training, and courses, including mini-
mum requirements for each cadre of professional
sta
• National and international collaborating networks
• Motivation and continuing education
• Ethical framework and code of conduct
Monitoring and evaluation
• Responsibilities and commitment
• Baseline survey of the whole country
• Indicators for monitoring
• Periodic monitoring
• Independent external evaluation every two to three
years
Research
• Operational research
• Pharmaceutical development and clinical
research
Technical cooperation among countries
• Information sharing
• Harmonization
Sources: Adapted from WHO 1995 and WHO 2003.
Box 4-2
Components of a national medicine policy
4.8 POLICY AND LEGAL FRAMEWORK
Choice of essential medicines
e selection of essential medicines to meet the health needs
of the population and the registration of safe, high-quality,
and eective medicines are important features of an NMP.
Adoption of and political commitment to the essential
medi cines concept should guide selection and reimburse-
ment decisions. Essential medicines are those considered
most vital for saving lives and alleviating serious and com-
mon diseases in the majority of the population. WHO cre-
ated the rst Model List of Essential Drugs in 1977 and
encouraged countries to use it as an example for making
their own lists. Such national essential medicines lists have,
in many countries, become the basis of public pharmaceuti-
cal supply systems. Hospital and outpatient practice formu-
laries commonly guide prescribing in both the private and
the public sectors. e principles, criteria, and process of
medicine selection are described in Chapter 16.
In a wealthy country, any medicine that meets stan-
dards of quality, safety, and ecacy can be sold, and sev-
eral thousand registered pharmaceutical products may
be available on the market. Where resources are lim-
ited, however, an essential medicines list can limit the
number of unnecessary or inappropriate purchases. For
example, more than a hundred medicines are available
to treat rheumatism and arthritis, but many are similar
and some are unnecessarily expensive; three or four such
medicines that are proven ecacious and aordable may
be all that are needed to adequately treat patients. is
selective approach is likely to save money and enable a
resource-limited pharmaceutical management system to
concentrate on essential medicines.
Medicines may also be selected using other criteria. For
example, some countries have been hesitant to add xed-
dose combination products to lists that already include
the individual components. Sometimes, a drug regulatory
authority may be willing to accept a product only if its price
is competitive with that of similar medicines already on the
market. Some countries have accepted only medicines for
which they believe a “medical need” exists—for example,
where the medicines have special advantages over other
products. is criterion is unpopular with manufacturers,
and it is dicult to apply, but many insurance schemes now
use the principle to determine for which medicines they are
willing to make reimbursements. e NMP can dene pro-
cedures to periodically update the national essential medi-
cines list and address the selection of traditional and herbal
medications.
Supply
In many developing countries, availability of essential medi-
cines is the most pressing concern of the NMP. To ensure
that high-quality medicines are available to all, govern-
ments not only need to select their priority medicines but
also to dene policies in production, procurement, and dis-
tribution, as well as to provide a mechanism for nancing,
which can be a key limitation. Such policies should take into
account what is feasible in the short term and what is nec-
essary for sustainable systems in the long term and under
special circumstances, such as when transport is likely to be
impeded during the rainy season.
In most countries, the private sector operates in the
pharmaceutical supply system to some degree, including
commercially based producers, importers, wholesalers,
pharmacies, and other retail drug sellers. Private-sector
products are oen relatively expensive, with the costs cov-
ered either from the patient’s pocket or refunded from a
private or public insurance system. In less auent coun-
tries, however, a public pharmaceutical supply system
procures and distributes medicines and makes them avail-
able to consumers at either low or no cost. ese public
systems were set up in part because private-sector activi-
ties were concentrated in urban areas, prices put products
out of reach of the poor, and no universal health insur-
ance systems existed. e rationale for many of these state-
supported systems persists, but they oen require improve-
ments in organization, management, and nancing to carry
out their mandate.
Another type of supply system is operated by NGOs, such
as Christian or Islamic missions. eir goal is largely to sup-
ply the needs that are not met by the commercial private sec-
tor or the public sector, especially among the poor and in
rural areas. Oen their role is explicitly recognized by gov-
ernment and incorporated into the NMP and public health
strategies.
Both government and NGO health services can be sup-
plied through a variety of alternative arrangements that
incorporate components of private-sector exibility and
eciency (see Chapter 8).
Pharmaceutical production policy (see Chapter 7) is
an important aspect of pharmaceutical supply. For many
years, countries have been interested in developing their
own local manufacturing capacity and a degree of national
self-suciency. Unfortunately, the diculties of local
production have frequently been underestimated. Local
production in developing countries is not necessarily a
low-cost venture; although wages and some other costs are
likely to be lower than in industrialized countries, phar-
maceutical constituents and even packaging materials have
to be imported, and maintenance of machinery is costly.
Many factors inuence the feasibility of local production,
and a range of policy options exists. When formulating an
NMP, the most important objective should be to get good-
quality, therapeutically useful medicines to the people who
need them, at prices they can aord—policies related to
industrial production should not interfere with policies
related to health care.
4 / National medicine policy 4.9
Affordability
Aordable prices are necessary to ensure access to medi-
cines in both the public and private sectors. Newer medi-
cines, such as those to treat HIV/AIDS and the newer
artemisinin-based combination therapies for malaria, are
very expensive. Possible mechanisms to increase aord-
ability to essential medicines in all sectors include select-
ing cost-eective treatments, comparing price information,
promoting price competition through generic substitution,
regulating producer prices and retail margins (see Chapter
9, on pharmaceutical pricing policy), limiting taris on
pharmaceuticals, and taking advantage of trade-related
intellectual property measures such as compulsory licensing
and parallel imports (see Chapter 3, on intellectual property
and access to medicines).
Financing strategies
Ensuring stable and adequate nancing for medicines is a
major challenge. Public nancing of medicines for gov-
ernment health services to increase access to medicines is
accepted as a legitimate policy in most countries and by
most institutions, and indeed, funding initiatives such as the
Global Fund to Fight AIDS, Tuberculosis and Malaria have
dramatically altered the pharmaceutical nancing context in
many developing countries. In addition, nancing mecha-
nisms such as user fees are used in the least developed coun-
tries to increase nancial resources, but they are dicult to
manage in a way that protects the poorest members of the
population. Public and private health insurance schemes are
becoming more common, and including reimbursement for
medicines should be promoted. Financing policies should
be designed to maximize resources for pharmaceuticals
while keeping prices as low as possible. ese issues are dis-
cussed in Chapter 11.
Rational medicine use
Medicines should be used appropriately, safely, and only
when needed. Irrational medicine use includes overuse,
underuse, and inappropriate use, caused by such factors as
lack of adequate regulatory systems; shortages of essential
medicines and availability of nonessential medicines; lack of
sound, objective medicine information; and the consider-
able inuence of medicine promotion on both prescribers
and consumers.
An NMP should specify major activities and responsi-
bilities for promoting rational prescribing, dispensing, and
patient medicine use. A wide variety of approaches has been
developed in an eort to promote rational prescribing and
dispensing (Chapters 29 and 30). Medicine prescribing and
use have been improved in certain institutional settings.
Although not yet widely implemented, programs focused on
rational medicine use can help improve medicine use in the
public and private sectors. Pre- and in-service training can
also promote rational medicine use.
Inadequate training of health professionals, lack of con-
trol of medicine promotion, and dispensing of medicines by
untrained persons all promote irrational use of medicines.
Strategies for public medication education should provide
individuals and communities with the information, skills,
and condence necessary to use medicines in an appropri-
ate, safe, and judicious way (see Chapter 33).
Human resources, monitoring, evaluation, and
research
Implementing an NMP depends on people; they must be
trained, motivated, and retained through competitive sala-
ries and other incentives. Human resources management
is therefore an important element of the policy. e roles
of dierent health professions should be clear. e policy
should lead to a human resources management plan that
identies education, training, continuing education require-
ments, and other elements necessary to develop and sustain
an adequate supply of skilled professionals who are moti-
vated to perform at a high level (Chapter 51).
e implementation of an NMP should be routinely
monitored, and its eect should be evaluated at regular
intervals. Provisions for monitoring and evaluation need
to be included in the policy itself, and adequate sta and
budget need to be allocated. Appropriate use of indica-
tors helps quantify progress and needed improvements
(Chapter 36).
Research is essential for health service and health care
improvements. NMPs are particularly concerned with oper-
ational research aimed at constantly improving and adapt-
ing the selection, procurement, distribution, and use of
existing medicines. e Lao People’s Democratic Republic
(P.D.R.) incorporated operational research into the moni-
toring and evaluation plan of its NMP (see Country Study
4-1). NMPs may also include specic provisions for clinical
research and the development of new medicines, especially
using local resources, such as indigenous plants.
Finally, many NMPs address technical cooperation
among countries. Cooperation among countries within
the same region and the same economic area has become
increasingly common. ere are examples of cooperation in
virtually every aspect of pharmaceutical policy and manage-
ment.
4.4 Setting priorities
When the basic components of a policy have been identi-
ed, choices must be made about the most appropriate
strategies and activities to achieve policy objectives at each
4.10 POLICY AND LEGAL FRAMEWORK
level of the system. For example, to improve the supply
system for essential medicines, many possible solutions
exist: developing the central medical stores (CMS) further
or transforming the CMS into a parastatal organization
(as in Tanzania), decentralizing pharmaceutical procure-
ment (as in Cameroon), or developing incentives for the
private sector to manage supply and distribution. Activities
can then be undertaken to implement the approaches
selected—for example, using restrictive or competitive
tenders, buying only from the essential medicines list,
negotiating contracts with the private sector, and so forth.
A series of interventions can be undertaken to increase
rational prescribing and use of essential medicines, but
depending on the country, some of these strategies will
e Food and Drug Department of the Ministry of
Health in the Lao People’s Democratic Republic intro-
duced a National Drug Policy (NDP) in 1993 with the
goal of ensuring the availability and rational use of high-
quality medicines at a low cost, with a focus on vulner-
able populations in remote areas. Over the initial ten
years, the Food and Drug Department implemented the
policy in three phases—
• Phase I (1993–95): Develop a dra NDP, train
inspectors, and create an information, education,
and communication strategy on the rational use of
medicines
• Phase II (1996–2000): Implement the NDP in ve
pilot provinces, including building individual and
institutional capacity, developing related laws and
standard treatment guidelines (STGs), and initiating
and evaluating operations research projects
• Phase III (2001–2003): Consolidate NDP achieve-
ments and revise the policy, roll out policy imple-
mentation to the rest of the country, further
strengthen pharmaceutical management capacity,
and continue operations research
e success of the Lao P.D.R.’s NDP implementation is
due in part to the emphasis placed on health systems
research, which began during Phase II. Operations
research was built into the pilot program design to
improve implementation by bridging the gap between
policy and practice and to provide evidence for policy
making. e six operations research areas included—
• Use of public health messages to reduce irrational
use of antibiotics
• Use of traditional medicine in Champassack prov-
ince
• Knowledge, attitudes, and perceptions about quality
of drugs among customers and health care providers
(including drug sellers)
• Eectiveness of “feedback” for improving treatment
based on STGs
• Methods used to eectively implement the NDP
• Regulation of private pharmacies in Savannakhet
province
When results of a mid-program evaluation in 2000
showed the success of the NDP pilot program, policy
makers revised the NDP to broaden its scope to include
three new components: health systems research, human
resources development, and overall management and
coordination. In addition, recommendations were made
to adapt the Lao NDP model for use elsewhere in the
region.
Building research into the design of the Lao P.D.R.’s NDP
yielded two strategic benets. First, the results of this
research guided the revision of the NDP in 2001 and
showed policy makers how to more eciently scale up
the NDP nationwide. Second, building a research com-
ponent into the NDP framework made monitoring and
evaluation possible; the choice to pilot the implementa-
tion in only ve districts made evaluating the NDP’s
eect by comparing pilot districts to control districts
easier. In fact, research results showed that the pilot prov-
inces performed signicantly better in several aspects
of quality and rational use of medicines. Research on
the eectiveness of communications that promoted the
rational use of medicines found that consumers still self-
medicated with antibiotics, even aer hearing medicines
information on the radio and receiving advice from the
doctor. is nding indicated that policy makers needed
to adjust the information, education, and communica-
tion strategy regarding rational use of medicines.
Seeing the value of this research-based evaluation, policy
makers made operations research a permanent com-
ponent in the 2001 NDP. However, a solid operations
research component alone is not enough to ensure a
NDP’s successful implementation. Research must be cou-
pled with eective communication and dissemination of
results, strong political will, and technical competence in
the pharmaceutical sector.
Sources: Tomson et al. 2005; Lao P.D.R. Food and Drug Department
2003; Paphassarang et al. 2002.
Country study 4-1
using operations research to develop and implement the Lao P.D.r. National Drug Policy
4 / National medicine policy 4.11
be more cost-eective than others. Options may involve
training medical students, providing independent medica-
tion information to all prescribers, or using programs for
the ongoing review of medicine use to identify opportuni-
ties for improvement.
e range of strategies and activities that can be success-
fully implemented depends on the pharmaceutical situ-
ation and the socioeconomic conditions of the country. If
resources are insucient without external input, a set of
priority activities should be identied that can be executed
within existing means.
Initially, considering the following questions may be help-
ful—
• Is this approach based on scientic evidence, and has it
proved to be eective in other countries?
• Is this approach or activity really needed to improve
the situation in a particular area?
NATIONAL MEDICINE POLICY—A TREE THAT BEARS FRUIT
Medicine
Quality
Consumers
Pharmaceutical
Industry
Health
Professionals
Schools and
Universities
Government
Media
Rational
Prescribing
and
Dispensing
Value for
Money
Better
Health
for All
Availability
of Essential
Medicines
Aordable
Medicines
Safe and
Eective
Medicines
Appropriate
Use by
Patients
Legislation and Regulations
Selection of Medicines
Supply Management
Quality Assurance
Rational Medicine Use
Economic Strategies
for Medicines
Human Resource
Development
Monitoring and Evaluation
4.12 POLICY AND LEGAL FRAMEWORK
• Does it address the greatest needs?
• Are other approaches or activities available that might
be more eective?
Policy elements may have to be set aside that—however
successful they may have been in another country—would
be no more than expensive luxuries in the local context, or
would not work because too few technical and nancial
resources exist.
e combination of pharmaceutical policies that can be
successfully implemented in a particular country over the
short to medium term is closely linked to the structure of
the pharmaceutical distribution systems, pharmaceutical
spending levels, the presence or absence of health insurance
schemes, the number of trained people available, and the
capacity of the drug regulatory authority.
4.5 Formulating a national medicine policy
Formulating and implementing a national medicine policy
are highly political processes. A policy should promote
equity of access to health care by making the pharmaceutical
sector more ecient, cost-eective, and responsive to health
needs. Such responsiveness may involve the redistribu-
tion of goods and power, leading to increased competition
among the groups aected by reform.
As mentioned, given the diverse interests and the eco-
nomic importance of the issues involved, designing or
revising an NMP requires complex negotiations with all
stakeholders: the national and international pharmaceutical
industry, the medical profession, retail drug sellers, NGOs,
the government bureaucracy, and international donors. e
challenge is to identify the main elements of an appropriate
pharmaceutical policy and then construct a process that will
bring the diverse groups together.
e pharmaceutical sector represents many varied inter-
ests that do not always run parallel; opposition to a new
policy and sometimes even legal confrontations must be
expected. erefore, identifying political allies and main-
taining their support throughout the process is important.
Strategies to identify and deal with opponents should be
developed, ways of working with them must be identied,
and steps must be taken to resolve disputes. Dierences
may be resolved through eective communications, a col-
laborative approach, and careful monitoring of the policy
formulation process. Decisions and priorities touching on
the interests of various stakeholders must be balanced by
estimating gains and losses. Nothing can be le to chance,
particularly if the proposed policy seeks to change in an
important way structures, historical practices, or the behav-
ior of people. e more signicant the proposed changes,
the more the process of policy formulation should involve
all stakeholders, taking account of their needs and fears and
encouraging them to take an active part in the new policy.
No simple formula exists, but political will and leadership,
and eective communication and collaboration are the
main components for success.
Step 1. Organize the policy process
e ministry of health (MOH) is usually the most appro-
priate agency to take the lead in developing an NMP. e
rst step is to decide how formulation of the policy will be
achieved, who will be involved at the various stages, and how
the necessary nances will be obtained. A plan outlining the
process and the nal output can be drawn up by the phar-
maceutical department in the ministry, with the support
of a small committee. e more changes the policy seeks
to produce, the more dierent stakeholders will need to be
involved. is factor should be considered from the begin-
ning, because it helps to determine the resources needed.
e need for external assistance from WHO or other coun-
tries with experience in developing an NMP should also be
assessed at this stage.
Step 2. Identify and analyze problems
e second task when formulating a policy is performing a
thorough analysis of the main problems so that attainable
objectives can be set (see Chapter 36). e best way to begin
is to bring together a small team of experts, including some
who have performed similar studies in other countries. e
national experts should not come only from the MOH;
they may be from the health professions, from trade and
industry, and from other agencies of government (particu-
larly the treasury). e group’s function is to examine the
situation systematically, identify problems and root causes,
recommend what must and can be done, and suggest
approaches that might be taken. Recommendations can be
formulated and discussed in a multidisciplinary workshop
to prepare advice for the government. Ghana followed a
similar process, which led to the draing of an NMP in
2004 by a team of experts representing diverse interests,
including consumer rights, law, traditional medicine, trade,
and manufacturing.
However ambitious it may seem in the early stages of
medicine policy development, the situation in the coun-
try as a whole needs to be systematically reviewed so as to
identify viable reforms. is objective may be best achieved
through a detailed situational analysis. For example, in
countries where a poor national economic situation is
a major factor leading to unsatisfactory pharmaceutical
supply, basing reforms on demands for more government
money makes no sense because such funds are not avail-
able. e ultimate solution must take these structural con-
straints into account. Not everything can be done at once,
and for some urgently needed changes, reliance on donor
4 / National medicine policy 4.13
help may be necessary while a longer-term national solu-
tion is developed.
Step 3. Set goals and objectives
Aer high-priority problems and related goals have been
dened, primary objectives can be identied. (See Box 4-3
for a list of the objectives of Malawi’s NMP.) For instance,
if one of the priority problems is the availability of poor-
quality medicines, one of the primary objectives should be
to ensure that they are replaced by products of good quality.
e selection of the strategies or approaches is more com-
plex and should come from the situational analysis in step 2
or perhaps in a workshop with key people asking some key
questions: Where do these poor-quality medicines come
from and why are they here? Would good-quality medi-
cines necessarily be more expensive? What incentives would
encourage improvements? Aer objectives and strategies
are outlined, key participants can work out a strategy for
improvement, which can then be discussed in a larger work-
shop to reach consensus among all the main participants.
However, not all the parties are likely to agree immedi-
ately on the strategy. Representatives of the pharmaceutical
industry may be suspicious, fearing loss of prot; doctors
and pharmacists may have dierent points of view and may
worry about losing freedom; any party that feels secure in
the status quo may feel threatened by change. Not uncom-
monly, one government agency will disagree with another
on objectives, approaches, or timetables. To move for-
ward, it is important to establish as much trust as possible,
identify matters on which consensus and compromise are
possible, and use those matters as the basis on which to
proceed.
Step 4. Draft the policy
Aer a thorough analysis of the situation and an outline of
the main goals, objectives, and approaches have been com-
pleted, a dra of the NMP should be written. It should state
the general goal of the policy; in most countries, the goal will
be to ensure that high-quality medicines are accessible and
aordable to the entire population and that they are used
rationally. en the NMP should describe specic objectives
and the strategy or strategies to be adopted for meeting each.
For example, to ensure that essential medicines are avail-
able in health facilities (objective), the policy might propose
the creation of an autonomous procurement unit and the
strengthening of pharmaceutical management in health
facilities (strategies).
is draing of the policy can be done by the small com-
mittee of experts set up in step 2, with the support of the
people who performed the situational analysis. e group
should remain small, because a big group is dicult to man-
age and will have problems draing a coherent text. e
group may nd that examples of NMP documents from
other countries are helpful.
e dra policy should be assessed for its approach to
human rights issues. Human rights concern the relationship
between the state and the individual, generating individual
rights and state obligations. Box 4-4 includes a list of ques-
tions to ask when assessing health programs for their atten-
tion to the right to health.
Step 5. Circulate and revise the policy
To get full support from all sectors, the document should
be widely circulated for comments, rst within the MOH
Broad objective of the NMP
To develop within the available resources the potential
that medicines have to control common diseases and
alleviate suering.
Specific objectives of the NMP
• To ensure ready and constant availability (universal
access) of essential medicines and medical supplies
to the community
• To rationalize use of these essential medicines
through the provision of improved medicine utiliza-
tion information
• To educate the public on appropriate medicine use
and storage
• To improve supply management, prescribing, dis-
pensing practices, and patient adherence
• To ensure continuing education and professional
development for pharmaceutical and other relevant
health workers
• To institute a sustainable nancing mechanism to
ensure continuous availability of adequate quantities
of the required essential medicines
• To ensure eective regulation of pharmaceuticals
• To strengthen partnership at the national, regional,
and international levels in ensuring the full imple-
mentation of NMP through utilization of available
resources, knowledge, and expertise
Source: Government of Malawi 2009.
Box 4-3
Objectives of Malawi’s 2009 National Medicine Policy
4.14 POLICY AND LEGAL FRAMEWORK
and then in other government departments and agencies.
Endorsement by ministries or departments, such as plan-
ning, nance, education, and commerce, is of particular
importance, because the success of decisions regarding
registration, foreign exchange allocations, and human
resources development depends on the support of gov-
ernment ocials outside the health sector. Aer this wide
consultation is completed, the document can be nalized.
Although the formulation of the policy should reect broad
participation by the community, health workers, the phar-
maceutical industry, and universities, ultimate responsibil-
ity for producing the policy remains with the MOH and the
government.
Step 6. Obtain formal endorsement for the policy
In some countries, the document can then go to the cabi-
net or parliament for formal endorsement. In others, it
can be an administrative document that serves as a basis
for the implementation plans and for changes in pharma-
ceutical laws, which are oen needed. In certain cases the
NMP document becomes a law—for example, in Uganda,
where it was called the National Drug Policy and Authority
Statute; however, the MOH found that arrangement made
the implementation and revision of the NMP unwieldy, so
the revised NMP was separated from the statute in 2002.
Although creating a law can demonstrate strong com-
e basic principles of what is called the “rights-based
approach” include participation, accountability, non-
discrimination, attention to vulnerable groups, and
explicit linkage to human rights instruments. Five simple
questions are presented here to assess the medicines
policy in a specic country or program.
1. Which essential medicines are covered by the
right to health? Although WHO provides guidance on
essential medicine lists, exactly which medicines are
regarded as essential remains a national responsibility
and, therefore, the national list of essential medicines
should be used to dene the minimum needs. If no
such national list exists, the rst step is to develop one.
For situations outside the scope of national govern-
ments, such as ships and refugee camps, specic lists of
essential medicines have been developed by WHO and
relevant stakeholders.
2. Have all beneciaries of the medicine program
been consulted? True participation means that the
beneciaries of national medicines policies and pro-
grams are consulted in decisions that aect them.
Besides the usual stakeholders, such as the govern-
ment, universities, and professional associations, other
important beneciaries to be consulted are rural com-
munities, nongovernmental organizations, patients and
consumer groups, and representatives of the vulnerable
groups listed in item 4.
3. Do mechanisms exist for transparency and
accountability? e objectives of the medicines policy
and program should be clear and include government
obligations to respect, protect, and fulll the right to
health in line with any applicable international trea-
ties. e policy should identify indicators and targets
to monitor progress toward universal access to essen-
tial medicines. e national medicines policy should
specify the roles and responsibilities of all stakehold-
ers, with mechanisms in place to hold each of them
accountable.
4. Do all vulnerable groups have equal access to
essential medicines? How do you know? e main
vulnerable groups to be considered are children (espe-
cially girls), women, people living in poverty, rural
communities, indigenous populations, national (ethnic,
religious, linguistic) minorities, internally displaced
persons, the elderly, those with disabilities, and pris-
oners. Ensuring equality starts with collecting dis-
aggregated access statistics for each of these groups.
Such statistics are essential to create awareness among
policy makers, to identify vulnerable groups that need
special attention, and to monitor progress toward uni-
versal access. e minimum eort should consist of
gender-disaggregated statistics and surveys specically
aimed at vulnerable groups.
5. Are safeguards and redress mechanisms in place
in case human rights are violated? Access to essen-
tial medicines is best ensured by the development and
implementation of rights-based medicines policies and
programs; however, when progress is unjustiably slow,
mechanisms for redress and appeal are needed as a last
resort. A WHO study has shown that targeted litigation
is an additional means to encourage governments to
fulll their constitutional and international treaty obliga-
tions regarding the right to health and access to essential
medicines.
Sources: Hogerzeil et al. 2006; Hogerzeil 2006.
Box 4-4
access to essential medicines as part of the fulllment of the right to health
4 / National medicine policy 4.15
mitment on the part of the government, it is not always
advantageous, because legislation is dicult to pass and
dicult to change once enacted. Incorporating select com-
ponents of the NMP into a law, such as was done with the
Generics Act in the Philippines, may be more useful. When
a national medicine policy was draed in 2000 in newly
independent East Timor, the policy was written as a sim-
ple text that could be printed in the media and posted on
health facility walls for all to read, so that it became the
property of the people as a nation.
Step 7. Launch the policy
Launching an NMP is a political task rather than merely
a technical one. It requires as much attention as any other
political campaign. Promotion should be based on good
information, top-level political support, mobilization
of highly qualied people, and securing of international
support. e policy should be promoted through a clear
and well-designed campaign that disseminates informa-
tion through a variety of channels to reach dierent tar-
get groups. e policy needs to be explained in a way that
allows the media and the public to become involved in dis-
cussions.
4.6 Implementing a national medicine policy
Policy implementation—the execution of approaches
included in the policy through specic plans and pro-
grams—is a critical step; the policy itself is worthless if it is
not implemented. Each NMP requires an overall implemen-
tation plan or master plan. Given the multisectoral nature
of pharmaceutical issues, the MOH should develop, as early
as possible, a consensus with other government agencies on
action plans dealing with specic issues of economics and
nance (including foreign exchange), commerce, industry,
and education. e implementation plan roughly outlines
for each component of the policy what needs to be done and
who is responsible, estimates the budget requirement, and
proposes an estimated time frame. e implementation plan
allows coordination of donor input and assists in monitor-
ing the policy implementation and intervening where neces-
sary to keep the process moving.
e master plan should then be broken down into annual
workplans, which should be carefully developed with the
various agencies involved in implementation. e work-
plans should outline the specic approaches and activities
for each component, specifying in detail who is responsible,
listing the major tasks, and describing the target output, the
detailed time frame, and the exact budget. (See Chapter 38
for more information on developing plans.)
Countries take dierent approaches to implementation
(see Country Study 4-2 for Australia’s approach). In all cases,
if the policy is to succeed, government ocials must be pro-
active and committed. A number of strategies are summa-
rized below.
Use appropriate timing, and a combination of approaches
and methods of implementation. Not everything can be
done at the same time. In the Philippines, the rules for
generic labeling and promotion had to be put in place
before generic prescribing and dispensing could be
implemented. In practice, a one-year interval was neces-
sary between the issuance of the rules on generic labeling
and the issuance of those on dispensing. In this way, by
the time doctors and pharmacists were required to switch
to generics, the products in the pharmacies had already
been generically labeled.
Start implementation in relatively easy-to-change areas to
ensure initial high-visibility success. Perception of success
is an important consideration; if the policy is perceived
to have yielded signicant positive results, it is likely to
continue to receive support from important sectors.
Adopt a exible policy. In certain cases, an activity may
have to be postponed because the timing is not right. If,
for example, the policy proposes imposing strict rules
on pricing, waiting until pharmacists have received an
explanation about why the rules will be to everyone’s
advantage may be better than imposing the rules imme-
diately and being met with resistance. Consensus build-
ing should always be balanced against compromising
too much on key points. If the initial planning process
has been carried out properly, valid objections should
already have been addressed, and there should be no
need to compromise later.
Use experts to vouch for the policy’s technical soundness. It
is important that the most qualied people in the medi-
cal and pharmaceutical elds support the policy (for
example, clinical pharmacologists or specialists in the
main hospitals and universities). ose who have been
involved in developing the policy are likely to be its
strongest advocates and its most useful allies as it is intro-
duced and implemented.
Mobilize consumers, the media, or other key groups.
Although such mobilization has been successful in the
Philippines and Australia, this approach has not been
common in Africa, because of the lack of a well-
organized consumers’ movement.
Create constituencies that support the policy both inside
and outside the government. Aer suspicions have been
allayed, such constituencies may be found in any sector.
Even within the private sector, support will develop when
people realize that a healthy public sector will comple-
ment rather than undermine the private sector. Having
constituencies in all sectors is critical to the success of the
implementation and the long-term sustainability of the
policy.
4.16 POLICY AND LEGAL FRAMEWORK
In 1985, WHO called the Conference of Experts on the
Rational Use of Drugs, which resulted in a document
known as the Revised Drug Strategy. e 39th World
Health Assembly, held in 1986, adopted this strategy,
which calls on governments to implement a national
medicinal drug policy. Australia, as a participant at this
assembly, contributed to the development of this strategy.
e need for a national medicine policy was further illus-
trated in the Health for All Australians document issued
jointly by all Australian state and territorial health minis-
ters in 1988.
Initially, in 1991, the government formed two advisory
groups. e Australian Pharmaceutical Advisory Council
(APAC) was a council of representatives from the major
organizations involved, which would raise issues and
make recommendations across the gamut of medicine
policy. APAC represented an opportunity for all interested
parties to contribute positively on a multilateral and con-
sensus basis to the development and conduct of the policy.
e second group was the Pharmaceutical Health and
Rational Use of Medicines (PHARM) working party,
which advised the ministry on a policy for the use of
medicines and a strategy for its implementation. PHARM
drew on the best available knowledge and relevant con-
cepts to establish a coherent framework for tackling the
complex set of problems involved in the way medicines
are used. e group also drew on research in behavioral
change and health education; espoused principles of
community ownership, participation, and consultation;
and acknowledged the importance of media advocacy.
In 1992, this collaborative approach led to adoption of a
dra national medicine policy. e approach was to—
• Use consumer and professional education as a pri-
mary tool
• Stimulate partnerships among the major players
• Identify—
– What will empower consumers to use drugs well
and encourage health professionals to help them
do this?
– What constitutes eective education?
– What combination of information, skills, and
motivation will be eective for dierent groups?
– What will work in practice?
– What standards should apply, and who should set
them?
Aer policies were developed and implemented over
several years, the government conducted a major review
during 1999. What had evolved were four good but sepa-
rate programs for improving the availability, quality, and
quality use of medicines and the viability of the national
pharmaceutical industry. In late 1999, the revised policy
bringing these four programs together into one docu-
ment was launched with government-wide support.
e 2000 National Medicines Policy has four objectives
based on active partnerships, taking into account ele-
ments of social and economic policy—
• Timely access to the medicines that Australians need,
at a cost individuals and the community can aord.
e Commonwealth Government’s Pharmaceutical
Benets Scheme helps improve the health of all
Australian residents by ensuring they have timely
access to necessary and lifesaving medicines at an
aordable price.
• Medicines meeting appropriate standards of qual-
ity, safety, and ecacy. e erapeutic Goods
Administration provides a national framework for
regulating therapeutic goods in Australia. It also
ensures their quality, safety and ecacy.
• Quality use of medicines. Australia’s National
Strategy for Quality Use of Medicines (QUM) is cen-
tral to the National Medicines Policy. e National
Strategy for QUM is intended to assist the QUM
partners, health care consumers, health practitioners
and educators, health care facilities, the medicines
industries, the media, health care funders and pur-
chasers, and governments in becoming more aware
of the QUM framework and approach.
• Maintaining a responsible and viable medicines
industry. e chairs of the National Medicines
Policy groups—the Pharmaceutical Health
and Rational Use of Medicines Committee; the
Australian Pharmaceutical Advisory Council; the
Pharmaceutical Benets Advisory Committee; and
the National Prescribing Services—meet regularly
to discuss issues of importance to the National
Medicines Policy.
Each partner shares responsibility to various degrees for
achieving each of these objectives, and all partners con-
sider these central objectives in any relevant initiatives.
e policy also recognizes the fundamental role consum-
ers have in reaching these objectives, and all partners
have committed to consult with consumer representa-
tives. As of 2010, the policy still served as the framework
for Australia’s pharmaceutical sector.
Sources: Hodge 1993; Australian Government 1999.
Country study 4-2
Innovative approaches in formulating and implementing a national medicine policy in australia
4 / National medicine policy 4.17
ere is no single, perfect way to implement an NMP.
In most countries, the implementation process is launched
and maintained directly through the pharmacy depart-
ment of the MOH, as in Guinea, Tanzania, and Zimbabwe.
Such a department is generally supported by committees
that continue to deal with dierent aspects of the policy.
e problem with this approach is the policy’s lack of vis-
ibility; oen, the limited human and nancial resources of
these departments prevent them from being proactive and
coordinating all the actors, and physicians may not accept
the promotion of rational medicine use if it comes from
the MOH pharmacy department. In addition, the depart-
ment may focus too much on pharmacological issues
rather than on the broad public health aspects that should
inform the NMP. e policy’s central leadership needs to
smooth out these dierences and facilitate implementa-
tion; for example, by having the rational use component
of the policy come from the medical department or an
NGO. Country Study 4-3 illustrates how implementation
can go wrong.
Regional cooperation can be useful in implementing
medicine policies. Countries, institutions, and organiza-
tions can share information, expertise, skills, and facilities.
Exchanging experiences helps ensure that best practices
are promoted, that mistakes are not repeated, and that lim-
ited resources are used eectively. e East, Central, and
Southern Africa Health Community of fourteen member
countries has developed a template for a national pharma-
ceutical policy that its members can use as a resource for
creating or revising their own national policies. e WHO
Regional Oce for Africa has a website with country pro-
les that include documents related to national medicine
policy in African countries (http://www.afro.who.int/
en/clusters-a-programmes/hss/essential-medicines/
edm-country-proles.html). ese various documents can
be used as resources and bases for comparison for any coun-
try developing or implementing an NMP.
4.7 Monitoring and evaluating a national
medicine policy
Monitoring is a form of continuous review that allows senior
managers to assess the progress toward achieving dened
targets in each policy area and adjust strategies accord-
ingly. It can be carried out using a combination of methods,
including supervisory visits and both routine and sentinel
reporting.
Evaluation is a way of analyzing progress toward meeting
objectives and goals. It should build on and use monitor-
ing systems. At the start of a program, evaluation is used to
provide a clear assessment of needs. A midterm evaluation
can provide valuable information about how well the pro-
gram is working. Final evaluation allows a complete review
of program achievements from which lessons can be drawn
for the future.
A system for monitoring and evaluation serves as a man-
agement tool that enables continuous assessment of progress
and helps ocials make management decisions in response
to problems identied. e ndings, results, and recom-
mendations of the monitoring and evaluation team should
be discussed with national stakeholders and should serve
as the basis for identifying problems, nding solutions, and
improving performance. A monitoring and evaluation sys-
From 1995 to 2002, the Republic of Yemen received
technical help in developing a national medicine policy.
An important element included the creation of an eec-
tive public pharmaceutical supply system to serve the 30
percent of the population unable to aord private-sector
medicines.
Initially funded by donors, the system was intended to
rely partly on government funding and partly on patient
contributions. By late 2005, the system had virtually col-
lapsed, and in an attempt to improve the situation, the
government “nationalized” the system and declared that
all medicines would be supplied free of charge from then
on; however, no evident improvement occurred. By early
2006, donors were helping the government determine
why the system had failed while instituting an emergency
supply program.
e situational analysis showed that the revolving fund
proposal had never been adequately implemented
through a detailed plan of action, that expectations of
patient contributions had been too optimistic in view of
widespread poverty, that successive governments had
shown too little commitment to funding, and that cor-
ruption had played a major role.
In such situations, bringing together the original players
and seeking their views on the failure and on a recovery
plan are vital. In Yemen, a small-scale emergency scheme
was set up to restore faith in the system, to be followed by
a longer-term (ve-year) recovery plan.
Country study 4-3
When things go wrong with national medicine policies: The case of yemen
4.18 POLICY AND LEGAL FRAMEWORK
tem also provides transparency and accountability and cre-
ates a standard by which comparisons can be made between
countries and areas and over time. All this information may
produce the necessary evidence that progress is being made
(or not) to support the policy in discussions with interested
parties and policy makers.
Indicators for monitoring national medicine poli-
cies have been developed by WHO and are discussed in
Chapters 36 and 48. Indicators may need to be developed,
adapted, or deleted to match particular national con-
texts. For example, countries may have additional objec-
tives beyond those included in the WHO manual, such
as development of national medicine production. In any
case, a formal moni toring system is needed; ideally, this
system would be integrated with the health information
system. A lack of understanding about the value of moni-
toring and feedback can be a limitation that results in the
inadequate allocation of human and budgetary resources.
erefore, this institution-building process requires the
commitment of senior policy makers, but eective moni-
toring can be carried out even in countries with limited
resources.
4.8 Constraints and facilitating factors
Formulating and implementing an NMP should be manage-
able, yet few countries have succeeded in implementing all
aspects of their planned policies. Why? Some of the main
reasons are clear—
Lack of political will: Many governments hesitate to create
policies that might antagonize industry and other groups,
particularly if opposition is known to exist. Building sup-
port even in potentially hostile sectors is important at the
start of the process and as implementation progresses.
Lack of resources: Oen, understanding or documentation
of the problems, their causes, and solutions in the phar-
maceutical sector is not sucient to persuade national
governments to devote scarce resources to building
and implementing NMPs. e MOH will need to be
persuasive in its communication with other ministries
and departments to avoid these problems; the essential
message is that a national medicine policy contributes to
improving people’s health and therefore to strengthening
the economy and the nation.
Opposition: Frank opposition to medicine policies oen
comes from those who benet from a laissez-faire
approach. Doctors fear interference with their freedom
to prescribe. Importers and manufacturers are com-
monly earning large prots on precisely the medicines
or pharmaceutical practices that they fear would be
threatened by policy changes, such as price controls or
better procurement procedures. Retail pharmacists may
oppose policy initiatives that would threaten their earn-
ings.
Corruption: Corruption can be an issue in the pharmaceuti-
cal sector, where a great deal of money ows and where
demand, as a rule, greatly exceeds supply. No easy solu-
tion exists; corrupt practices in a country usually extend
well beyond the pharmaceutical sector. However, as the
pharmaceutical sector balances the roles of public and
private services, corruption is likely to decrease.
None of these impediments is easily overcome, but a
number of factors can facilitate the policy process—
Support of domestic and international interest groups:
Some of the domestic groups whose support is needed
include political parties, industry groups, physicians
and other health care professionals, consumers, and
consumer activist groups. International interest groups
include foreign governments, multilateral organizations,
multinational corporations, and international lending
agencies. eir support is required for successful policy
formulation, even if it is sometimes necessary to enter
into bargains and trade-os to win such support. e
consequences of each trade-o in the formulation and
implementation of pharmaceutical policies should be
carefully considered.
Shared values: e extent to which a congruence of interests
exists among groups is another important predictor of
the success of an NMP. e interests of a politically weak
group (for example, poor consumers) can oen be pro-
tected if its goals coincide, at least partially, with those of
more powerful interest groups (for example, retail phar-
macists who want to sell more medicines and are willing
to handle generic products because the higher volume of
sales can compensate for lower unit earnings).
e macroeconomic situation: Improvements in the e-
ciency of the pharmaceutical system may help countries
cope with the consequences of macroeconomic shocks.
For instance, the devaluation of the franc in West Africa
pushed countries in the region to strengthen their
essential medicines policies in the public sector and to
introduce mechanisms to promote the sale of medicines
under generic names in the private sector alongside more
expensive branded products.
Technical expertise: e existence of technical expertise and
capabilities within ministries of health, as well as access
to data on patent-related issues and pharmacological,
legal, and economic policy (including the policies of
other countries), are key to the formulation of a sound
and workable policy. WHO has a cadre of medicine
advisers located in its country oces who can provide
technical expertise (http://www.who.int/medicines/
areas/coordination/medicinesadvisers/en/index.html).
Donors and international organizations can also sup-
4 / National medicine policy 4.19
port the emergence and revision of medicine policies in
developing countries through planning and technical
assistance.
e presence of committed people in the MOH: In the
United Kingdom in 1968, Bangladesh in 1982, the
Philippines in 1986, Guinea in 1992, and Uganda in
1993, the development of these countries’ rst medi-
cine policies was sustained by individuals and institu-
tions that were persuaded of the need for it and worked
toward its realization.
Each country must shape its own NMP in accordance
with its needs and resources. e goals outlined at the begin-
ning of this chapter provide a policy focus. Experiences in
countries show that success in terms of public health is
linked to the essential medicines concept, with an empha-
sis on a list of essential medicines. Strategies vary among
countries, and in the end, the impact of a country’s NMP
depends on political commitment from the government
and the support of doctors and other health professionals.
n
References and further readings
H = Key readings.
Anello, E. 2006. Ethical Infrastructure for Good Governance in the Public
Pharmaceutical Sector. Working Dra for Field Testing and Revision.
Geneva: World Health Organization/Department of Medicines
Policy and Standards. <http://www.who.int/entity/medicines/
areas/policy/goodgovernance/Ethical_Infrastructure.pdf>
Australian Government, Department of Health and Ageing. 1999.
National Medicine Policy 2000. Canberra: Commonwealth of
Australia. <http://www.health.gov.au/internet/main/publishing.
nsf/Content/0241A32640D477CACA256F18004685E4/$File/
nmp2000.pdf >
Brudon, P. 1997. Comparative Analysis of National Drug Policies.
Geneva: World Health Organization.
H Brudon, P., J.-D. Rainhorn, and M. R. Reich. 1999. Indicators for
Monitoring National Drug Policies: A Practical Manual. 2nd ed.
Geneva: World Health Organization. <http://whqlibdoc.who.int/
hq/1999/WHO_EDM_PAR_99.3_pp1-114.pdf>
H Dag Hammarskjöld Foundation. 1995. Making National Drug
Policies a Development Priority: A Strategy Paper and Six Country
Studies (Norway, Sri Lanka, Bangladesh, Australia, India, Mexico).
Development Dialogue 1:1–240. <http://www.dhf.uu.se/pdler/
95_1.pdf>
Dukes, M. N. G. 2005. “e Industry and the Developing World.” In
e Law and Ethics of the Pharmaceutical Industry. London: Elsevier.
Federal Ministry of Health Nigeria/WHO. 2005. National Drug
Policy. Abuja: Federal Ministry of Health. <http://collections.info
collections.org/whocountry/collect/whocountry/pdf/s6865e/
s6865e.pdf>
National medicine policy development
and content
• Does an ocial NMP document exist? Has it been
updated in the past ten years?
• Does the document contain objectives and strategies
based on priority problems?
• Does it cover issues such as legislation, essential
medicines list, registration of pharmaceuticals, sup-
ply of essential medicines, nancing and pricing
policies, and rational use of medicines?
• If no ocial NMP document exists, do any unocial
documents set objectives and strategies for the phar-
maceutical sector?
• Do laws exist that specify the government’s respon-
sibility in ensuring equitable access to essential
medicines?
• Does the national constitution or any other national
law recognize the right of everyone to the enjoyment
of the highest attainable standard of health?
• Were patients’ organizations and rural communities
consulted when the NMP and program were
developed?
NMP implementation
• Is the NMP used as a guide for action by policy mak-
ers and senior management ocers in the ministry
of health?
• Does the NMP describe the obligations of the vari-
ous stakeholders?
• Does the pharmaceutical legislation provide a legal
basis for enforcement of the NMP?
• Does an implementation plan exist to put the policy
into practice?
• Is the policy monitored regularly? If so, how is it
monitored? Are baseline and target data available on
access to essential medicines against which progress
can be measured?
• Does any evaluation take place of the performance
and outcome of the NMP in terms of attaining its
objectives?
• Are legal mechanisms available to le complaints
about lack of access to essential medicines? If so,
have they been used?
• Is the NMP highly visible in the ministry of health
and the government?
assEssMENT GuIDE
4.20 POLICY AND LEGAL FRAMEWORK
Government of Malawi. 2009, National Medicine Policy Malawi.
Lilongwe: Ministry of Health.
Hodge, M. M. 1993. Australia Focuses on the Quality Use of Medicines:
Policy and Action. Essential Drugs Monitor 15:12–3.
Hogerzeil, H. V. 2006. Essential Medicines and Human Rights: What
Can ey Learn from Each Other? Bulletin of the World Health
Organization 84:371–5.
————. 2004. e Concept of Essential Medicines: Lessons for Rich
Countries. BMJ 329:1169–72.
Hogerzeil, H. V., M. Samson, J. Casanovas, and L. Rahmani-Ocora.
2006. Is Access to Essential Medicines as Part of the Fullment of the
Right to Health Enforceable through the Courts? Lancet 368:305–11.
Lao P.D.R. Food and Drug Department of the Ministry of Health. 2003.
National Drug Policy Programme 1993–2003. Vientiane: Ministry
of Health.
Ministry of Health, Ghana. 2004. National Drug Policy. 2nd ed. Accra:
Ministry of Health.
Paphassarang, C., R. Wahlström, B. Phoummalaysith, B. Boupha, and
G. Tomson. 2002. Building the National Drug Policy on Evidence: A
Cross-Sectional Study on Assessing Implementation in Lao P.D.R.
Southeast Asian Journal of Tropical Medicine and Public Health
33(3):647–53.
Peltzer, K., N. Phaswana-Mafuya, G. Mohlala, S. Ramlagan, A. Davids,
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chapter 5
Traditional and complementary medicine policy
Summary 5.2
5.1 e changing role of traditional and complementary
medicine in health care 5.2
Denitions of traditional and complementary medicine •
Increasing popularity of traditional and complementary
medicine
5.2 Why people use traditional and complementary
medicines 5.4
Accessibility • Aordability • Perceived safety • Potential
for treating disease
5.3 Risks associated with herbal medications 5.5
Poor quality • Incorrect usage • Lack of information
5.4 Meeting the challenges of traditional
medicine 5.8
Government policy on traditional medicine • Integration
into national health care systems • Ensuring quality, safety,
and ecacy • Enhancing access • Promoting rational use
Assessment guide 5.15
References and further readings 5.16
illustration
Table 5-1 Select examples of clinical eectiveness based
on meta-analyses of clinical TM/CAM therapy
research 5.13
boxes
Box 5-1 WHO denitions related to traditional
medicines 5.3
Box 5-2 Traditional, complementary, and alternative
medicine challenges 5.8
country studies
CS 5-1 Using traditional practitioners in HIV/AIDS
activities in sub-Saharan Africa 5.6
CS 5-2 e regulatory status of traditional medicine in
eight countries 5.10
CS 5-3 Innovative indigenous knowledge research
agreement: Samoa and the University of California,
Berkeley 5.14
Part I: Policy and economic issues Part II: Pharmaceutical management Part III: Management support systems
Policy and legal framework
1 Toward sustainable access to medicines
2 Historical and institutional perspectives
3 Intellectual property and access to medicines
4 National medicine policy
5 Traditional and complementary medicine policy
6 Pharmaceutical legislation and regulation
7 Pharmaceutical production policy
8 Pharmaceutical supply strategies
Financing and sustainability
copyright
©
management sciences for health 2012
5.2 POLICY AND LEGAL FRAMEWORK
5.1 e changing role of traditional and
complementary medicine in health care
For thousands of years, traditional medicine has been an
important source of health care for much of the world, and
many populations use TM not only as the source of their
primary health care but also as part of their spiritual and cul-
tural belief systems. Meanwhile, people in Europe, Australia,
and North America have increasingly embraced alternative
and complementary practices, such as the use of herbal
medications, to supplement their standard health care.
e growing attention focused on TM has introduced a
number of public health issues in developing and developed
countries alike, including policy, safety and quality, ecacy,
access, and appropriate use. Regulations that ensure the
quality and safety of TM products and procedures are oen
lacking, and because herbal medicines are now marketed
across regions and internationally, these issues have evolved
from being local in scale and are now of global concern.
Definitions of traditional and complementary
medicine
e World Health Organization (WHO) denes traditional
medicine as—
Diverse health practices, approaches, knowledge
and beliefs incorporating plant, animal, and/or
mineral based medicines, spiritual therapies, man-
ual techniques and exercises applied singularly or
in combination to maintain well-being, as well as
to treat, diagnose or prevent illness (WHO 2002, 7).
Traditional medicine is a comprehensive term that refers
to forms of medicine long-established in a country, whether
developed or developing. Health care practices that are
not part of a country’s own tradition and that are not well
established within the country’s conventional health care
system are oen referred to as complementary and alterna-
tive medicine. Sometimes, the terms complementary medi-
cine or alternative medicine are used interchangeably with
traditional medicine, but CAM may include more recently
developed technologies, unlike TM.
TM/CAM therapies are considered medication based
if they use herbal medicines, animal parts, minerals, or
homeopathic remedies. Herbal medicines include herbs,
herbal materials, herbal preparations, and nished herbal
products that contain therapeutically active ingredients that
are plant based. erapeutic interventions that are not based
primarily on medications are procedure based. ese thera-
pies may include acupuncture; manual therapies, such as
For thousands of years, traditional medicine (TM) has
been an important source of health care for much of the
world, and many populations use and value TM not only
as the source of their primary health care but also as part
of their spiritual and cultural belief systems. Meanwhile,
people in Europe, Australia, and North America have
increasingly embraced TM, also referred to as comple-
mentary and alternative medicine (CAM), by using herbal
medications to complement their standard health care.
Attractive features of TM practices include greater acces-
sibility in many parts of the world, cultural acceptance in
low- and middle-income countries, comparatively low
cost and, oen, a lesser need for modern technology. In
developed countries, CAM is used for preventing disease
and maintaining wellness, in addition to complementing
conventional care for chronic and acute health conditions.
Although TM/CAM has a great inuence on health care
practices, there is wide variation from country to country
in policies, laws, and regulations governing the safety,
quality, and ecacy of TM/CAM therapies. Many con-
sumers use herbal products to treat themselves—oen
without a health practitioner’s knowledge or advice.
Consumers and practitioners may not be adequately
informed about potential adverse eects, drug inter-
actions, and how to use herbal medicines safely. Lack
of regulations on quality standards and evaluation for
safety and ecacy of these products may cause problems,
resulting in the marketing of unsafe or ineective TM/
CAM products.
Countries that already have a strong pharmaceutical
regulatory structure in place should adapt their existing
systems to include herbal medications, and countries that
lack regulatory standards should work toward setting up
a national system that encompasses both pharmaceu-
ticals and herbal medicines. All countries should have
some framework in place to review and monitor herbal
medicines, including a regulatory agency, a national
advisory committee, and a system to monitor adverse
reactions from herbal medicines.
Expanding the credibility and integration of TM/CAM
will require developing an evidence base for safety and
ecacy, which means consolidating data from existing
national and international studies and supporting new
research to ll evidence gaps.
suMMary
5 / Traditional and complementary medicine policy 5.3
massage and chiropractic, heat, or exercises; and qigong, tai
chi, yoga, meditation, or spiritual practices. Box 5-1 includes
a list of denitions developed by WHO related to TM/CAM
and herbal medications.
Increasing popularity of traditional and
complementary medicine
Traditional medicine has been used continuously in devel-
oping countries for centuries, but more recently, alternatives
to conventional medicine have become increasingly popular
in developed countries. TM and CAM have also attracted
more attention within the context of the globalization of the
health care sector, health sector reform, and health care pro-
vision. e popularity of TM/CAM is reected in its world-
wide economic importance: the global market for herbal
medicines is estimated to be over 60 billion U.S. dollars
(USD) and growing 10 to 20 percent a year (UNCTD 2000).
Traditional and complementary medicine usage is wide-
spread. For example, according to WHO, up to 80 percent
of people in Africa and Asia use TM as part of their pri-
mary health care; in China, traditional herbs make up 30
Traditional medicine. Traditional medicine is the sum
total of the knowledge, skills, and practices based on the
theories, beliefs, and experiences indigenous to dierent
cultures, whether explicable or not, used in the mainte-
nance of health as well as in the prevention, diagnosis,
improvement, or treatment of physical and mental ill-
ness.
Complementary/alternative medicine. e terms com-
plementary medicine and alternative medicine are used
interchangeably with traditional medicine in some coun-
tries. ey refer to a broad set of health care practices that
are not part of that country’s own tradition and are not
integrated into the dominant health care system.
Herbal medicines. Herbal medicines are dened as plant-
derived material or preparations with therapeutic or
other human health benets, which contain either raw or
processed ingredients from one or more plants. In some
traditions, material of inorganic or animal origin may
also be present. Specic elements of herbal medicines are
dened as discussed here.
• Herbs, including crude plant material such as leaves,
owers, fruit, seed, stems, wood, bark, roots, rhi-
zomes, or other plant parts, which may be entire,
fragmented, or powdered.
• Herbal materials, including, in addition to herbs,
fresh juices, gums, xed oils, essential oils, resins,
and dry powders of herbs. In some countries, these
materials may be processed by various local proce-
dures, such as steaming, roasting, or stir-baking with
honey, alcoholic beverages, or other materials.
• Herbal preparations are the basis for nished herbal
products and may include comminuted or powdered
herbal materials, or extracts, tinctures, and fatty oils
of herbal materials. ey are produced by extraction,
fractionation, purication, concentration, or other
physical or biological processes. ey also include
preparations made by steeping or heating herbal
materials in alcoholic beverages and/or honey, or in
other materials.
• Finished herbal products, consisting of herbal prepa-
rations made from one or more herbs. If more than
one herb is used, the term mixture herbal product
can also be used. Finished herbal products and
mixture herbal products may contain excipients in
addition to the active ingredients. However, nished
products or mixture products to which chemically
dened active substances have been added, includ-
ing synthetic compounds and/or isolated constitu-
ents from herbal materials, are not considered to be
herbal.
Traditional use of herbal medicines. is refers to the
long historical use of these medicines. eir use is well
established and widely acknowledged to be safe and
eective, and may be accepted by national authorities.
erapeutic activity. is refers to the successful pre-
vention, diagnosis, and treatment of physical and mental
illnesses; improvement of symptoms of illnesses; as well
as benecial alteration or regulation of the physical and
mental status of the body.
Active ingredients. ese are ingredients of herbal
medicines with therapeutic activity. In herbal medicines
where the active ingredients have been identied, the
preparation of these medicines should be standardized
to contain a dened amount of the active ingredients, if
adequate analytical methods are available. In cases where
it is not possible to identify the active ingredients, the
whole herbal medicine may be considered as one active
ingredient.
Sources: Adapted from WHO 2002, 2000.
Box 5-1
WHO denitions related to traditional medicines
5.4 POLICY AND LEGAL FRAMEWORK
to 50 percent of total medicine consumption; and 90 per-
cent of Germans, 70 percent of Canadians, and 50 percent
of Swedes have used a natural remedy at some time (WHO
2008b; Hanssen et al. 2005).
Even with the long history of TM use in most countries,
however, and a sharp increase in TM/CAM in developed
countries, a schism remains between traditional and con-
ventional medical practice. Typically, both traditional and
conventional practitioners are unaware or even suspicious of
what the other can oer in terms of health care and services.
In addition, patients can be reluctant to admit to health care
providers that they are using both types of treatment, creat-
ing what could be a potentially alarming risk—especially for
those patients taking certain herbal medications in combi-
nation with pharmaceuticals.
But barriers to addressing issues related to TM/CAM
appear to be weakening in some areas, such as government
recognition. More countries are considering ways to inte-
grate TM/CAM into their national health care system, as
some Asian countries, including China and South Korea,
already do (Holliday 2003). For example, a recent report
notes that increasing numbers of U.S. hospitals and physi-
cians are oering CAM therapies; more insurers are cover-
ing alternative treatments; and integrative medicine centers
now exist, many of which have ties to medical schools and
teaching hospitals (IOM 2005). Developing countries,
too, are acting on the need to ocially recognize TM; for
example, the government of Uganda has begun to integrate
TM into its health system, and South Africa now legally
recognizes traditional healers as health care professionals
(Bianchi 2004).
5.2 Why people use traditional and
complementary medicines
Positive features that attract people to TM/CAM include
diversity, exibility, greater accessibility in many parts of the
world, extensive acceptance in developing countries, com-
paratively low cost, and a lesser need for modern techno-
logical capability.
Accessibility
Traditional medicine therapies are commonly used in
developing countries because they are oen more widely
available and more aordable than conventional therapies.
In addition, because TM practices are, oen, woven into
everyday life and belief systems, and because traditional
healers are trusted members of the community, TM is
oen the rst source of health care at the community level.
Conventional health care may be a last resort, especially
if the nearest primary health care facility is some distance
from the community.
In resource-limited countries, especially in rural areas,
there are usually fewer conventional health care practitio-
ners than TM practitioners. In India, TM is the only available
source of health care for a large part of the rural population
(WHO 2002). is situation has been aggravated as large
numbers of trained and licensed conventional health care
workers leave their native countries for better opportunities
elsewhere (the “brain drain” phenomenon); sub-Saharan
Africa has been particularly hard hit (see Chapter 51).
In developed countries, patients have become more
informed about their health and use print media, television,
and the Internet to get information on which to base their
health decisions. As a result, alternative therapies are appeal-
ing because they are perceived as more natural and therefore
safer compared to “manufactured” pharmaceutical products
(WHO 2004a). A perceptual dierence between cultures
may be that people in developing countries are more likely
to view TM as their primary source of medical care, whereas
people in developed countries generally view alternative
treatments as complementary to, rather than competitive
with, conventional medicine.
Affordability
Most poor people in developing countries buy their medi-
cines out of pocket; even if the public health sector oers
medicines at no charge, essential medicines may not be reli-
ably stocked, or health facilities may be too far away. e
rural poor oen cannot aord the transportation costs to
get to a public health facility. Herbal medicines in develop-
ing countries are oen cheap, and the TM practitioner may
accept a trade in-kind or oer a sliding payment scale. In
addition, many herbal medications are available for pur-
chase in stores, so patients may buy and take medication
without ever incurring the cost of seeing a practitioner. A
cost comparison of malaria treatments in Ghana showed
that clinic treatment cost USD 1.60, self-treatment with
medicines bought from a private drug shop (both chloro-
quine and herbal) was USD 0.35, and self-treatment with
herbs cost USD 0.10 (Ahorlu et al. 1997). Recent evidence
also suggests that the rising cost of conventional medicine in
some developed countries is contributing to increased use of
alternative medicines (Pagan and Pauly 2005).
Perceived safety
TM/CAM therapies are also popular because of the lower
rate of adverse eects compared with some pharmaceutical-
based therapies. For example, St. John’s wort taken to treat
mild depression generally causes fewer side eects than
antidepressive pharmaceuticals; capsaicin cream, derived
from hot Capsicum peppers and used to treat osteoarthritis,
does not cause the gastrointestinal eects that nonsteroidal
anti-inammatory medications do. Evidence suggests that
5 / Traditional and complementary medicine policy 5.5
some patients may choose an herbal medication over a con-
ventional medication specically to avoid adverse eects
(Fraenkel et al. 2004). Although consumers may perceive
herbal products as natural and therefore less likely to cause
problems, these products are not without risk and are not
necessarily safer than conventional pharmaceuticals.
Potential for treating disease
People also use TM/CAM because of its perceived ecacy,
both in general (Sydara et al. 2005) and in particular for
treatment of chronic, debilitating diseases that defy con-
ventional pharmaceuticals. Indeed, plant extracts have been
proved to have pharmacological eects on many condi-
tions, both acute and chronic. Moreover, analysis from U.S.
National Cancer Institute researchers showed that more
than two-thirds of all drugs discovered in the previous
quarter-century were derived from natural products, such
as plants (Newman and Cragg 2007); for example, aspirin
(salicylic acid) uses a compound derived from the white
willow tree, and paclitaxel, a chemotherapy agent, is made
using a substance found in the Pacic yew tree. As long-
time treatments for the most severe form of malaria have
become ineective because of antimicrobial resistance, arte-
misinin compounds from Artemisia annua, an herb native
to Asia, are now the rst-line treatment for malaria in most
countries.
Although research projects have investigated the eec-
tiveness of herbal medicines to treat HIV/AIDS, thus far
no equivalent to artemisinin for malaria has been found
for HIV/AIDS. However, traditional healers have been
targeted as essential partners in eorts to educate their
communities and provide support for people living with
HIV/AIDS (see Country Study 5-1), and many Africans
use traditional herbal medications to treat AIDS symp-
toms and manage opportunistic infections (UNAIDS 2000,
2002). TM/CAM is also important to HIV/AIDS patients
in developed countries; more than eighty percent of a sam-
ple of people living with HIV/AIDS in the United States
reported regular use of alternative medicine therapies
(Sparber et al. 2000).
5.3 Risks associated with herbal medications
Many people believe that, because herbal medications are
“natural,” or have been used in some parts of the world for
generations, they must be safe. But, like modern pharmaceu-
ticals, herbal medications can cause adverse eects (Farah et
al. 2000). e causes of such adverse reactions are diverse:
the use of inherently toxic herbal medicines or an overdose
of herbs, conventional drug–herbal medicine interactions,
and idiosyncratic reactions such as allergies. Most countries
have no adverse drug reaction surveillance (pharmacovigi-
lance) system for medicines at all, or the existing system may
exclude herbal medicines.
Poor quality
A lack of strict standards for the production and manu-
facture of herbal medications can cause quality problems,
such as adulteration, misidentication of ingredients, sub-
stitution of one herb with another, inclusion of pharmaceu-
ticals without identication on the labels, contamination,
and variability in the amount of active ingredient. For
example, an analysis of dierent red yeast rice products on
the market showed levels varying by 100-fold across ten
products, and four were contaminated with a mycotoxin
(ConsumerLab 2009). Heavy metals, fumigation agents,
microbial toxins, and pharmaceutical substances have all
been found in toxic concentrations in TM/CAM medica-
tions (Ernst 2001; Huang et al. 1997; Ko 1998). In 2009, a
manufacturer recalled its herbal weight-loss product, which
was found to actually contain the unlabeled prescription
drug sibutramine, which can substantially increase blood
pressure, and phenolphthalein, a suspected cancer-causing
chemical that is not approved for marketing in the United
States (FDA 2009).
Incorrect usage
Incorrect usage of herbal medication therapies can have
fatal outcomes. e inappropriate long-term use of kava
kava (Piper methysticum), for example, has been associated
with serious cases of liver damage (Stevinson et al. 2002),
and Ginkgo biloba, which stimulates circulation, may cause
excessive bleeding during surgery (Ang-Lee et al. 2001). e
U.S. Food and Drug Administration recalled all botanical
products, marketed for a variety of ailments, that contained
aristolochic acid, from the plant Aristolochia, aer reports
of adverse events showed a relationship with kidney fail-
ure. Problems also occur, when TM therapies are marketed
and used in dierent cultures, with potentially hazardous
changes in indicated uses and doses. Ma huang (Ephedra
sinica), which contains ephedrine, has long been used in tra-
ditional Chinese medicine for respiratory symptoms, but its
marketing at higher doses in the United States as a weight-
loss product led to a number of severe eects and deaths
(Ang-Lee et al. 2001).
Lack of information
Many consumers in both developed and developing coun-
tries use herbal products to treat themselves without a health
practitioner’s advice because of the availability and relatively
inexpensive cost of such products. Consumers who treat
themselves, however, may be uninformed about poten-
tial adverse eects and the safe use of herbal medicines.
5.6 POLICY AND LEGAL FRAMEWORK
Kenya
Women Fighting AIDS in Kenya (WOFAK) is a non-
prot support organization started in 1994 by ten women
aected by HIV/AIDS. WOFAK has incorporated tra-
ditional medical practices into its program because of a
concern that conventional medicine is too expensive for
WOFAK clients. WOFAK works to sustain and promote
various forms of traditional medicine and benecial cul-
tural practices throughout the country, and it supports
the exploration of traditional therapies for HIV and asso-
ciated opportunistic infections.
To further its objectives, WOFAK established a col-
laboration with the Kenya Forestry Research Institute
(KEFRI) to grow, process, and conduct safety assess-
ments and analyses of medicinal herbs. Although
collaboration between conventional and traditional
practitioners in Kenya is rare, WOFAK encourages such
partnerships to improve the quality of health services
to people living with HIV/AIDS. For example, a KEFRI
herbalist worked part-time at the WOFAK drop-in cen-
ter treating clients with herbal medicine. e center has
two clinic rooms—one for traditional medicine and one
for conventional medicine—and the center employs one
community nurse, one traditional healer, one part-time
doctor, and two herbal nurses. Cross-referrals occur
between the conventional health practitioners and the
traditional medicine practitioners, according to the
condition, the medicine available, or the patient’s pref-
erence. Conventional screening methods are used to
determine the problem before treatment begins. In addi-
tion, WOFAK conducts training sessions for traditional
healers in HIV/AIDS issues, including patient counsel-
ing, the role of traditional healers in AIDS control, and
the identication of herbs for treatment of opportunistic
infections.
Tanzania
e Tanga AIDS Working Group (TAWG) was begun in
1990 aer a traditional healer successfully used herbal
medicines to treat a patient in a government hospital
in the Tanga region of Tanzania. e doctors were so
impressed that they initiated collaboration with healers
to better provide services for their patients with HIV/
AIDS. One of the rst TAWG activities was to work with
local healers to develop three herbal remedies to treat
a variety of HIV/AIDS-related conditions. From that
activity evolved a home-care service for patients and
their families, a type of service that patients oen pre-
fer because it is more condential than hospital-based
services. ese home visits are used to monitor general
health, administer traditional therapies, and provide
counseling services. Many hospital sta members refer
patients to TAWG for HIV testing because they know
that TAWG sta members have been trained as coun-
selors on how HIV/AIDS is contracted, spread, and pre-
vented.
In addition to home-based counseling, HIV testing ser-
vices are provided at TAWG facilities. For patients who
are hospitalized, TAWG prescribes herbal medicines col-
lected by a healer and distributed by the hospitals, a pro-
cess that allows patients to be monitored by conventional
health care providers. TAWG’s success is due to the trust-
ing and collaborative relationship between clients, sta
members, traditional healers, and conventional health
practitioners.
Uganda
In the early 1990s, when the prevalence of HIV/AIDS in
Uganda was among the highest in the world, the National
AIDS Control Program, the Uganda AIDS Commission,
and two nongovernmental organizations launched
Traditional and Modern Health Practitioners Together
Against AIDS and Other Diseases (THETA). THETA’s
rst project was a collaborative clinical study to evalu-
ate traditional herbal medicines for their eectiveness
against HIV/AIDS-related symptoms, and its second
project aimed to determine whether traditional healers
could be trained as eective counselors on sexually trans-
mitted infections and HIV/AIDS.
THETA’s clinical studies showed that local herbal
medications were just as ecacious in treating herpes
zoster, which is especially problematic for people living
with HIV/AIDS, as the conventional drug acyclovir. To
increase access to these local products, THETA started
an herbal processing-and-packaging demonstration
laboratory, and grows medicinal herbs in a garden in
Kampala. THETA also developed a Resource Center for
Traditional Medicine and AIDS, which includes a library
and a speakers bureau. To facilitate the exchange of infor-
mation, the center has published booklets, training kits,
educational videos, and a newsletter.
In addition, THETA’s training program for traditional
healers has been so successful that it has expanded to sev-
eral districts. Healers who have gone through the inten-
sive, two-year training and certication program serve
as HIV/AIDS trainers for other traditional healers and
Country study 5-1
using traditional practitioners in HIV/aIDs activities in sub-saharan africa
5 / Traditional and complementary medicine policy 5.7
Oen, the labeling of herbal preparations contains inad-
equate or unclear information about usage or possible
adverse eects, leading to improper use by consumers. In
a fatal example, the label on a bottle of Chinese wintergreen
oil indicated that it was primarily for external use but could
be taken orally for enhanced ecacy, even though ingesting
as little as 4 mL can be fatal. An elderly consumer seeking
relief from arthritis drank the entire contents of the 60 mL
bottle that she purchased in a grocery, resulting in her death
(Hofman et al. 1998).
Another problem is that most people do not com-
municate with their health care providers about other
medications they are taking. Studies show that up to 70
percent of people use TM/CAM therapies simultaneously
with conventional medicine without telling their health
care providers (Eisenberg et al. 2001). is lack of com-
munication puts consumers at risk of suering serious
adverse eects caused by the interaction between herbal
medicines and conventional medicines (Ernst 2001;
Fugh-Berman 2000). Problems with herbal medicine–
conventional medicine interactions can be prevented
through improved communication between patients and
health care providers and, in the case of self-treatment,
better consumer information.
Clearly, issues related to herbal safety, herb-drug interac-
tions, and health care provider and consumer education and
communication are increasingly important for national and
international authorities to address, given the growing pop-
ularity of herbal products in both developed and developing
countries. WHO has published guidelines on developing
consumer information for TM and CAM that discuss many
of these issues (WHO 2004a).
ll a gap in providing counseling services in geographic
areas where counseling would not otherwise be available.
Healers have been recognized for their unique education
methods, which include song, dance, storytelling, and
drama. Part of the training process includes workshops
with conventional health practitioners to promote col-
laboration between traditional healers and health care
providers.
I work together with fellow healers to educate the
communities. When there are many of us, we can
handle all the questions.
—Trained healer from Kiboga
South Africa
In South Africa, an estimated 80 percent of people regu-
larly see sangomas, or traditional healers. e Nelson
R. Mandela School of Medicine at the University of
KwaZulu-Natal (KZN) in Durban has developed the
Biomedical and Traditional Healing Collaboration
Against HIV/AIDS to improve collaboration with tra-
ditional healers caring for people with HIV/AIDS. In
2003, a memorandum of understanding was signed
between the school and the KZN Traditional Healers’
Council (including the Ethekwini Traditional Healers’
Council), as well as two other traditional healers’ orga-
nizations, Mwelela Kweliphesheya and the Umgogodla
Wesizwe Trust. e provincial health department helps
run the project.
e project has trained hundreds of traditional healers
on HIV/AIDS awareness, voluntary counseling and test-
ing, home-based care, and antiretroviral therapy aware-
ness. Membership in one of the councils is required for
participation in the program. Traditional healers are
recognized as eective counselors, and the project is
developing strategies that use sangomas to deliver HIV
prevention messages and behavioral counseling.
Sangomas are already treating many patients with HIV/
AIDS while they are on the waiting list for antiretroviral
therapy. ey not only treat people’s opportunistic infec-
tions, but also encourage patients’ behavioral changes
and advise them on good nutrition and healthy living.
e project is working to improve two-way communica-
tion and referral between sangomas and conventional
health practitioners. e sangomas already refer patients
to health care facilities, but they feel that they do not
receive reciprocal referrals because of hostility on the
part of the conventional practitioners. e project is
working with all parties to clarify patient condentiality
issues, which should help improve communication and
information exchange.
In addition, the project supplies the traditional healers,
who do not have the resources to buy supplies such as
rubber gloves, with home-based care kits and helps them
incorporate record keeping into their practices, which,
although advocated by the healer councils, is challeng-
ing because of low literacy. Record keeping is seen as an
important element of successful collaboration between
the traditional and conventional health systems.
Biomedical and Traditional Healing Collaboration
Against HIV/AIDS recognizes that the integration of
traditional healers into care for patients with HIV/AIDS
will help reduce workload, improve patient care, and
give the HIV/AIDS treatment program partners within
patients’ communities.
Sources: Kenya, Tanzania, Uganda: UNAIDS 2002; South Africa: Smart
2005; IRIN PlusNews 2010.
5.8 POLICY AND LEGAL FRAMEWORK
5.4 Meeting the challenges of traditional
medicine
Although TM has a great inuence on health care practices
worldwide, little reliable information exists regarding the
safety, quality, and ecacy of TM/CAM medications, in part
because most country governments do not regulate or o-
cially recognize TM/CAM therapies. In the countries that do
recognize TM, the scope of regulations varies considerably
because of dierences in history, culture, and product use.
Some countries classify herbal products as medicines and
some as food, and regulate accordingly. Generally, coun-
tries do not register herbal and other TM products the same
way as conventional medicines, and evidence of quality,
ecacy, and safety may not be required before marketing.
Governments will continue to take dierent approaches in
recognizing and classifying TM/CAM preparations unless
an international framework is established for evaluating and
regulating these products (Bast et al. 2002).
TM therapies have the potential to contribute to a bet-
ter health care system in many places; however, a number
of challenges must be met to avoid the emergence of more
costly and less safe and eective health care (see Box 5-2).
WHO has developed strategies to address these challenges
through recent resolutions and through the publication of
the WHO Traditional Medicine Strategy: 2002–2005. is
overarching strategy includes four major objectives: (1)
framing government policy; (2) ensuring safety, ecacy,
and quality; (3) enhancing access; and (4) promoting proper
use of TM/CAM, including herbal medicines (WHO 2002).
To share experiences and support the adoption of TM/
CAM strategies, more than 1,500 representatives from
member states and interested stakeholders attended the rst
WHO Congress on Traditional Medicine in 2008 in Beijing.
Attendees shared national experiences and information
on national TM/CAM policy, regulation of traditional and
herbal medicines and TM/CAM practice, TM in primary
health care, and research. e resulting Beijing Declaration
calls on WHO member states and other stakeholders to take
steps to integrate TM/CAM into national health systems
(WHO 2008a).
Government policy on traditional medicine
TM is used widely to prevent, diagnose, treat, and manage
disease, but considering TM’s popularity, the development
of regulation and legislation of the herbal medicines market
has generally been inadequate. Public policies on TM dif-
fer signicantly because countries and regions have diverse
priorities; for example, the Chinese and Indian governments
want to use TM to strengthen primary health care in remote
areas; in Africa, many countries are looking for the best ways
to use local TM resources and make TM an integrated part
of minimal health care packages; and in Europe, licensing
providers and creating standards of training and priorities
for research have become crucial issues.
National policy and regulatory frameworks
• Lack of ocial recognition of TM/CAM and TM/
CAM providers
• TM/CAM not integrated into national health care
systems
• Lack of regulatory and legal mechanisms
• Equitable distribution of benets of indigenous TM
knowledge and products
• Inadequate allocation of resources for TM/CAM
development and capacity building
Safety, efficacy, and quality
• Lack of research methodology
• Inadequate evidence base for TM/CAM therapies
and products
• Lack of adequate regulation and registration of
herbal medicines
• Lack of registration of TM/CAM providers
• Inadequate support for research
Access
• Lack of data measuring access levels and aordability
• Need to identify safe and eective therapies and
products
• Lack of ocial recognition of role of TM/CAM pro-
viders
• Lack of cooperation between TM/CAM providers
and conventional practitioners
• Unsustainable use of medicinal plant resources
Rational use
• Lack of training for TM/CAM providers as well as
for conventional practitioners on TM/CAM
• Lack of communication between TM/CAM and
conventional practitioners, and between conven-
tional practitioners and consumers
• Lack of information for public on appropriate use
of TM/CAM
Source: WHO 2002.
Box 5-2
Traditional, complementary, and alternative medicine challenges
5 / Traditional and complementary medicine policy 5.9
Countries create policies that help characterize the role
of TM in the national health care system and ensure that
regulatory and legal mechanisms promote good practice,
equitable access, and assurance of quality, safety, and e-
cacy. Unfortunately, a 2003 WHO survey found that only
forty-ve countries reported having enacted a national
TM policy (WHO 2005). Fiy-one additional countries,
however, reported having such policies in development.
Without relevant policies, TM/CAM is practiced with little
government oversight and without patient or consumer
protection. erefore, national policies should encompass
legislation and regulation of practice and products; educa-
tion, training, and licensing of providers; and research and
development.
Before a country develops a national TM policy, it should
assess TM use and practices and evaluate how TM can be
used to improve the existing health care system. A national
policy on TM/CAM must ensure the safety, ecacy, and
quality of TM/CAM products and practices; at the same
time, such a policy is not useful if it unduly hinders patient
treatment options or leads to higher health care costs.
Although national TM policies have been, initially, slow
to take shape, countries are increasingly aware of the impor-
tance of ensuring the safety and ecacy of TM, and those
with some sort of regulations on herbal medicines increased
from fourteen in 1988 to y-three in 2003 (WHO 2005).
Another survey showed that eleven of twenty-six drug regu-
latory authorities in sub-Saharan Africa actually registered
TMs (WHO 2010a). But, again, because national priorities
dier, government approaches to legislation and regulations
lack consistency (see Country Study 5-2).
Integration into national health care systems
e integration of TM within the national health care sys-
tem generally follows four approaches (Bodeker 2001;
WHO 2008a).
A tolerant health system is based on conventional Western
medicine, but allows some TM/CAM practitioners to prac-
tice in some capacity. In the United Kingdom, only the prac-
tice of osteopathy and chiropractic are protected by statute;
Canada’s provinces individually regulate CAM practi-
tioners, resulting in some CAM practitioners being regu-
lated in some provinces but not others; in the United States,
provider training, credentialing, and licensure requirements
vary from state to state. Few national credentialing and
licensing bodies are available to determine qualications for
a particular practice.
An inclusive system recognizes TM practices but does not
fully integrate them into health care delivery, education, or
regulation. Nigeria and Mali are examples of inclusive sys-
tems, where the governments have a national TM policy,
but there is otherwise little regulation of products or prac-
tices. In some countries, such as Norway, Zimbabwe, and
South Africa, authorities are giving substantial recognition
to TM/CAM providers through national eorts designed
to increase the integration of TM/CAM and conventional
medical systems.
A parallel health care system has both conventional and
TM as separate components of the national health system.
For example, the government of India ocially recognized
the Ayurvedic and Unani medical systems through the
Indian Medicine Central Council Act of 1970. More than
700,000 registered traditional medical practitioners are
active in India and almost 500 colleges of Ayurvedic and
other traditional medicine education exist (Joshi 2008).
An integrated system integrates conventional and TM
systems at the level of medical education and practice.
Integrative measures include government regulation and
registration to control the safety, ecacy, and quality of
herbal medicine products; registration of traditional heal-
ers and herbalists; and establishment of specialized hospi-
tals, colleges, and universities. Worldwide, only China, the
Democratic People’s Republic of Korea, the Republic of
Korea, and Vietnam are considered to have fully integrated
systems (WHO 2002). e Association of Southeast Asian
Nations recently committed to promoting the integration
of TM/CAM into its members’ national health care ser-
vices, including draing an Action Plan and Declaration on
Traditional Medicine (ASEAN 2009).
Ensuring quality, safety, and efficacy
Many developing countries have a weak regulatory infra-
structure for conventional pharmaceuticals, and most coun-
tries have no national regulations governing the quality,
safety, and ecacy of herbal medications. To be registered
as medicines, herbal products must undergo scientic study
to assure their safety and ecacy, composition, dosage form,
and claimed indications. However, in some countries, such
as the United States, herbal products are regulated as foods
rather than as medicines; manufacturers are not required to
conduct safety or ecacy tests on their products and thus
have little incentive to invest in research. Under U.S. law, the
onus is on the Food and Drug Administration to prove tox-
icity in order to remove a product from the market.
Countries that do have a strong pharmaceutical regula-
tory structure in place should adapt their existing systems
to include herbal medications, and countries that lack regu-
latory standards should work toward setting up a national
system. All countries should have some framework in place
to review and monitor herbal medicines, including a coor-
dination agency, a national advisory committee, and a phar-
macovigilance system for herbal medicines. WHO and its
Regional Oce for the Western Pacic have published a
number of references and guidelines on assessing traditional
therapies, and specically herbal medicines, for use by gov-
ernment authorities and researchers. ey are available
5.10 POLICY AND LEGAL FRAMEWORK
e creation of a national TM policy helps dene the role of traditional medicine in a national health care system
by putting mechanisms in place for ensuring availability, accessibility, safety, quality, ecacy, and appropriate use.
Although more countries are recognizing and addressing the legal and policy issues surrounding TM and CAM, their
eorts vary considerably in scope and approach. e following table summarizes the status of regulations, training,
and insurance coverage in eight countries as of 2005 or before.
Country regulations and laws Ocial training and education
Bolivia •Regulation of herbal medicines was instituted in 1982; they are
regulated in their own category as over-the-counter medications.
•There are 52 registered herbal medicines.
•A postmarketing surveillance system is planned.
•Practice of TM was legally recognized in 1985.
•TM practitioners must have a government license, although no
registry exists.
•No official program exists to integrate TM and conventional
medicine.
•Ministry of Health established a training
program for TM practitioners at conventional
medical schools in 1982.
•KUSKA, a research organization, runs two TM
schools.
•Formal courses, workshops, and seminars in
TM are available through the government
health sector.
Ethiopia • Health, Drug, Science and Technology Policy of 1999 covers TM
national policy.
•Ethiopia does not regulate herbal medicine, and no regulatory status
exists for herbal medicine.
•There are no restrictions on the sale of herbal medicines.
•Ethiopian Traditional Healers Association reviews practitioner
qualifications in the absence of regulations.
None
Gambia •No laws or regulations regarding TM exist, but a national policy is
under development.
•There are no restrictions on the sale of herbal medicines.
•There is a licensing process for TM practitioners.
•Some TM practitioners are involved in the primary health program.
•There is a training program for TM for health
workers.
Kenya •TM was incorporated into national health policy in the 1970s.
•Herbal medicines are not regulated, and there are no restrictions on
their sale.
•TM practitioners must be registered.
•Patent law was revised in 1999 to include protection for TM.
•In 2004, Kenya announced that it would develop a national action
plan on regulating and promoting TM.
•A postmarketing surveillance plan is under development.
•Some training is available for traditional birth
attendants.
Netherlands •There is no national policy on TM/CAM.
•Herbal medicines are regulated under the same laws as conventional
pharmaceuticals.
•There is no registration system for herbal medicines. They are sold in
pharmacies and other outlets as over-the-counter products.
•As of 1997, CAM practitioners can legally practice medicine, except
for specific medical acts reserved for conventional physicians.
•Legal registers exist for various categories of nonconventional
practitioners who have satisfied specific requirements. Registration
gives them the right to practice under a protected title, to ensure
they are qualified in a specific field of health care.
•CAM institutions have organized training
courses, developed standards of training and
professionalism, and established national
registration systems.
•Most members of CAM organizations are
trained as conventional physicians or nurses.
•Courses on CAM are offered at conventional
medical schools.
•Three-year programs are offered in
homeopathy, separate from conventional
medical school curricula.
Philippines •National policy on TM was established in 1997.
•There is a TM division within the Department of Health.
•Herbal medicines are regulated as over-the-counter medications,
separate from conventional pharmaceuticals; medical claims may be
made for herbals with supporting scientific proof.
•The postmarketing surveillance system includes conventional and
herbal medicines.
•Traditional and Alternative Medicine Act signed in 1997 seeks to
integrate TM into the national health care delivery system.
•Philippines Institute of Traditional and Complementary/Alternative
Health Care was created to promote research and integration of TM.
•Training in TM for conventional practitioners is
a government priority.
Country study 5-2
The regulatory status of traditional medicine in eight countries
5 / Traditional and complementary medicine policy 5.11
online at http://www.who.int/medicines/areas/traditional/
en/index.html.
Expanding the credibility of TM will depend on develop-
ing an evidence base for safety and ecacy, which means
consolidating existing national and international stud-
ies and supporting new research to ll evidence gaps. e
increasing number of national TM/CAM research insti-
tutes in developed and developing countries is an encour-
aging sign that more research and collaboration is under
way. Examples are found in China, Germany, Ghana, India,
Indonesia, Mali, Nigeria, Norway, ailand, the United
States, and Vietnam.
Evaluating quality. Correct botanical identity is a
critical step in ensuring the quality of herbal medicine.
Formal procedures are needed, including retaining botan-
ical voucher specimens for each raw material batch and
using simple organoleptic tests. Increasingly, thin-layer
chromatography and qualitative and quantitative high-
performance liquid chromatography methods are being
used to conrm the identity and quality of raw materials.
Other strategies that help ensure the quality of herbal
products include developing standard operating proce-
dures for cultivation and manufacturing, quality stan-
dards, and assays for determining the pharmacological
activity of the product.
Evaluating or even establishing quality standards for herbal
medications is dicult because the properties of plants
vary drastically according to the plants’ genetic makeup
and variability; where they are grown, climatic conditions,
and time of harvest or collection; and post-harvesting
treatment. Some products share more properties with food
products, whereas others are potent medicines, and each
plant may have hundreds of natural constituents that con-
tribute to its therapeutic qualities.
Without any sort of manufacturing standard, herbal
products range in composition from products that are vir-
tually unprocessed, to extracts, to mixtures that include
other chemicals. Given their natural complexity and the
dierences in formulation, isolating and identifying key
active ingredient(s), establishing dosage levels, determining
mechanisms of action, and weighing risks against benets
oen prove dicult. Overall, the general lack of regulations
governing quality-control standards and consistency among
herbal products hinders the ability of health professionals to
guide patients on product selection and use, as well as the
ability of researchers to conduct studies that could further
clarify product ecacy and appropriate uses.
To ensure that herbal products marketed to consumers
are of adequate and consistent quality, national drug regu-
latory authorities must establish guidance on all elements
Country regulations and laws Ocial training and education
United
Kingdom
•Herbal medicines can be licensed or unlicensed; if licensed, they
must meet the same manufacturing and safety requirements
as conventional medicines. Unlicensed herbal products are not
required to meet any specific quality or safety standards, but that
may change in accordance with new EU directives.
•The postmarketing surveillance system was expanded to include
herbals in 1996.
•CAM practitioners without a conventional medical degree are
tolerated by law but not officially recognized.
•No restrictions exist on registered physicians who also practice CAM
if they have the required skills and/or qualifications.
•The British Medical Association recommends
incorporating CAM into the undergraduate
curriculum of medical schools and making
accredited postgraduate training available.
•Many professional CAM associations offer
training in their specialties.
•The Institute of Complementary/Alternative
Medicines is working to establish national
standards of training.
Vietnam • A national TM/CAM policy is under development.
•Laws and regulations on herbal medicines were established in 1989.
They are regulated as prescription and over-the-counter medicines.
•More than 1,500 herbal medicines are registered.
•Safety requirements for herbal medicines include traditional use
without demonstrated harmful effects and reference to documented
scientific research on similar products.
•The postmarketing surveillance system integrates conventional and
herbal medicines.
•Vietnam’s constitution, as well as various laws and regulations,
outlines the integration of conventional and traditional health
care. Promotion of these objectives is a shared responsibility of the
Ministry of Health, Vietnamese Traditional Medicine Association, and
the Viet Nam General Union of Medicine and Pharmacy.
•Regulations from 1991 specify qualifications for TM practitioners as
well as procedures they are permitted to use.
•The government entrusts an assessing committee with issuing
licenses to TM practitioners.
•Government programs train community
health workers to use TM methods to treat
common diseases.
•No college or university of traditional medicine
exists, although the government plans to
create one.
•Hanoi Medical University has a department of
traditional medicine.
•Two secondary schools are the main seats of
learning in TM.
Sources: WHO: 2001, 2005.
5.12 POLICY AND LEGAL FRAMEWORK
of quality assurance, including standard operating proce-
dures, such as Good Agricultural and Collection Practices
(GACPs), Good Manufacturing Practices (GMPs), and
Good Laboratory Practices (GLPs). Guidelines have been
published related to these standards, such as WHO’s Quality
Control Methods for Medicinal Plant Materials. ese guide-
lines not only facilitate the technical work of drug regulatory
authorities but also encourage countries to establish quality-
control procedures for herbal medicines.
Evaluating clinical efficacy. A report from the U.S.
Institute of Medicine (IOM 2005) stated that conventional
and complementary medical treatments should be held to
the same standards for demonstrating clinical eectiveness
and that investigators should use common methods, mea-
sures, and criteria to generate and interpret the evidence
necessary for making decisions about the use of comple-
mentary medicines. Because TM/CAM practices have
developed within dierent cultural and regional contexts,
there have been only limited efforts at parallel develop-
ment of standards and methods—either national or inter-
national—for undertaking the type of evaluation that exists
for conventional pharmaceuticals. Importantly, scientic
research has increased on the chemistry and pharmacol-
ogy of raw herbal materials and constituent phytochemicals.
Despite this increase, however, many natural products on
the global market lack clinical proof of safety and ecacy.
Table 5-1 lists some herbal medicines that have been evalu-
ated for clinical ecacy.
Additionally, TM/CAM practitioners oen focus on the
overall condition of the individual patient, rather than on
the particular ailment or disease from which the patient is
suering. is more holistic approach to health care makes
TM attractive to many people; to be evaluated, however,
it requires an evidence base that uses innovative scientic
approaches to include the many patient health factors, both
specic and nonspecic, considered by TM practitioners.
erefore, the debate continues concerning the appropriate-
ness of applying and combining accepted research method-
ologies to evaluations of TM/CAM.
Pharmacovigilance. Insufficient safety and efficacy
research has hindered the development of national surveil-
lance systems for monitoring and evaluating adverse reac-
tions from herbal medicines. Pharmacovigilance needs to
incorporate instruments to identify adverse reactions expe-
rienced by patients, studies to determine adverse reactions
in specic settings, and a postmarketing quality surveillance
system for herbal medicines.
Any adverse reaction reporting must document the
product’s specic batch number, identify the botanical
ingredients present, and include other relevant infor-
mation, when available. For example, an adverse reac-
tion recorded for a product labeled “ginseng” could be
incorrectly assumed to be caused by Panax quinquefolius
(American or Western ginseng), whereas the product
may actually be made from Pfaa paniculata, which is
sold as Brazilian ginseng. Monitoring adverse drug reac-
tions requires some technical sophistication to dierenti-
ate crude-milled herbal material in tablet or capsule form
from concentrated extracts; the latter may contain sol-
vent residue that may be the cause of an adverse reaction,
rather than the plant. Similarly, simulta neous conventional
pharmaceutical and illicit drug use should be documented
to help clarify causality.
In cases where a national pharmacovigilance system for
conventional pharmaceuticals exists, it should be enhanced
and broadened in ways that will include surveillance of
herbal medicines. Knowledgeable researchers and practi-
tioners of TM should be consulted during the development
of such systems. WHO has published guidelines on how to
include herbal medicine monitoring in pharmacovigilance
systems (2004b). Chapter 35 provides more information on
pharmacovigilance monitoring.
Enhancing access
Poor countries are the most in need of inexpensive, eective
treatments for diseases and access to essential medicines.
In these regions, some form of TM is oen the most widely
available and aordable source of health care. Creating
linkages between traditional and conventional medi-
cine through collaboration and communication may help
improve health care access and services for all people, and
especially for those in resource-limited, rural areas. Such
linkages may also promote the acceptance of TM as part of
the overall health care system.
Other access issues relate to the protection of TM knowl-
edge and intellectual property rights and the sustainable use
of natural resources. Many methods can be used to protect
TM knowledge, such as creating a national policy on pro-
tecting indigenous knowledge and formalizing the record of
information on medicinal plants.
Promoting acceptance of TM in the health care sys-
tem. One strategy is to develop local professional organi-
zations of TM/CAM practitioners that can form the basis
of future national organizations. A strong organization of
TM/CAM practitioners will help create better mechanisms
for self-regulation and contribute to enhanced profes-
sional standards and increased consumer trust and safety.
Establishing such professional organizations also facilitates
outreach and communication within the health care com-
munity.
Countries in Asia that have better-integrated health
care systems experience more professional information
exchange and cooperation between the TM and conven-
tional health sectors, partly through links in their educa-
tional systems (Holliday 2003). Recognizing the eect that
TM has on the lives of most Africans, Uganda has added
traditional healing studies to its university curriculum to
5 / Traditional and complementary medicine policy 5.13
show that TM has a role in the health care system. In some
countries, more informal links are being made between
TM practitioners and primary health care providers—
especially through eorts to increase access to HIV/AIDS
treatment and counseling (Kaboru et al. 2006). But in
many other countries, the two types of health care provid-
ers work in isolation from each other. Creating opportuni-
ties to improve cooperation between TM practitioners and
conventional medicine practitioners may allow patients to
use both TM and conventional therapies to best meet their
needs while improving patient safety. WHO has published
the results of a workshop on how to help traditional health
practitioners become more involved in primary health care
(WHO 2009a).
Protecting medicinal plants. A key to guaranteeing
access to traditional medicines is the protection and sus-
tainable use of medicinal plant resources. Raw materials for
herbal medicines are oen collected from wild plant popu-
lations, and overharvesting for local use or to meet export
demand is a growing problem. For example, when countries
aected by chloroquine-resistant malaria began turning to
artemisinin-based antimalarials, China, which exports raw
material and extracts of the source plant, Artemisia annua,
could not fulll the need. Fortunately, Artemisia annua can
readily be grown from seed as an annual crop, and many
countries, including Kenya, Nigeria, and Tanzania, are
establishing commercial plantations.
To help protect its resources, Kenya has banned the export
of an endangered tree, Prunus africana, that has medicinal
properties. e Republic of Kiribati is promoting resource
management, conducting agricultural research on medici-
nal plants to help improve crops and yield, as well as oering
registered traditional healers seeds and advice on growing
conditions (B. Snell, E-drug, Feb. 7, 2005). As part of national
TM strategies, other countries are compiling national inven-
tories of medicinal plants to help focus eorts on natural
resource management and sustainability.
Protecting indigenous knowledge and intellectual
property. Use of herbal medicines requires access not only
to biological resources, but also to community knowledge
about plants’ therapeutic properties. However, rights to
indigenous knowledge and resources have, for the most
part, been overlooked by Western intellectual property sys-
tems, where the components of TM have been treated as
part of the public domain and available to anyone. Although
research into TM is essential to ensuring access to safe and
eective treatments, the knowledge of TM practices and
products can be a source of substantial economic benet to
companies and research institutes.
Currently, TM knowledge is being appropriated, adapted,
and patented by scientists and industry, with little or no
compensation to its original creators or holders, and with-
out their informed consent. Because of such appropriation
and because of the focus on intellectual property rights and
pharmaceuticals in general, growing attention is being paid
to the issue of protecting TM knowledge and products. But,
because intellectual property rights are usually given to indi-
viduals or organizations, whereas indigenous knowledge is
community based, determining what can and should be
protected may be dicult.
Country Study 5-3 describes a unique collaboration
between the University of California, Berkeley, and Samoa
that is designed to protect indigenous knowledge while
exploiting modern research and development capabilities.
WHO encourages countries to adopt systems that compile
a national inventory of medicinal plants and create records
to preserve TM knowledge and enable its correct and con-
tinuous use over generations. For example, the Ministry of
Health in Côte d’Ivoire has conducted a knowledge survey
among traditional practitioners and recorded more than
2,000 traditionally used plants (WHO 2002); traditional
healers, lawyers, and scientists are some of the stakeholders
in Zambia working to create a national policy specically to
protect and document knowledge and biological resources
(Ngandwe 2005); and India has developed a digital library of
knowledge and formulations used in Ayurveda that is orga-
nized to help international patent oces to avoid granting
inappropriate patents. Other countries, such as China, are
Table 5-1 Select examples of clinical eectiveness based on meta-analyses of clinical TM/CAM therapy research
Therapy Medical condition Conclusion
Artemether Severe malaria Equally effective as quinine, but more effective in
quinine-resistant areas
Ginkgo biloba Peripheral arterial disease More effective than placebo
St. John’s wort Mild depression More effective than placebo, as effective as (and safer
than) synthetic antidepressants
Kava kava Anxiety More effective than placebo
Saw palmetto Prostate hyperplasia Effective in relief of symptoms
Horse chestnut (Aesculus hippocastanum L)
seed extract
Chronic venous insufficiency Effective in short term at reducing leg pain and swelling
Glucosamine sulfate Osteoarthritis Decreased pain and increased function
Sources: Ernst 2001; Pittler and Ernst 2008, 1999; Schneider 1992; Towheed et al. 2008.
5.14 POLICY AND LEGAL FRAMEWORK
using the Indian database as a template for developing their
own knowledge libraries (Hepeng 2005). e information
generated by these inventories should be used by national
patent oces worldwide to evaluate the novelty and inno-
vation of patent applications. In South Africa, the Patents
Amendment Act of 2005 requires that every patent applica-
tion state whether the invention is based on or derived from
traditional knowledge.
Promoting rational use
As with the rational medicine use concept promoted for
conventional pharmaceuticals (Chapter 27), appropriate use
of TM and herbal medicines is dependent on qualied prac-
titioners, proper prescribing and use of high-quality prod-
ucts, and reliable information and guidance for practitioners
and patients. e degree to which traditional or alternative
medicine is integrated into the conventional health care
system will aect the type of information about TM/CAM
needed in the community. In many countries, additional
work is needed to raise awareness of safe and appropriate
use of TM, but unfortunately there is a shortage of organized
networks of traditional practitioners to help promote safe
TM practices.
Reliable information based on results from high-quality
scientic studies is crucial in guiding TM/CAM practi-
tioners, conventional health care providers, and the public
in the most appropriate use of herbal medicines. e WHO
Monographs on Selected Medicinal Plants is an important
reference for national health authorities, scientists, and
pharmaceutical companies, providing technical informa-
tion on the safety, ecacy, and quality control of widely used
medicinal plants (WHO 1999, 2004, 2007, 2009).
Proper use by providers. Training for TM practitio-
ners should ensure that their knowledge and qualications
are adequate in their area of expertise. Without appropri-
ate training or accompanying qualication and licensing
schemes, it is dicult for national authorities and consum-
ers alike to identify qualied TM providers. In the few coun-
tries that integrate TM and conventional medicine into one
health care system, TM practitioners benet from university
education, which should include study of both TM and con-
ventional medicine. Subsequently, these practitioners can
become part of sta at hospitals of conventional medicine,
promoting the use of TM in combination with conventional
medicine practices. In the absence of formal education,
TM practitioners or healers who receive basic training in
primary health care can help disseminate important health
information, especially in areas where people rely predomi-
nantly on TM.
Also, because TM/CAM use is becoming more wide-
spread, all doctors, nurses, pharmacists, and other conven-
tional health care providers should receive education about
TM treatments during their professional education. Parallel
In the 1980s, an ethnobotanist from the United States
was searching for a cure for breast cancer among the ora
in Samoa. As part of the project, he interviewed two tau-
lasea (traditional healers) who had used the bark of the
indigenous mamala tree (Homalanthus nutans) as a treat-
ment for hepatitis. Later tests of mamala showed that it
contained prostratin, a previously known substance that
showed powerful eects against HIV in the laboratory.
e hope is that prostratin will become an eective treat-
ment for HIV/AIDS. However, the supply of prostratin is
limited to mamala tree bark, found wild in Samoa and a
few other South Pacic islands. To make prostratin more
widely available without endangering its source in the
rain forest, researchers at the University of California,
Berkeley (UC Berkeley), are using genetic engineering
to clone the tree’s genes and insert them into microbes to
mass-produce the substance.
is research is conducted under an innovative agree-
ment between the university and the nation of Samoa,
which asserts national sovereignty over the gene
sequence. e intellectual property agreement was made
aer scientists visited tribal chiefs to give a presentation
on genetic engineering. e contract gives Samoa and
UC Berkeley equal shares of any royalties that the uni-
versity might ultimately derive from the use of the genes.
Samoa’s portion will be allocated to the government, vil-
lages, and the families of the taulasea who rst showed
the American ethnobotanist how to use the plant. In
addition, if the research results in a marketable product,
UC Berkeley and Samoa will establish a distribution
process that will allow access to developing countries at a
cost including no or minimal prot.
A separate agreement was established in 2001 between
the Samoan government and the AIDS Research Alliance
(ARA), allowing clinical research on prostratin, with 20
percent of the ARA’s prots to be returned to the Samoan
people. ARA planned to nish its preclinical trials in
2010, paving the way to begin human clinical trials.
Sources: ARA 2010; Black 2004.
Country study 5-3
Innovative indigenous knowledge research agreement: samoa and the university of California, Berkeley
5 / Traditional and complementary medicine policy 5.15
education helps TM providers and conventional health care
professionals understand how their roles can complement
each other for the benet of the patient.
Proper use by consumers. Because many consumers use
herbal medicines without consulting a health care profes-
sional, they must have access to reliable information and
product labeling to make informed decisions on the safe use
of herbal medicines. Without knowledge of the potential for
adverse reactions, patients may fail to inform their doctors
about the TM/CAM products they are using, and doctors
may fail to ask.
Public information about TM/CAM helps spread knowl-
edge about the health benets as well as the possible risks,
but the information must be reliable and adapted to the
specic local context. An information campaign on herbal
medicines should consider the local social, cultural, reli-
gious, and spiritual contexts, because medical concepts
and understanding can vary signicantly. Consequently,
eorts to ensure that consumers use TM/CAM properly
must involve a range of stakeholders, including govern-
ment representatives, health authorities, professional
and consumer organizations, and TM/CAM researchers.
An important resource related to consumer education is
Guidelines on Developing Consumer Information on Proper
Use of Traditional, Complementary and Alternative Medicine
(WHO 2004a).
Currently, few standards exist to control the labeling and
advertising of herbal medicines. e regulatory framework
for TM/CAM products should include guidelines on how
to educate the public, including restrictions on informa-
tion and advertisements. Such regulations can be issued
either by national authorities, in the form of enforceable
controls, or by local organizations, such as professional
groups, in the form of voluntary controls. ese kinds of
regulations help secure the trustworthiness of the informa-
tion, prevent false health claims and misleading advertise-
ments, and ensure the appropriate labeling of TM/CAM
products.
TM/CAM national policy, laws, and regulations
• Is there a national policy on TM/CAM?
• Are there any laws or regulations relating to
TM/CAM? How are the laws enforced?
• Do any laws or regulations pertain specically to
herbal medicines?
• If so, are herbal medicines regulated separately
from conventional medicines? Are they classied as
prescription or over-the-counter, or are they given
another status, such as food?
• Is there a national program or expert advisory group
that has responsibility for TM/CAM issues?
Evaluating the quality, safety, and efficacy of
herbal medicines
• What regulatory requirements apply to the manu-
facturing of herbal medicines?
• What are the regulatory requirements for the safety
assessment of herbal medicines?
• What type and level of evidence, if any, is required to
prove the ecacy of herbal medicines?
• Is there a registration system for herbal medicines?
• Is there a postmarketing surveillance system for
herbal medicines? Does it include reporting for
adverse reactions?
TM/CAM research
• Is there a national research institute devoted to
TM/CAM?
• Are there any policies in place to compile an
inven tory and/or protect traditional medicine
resources, such as endangered plants? Is there any
system to document indigenous knowledge and
resources?
Integration of TM/CAM into the conventional
health system
• Is TM/CAM ocially recognized by the govern-
ment as part of the health care system? Is there any
integration with the national health care system? Are
there any herbal medicines on the national essential
medicines list?
• Is the practice of TM/CAM regulated both for health
care providers and TM/CAM providers?
• Are there any training programs for TM/CAM prac-
tices?
Use of TM/CAM
• How do consumers typically use herbal medicines?
Where do they buy herbal medicines? From phar-
macies or other medicine outlets? From licensed or
unlicensed practitioners?
• How are consumers informed about the benets and
risks of herbal medicines? Are there any regulations
related to medical or health claims or labeling?
assEssMENT GuIDE
5.16 POLICY AND LEGAL FRAMEWORK
Consumers also need to be reminded that information
on the Internet is not easily controlled or regulated and
that special attention is needed when evaluating online
information (see Chapter 34). Some countries have special
regulations to control the publication of health information
on the Internet, but product marketing and advertising are
mostly unrestricted. n
References and further readings
H = Key readings.
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Ang-Lee, M., J. Moss, and C. Yuan. 2001. Herbal Medicine and
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Bianchi, F. 2004. “New Tradition for African Healthcare.” Christian
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and Alternative Medicine: Policy and Public Health Perspectives.
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De Silva, T., T. Bahorun, M. Sahu, and L. M. Huong. 2009. Traditional
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Eisenberg, D. M., R. C. Kessler, M. I. Van Rompay, T. J. Kaptchuk,
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Complementary erapies Relative to Conventional erapies
among Adults Who Use Both: Results from a National Survey.
Annals of Internal Medicine 135(5):344–51.
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An Attempt to Dispel the Myths. International Journal of Clinical
Practice 55(6):376–9.
Farah, M. H., R. Edwards, M. Lindquist, C. Leon, and D. Shaw. 2000.
International Monitoring of Adverse Health Eects Associated
with Herbal Medicines. Pharmacoepidemiology and Drug Safety
9(2):105–12.
Farnsworth, N. R., O. Akerele, A. S. Bingel, D. D. Soejarto, and Z. G.
Guo. 1985. Medicinal Plants in erapy. Bulletin of the World Health
Organization 63(6):965–81.
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Safety Alerts: November 2009. Rockville, Md.: U.S. Department of
Health and Human Services. <http://www.fda.gov/ForConsumers/
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Fraenkel, L., S. T. Bogardus Jr., J. Concato, and D. R. Wittink. 2004.
Treatment Options in Knee Osteoarthritis: e Patient’s Perspective.
Archives of Internal Medicine 164(12):1299–304.
Fugh-Berman, A. 2000. Herb-Drug Interactions. e Lancet 355
(9198):134–8.
Hanssen, B., S. Grimsgaard, L. Launsø, V. Fønnebø, T. Falkenberg, and
N. K. R. Rasmussen. 2005. Use of Complementary and Alternative
Medicine in the Scandinavian Countries. Scandinavian Journal of
Primary Health Care 23(1):57–62.
Hepeng, J. 2005. “Chinese Medicine Set for Protection.” Science and
Development Network, January 14. <http://www.scidev.net/en/
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Hofman, M., J. Diaz, and C. Marella. 1998. Oil of Wintergreen
Overdose. Annals of Emergency Medicine 31:793–4.
Holliday, I. 2003. Traditional Medicines in Modern Societies: An
Exploration of Integrationist Options through East Asian
Experience. Journal of Medicine and Philosophy 28(3):373–89.
Huang, W. F., K. C. Wen, and M. L. Hsaio. 1997. Adulteration by
Synthetic erapeutic Substances of Traditional Chinese Medicines
in Taiwan. Journal of Clinical Pharmacology 37:224–350.
Hussain, K., M. T. Majeed, Z. Ismail, A. Sadikun, and P. Ibrahim. 2009.
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IOM (Institute of Medicine). 2005. Complementary and Alternative
Medicine in the United States. Washington, D.C.: National Academy
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Kaboru, B. B., T. Falkenberg, J. Ndulo, M. Muchimba, K. Solo, E.
Faxelid, and e Bridging Gaps Project’s Research Team. 2006.
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chapter 6
Pharmaceutical legislation and regulation
Summary 6.2
6.1 e role of pharmaceutical legislation and
regulation 6.2
Why pharmaceutical laws and regulations are
necessary • D ierences between pharmaceutical laws,
regulations, and guidelines • Evolution of policy and
law • Globalization and harmonization • Draing and
revising pharmaceutical legislation and regulations
6.2 Basic elements of national pharmaceutical
legislation 6.7
6.3 Key provisions of national pharmaceutical
legislation 6.7
Dening the roles of various parties • Licensing, inspection,
and quality control • Pharmacovigilance • Advertising
and promotion • Sanctions
6.4 Medicine registration, licensing, and marketing
authorization 6.10
Classifying pharmaceuticals for dispensing • Regulating
traditional and herbal medicines
6.5 Controlling alternative and informal distribution
channels 6.13
6.6 Substandard and counterfeit medicines 6.14
6.7 Establishing eective administrative control 6.15
Required resources • Financing • Guiding principl es for
small national drug regulatory authorities
6.8 Evaluating the eectiveness of pharmaceutical
legislation 6.18
References and further readings 6.19
Assessment guide 6.20
illustrations
Figure 6-1 Resources for medicine registration in twenty-six
African countries 6.13
Figure 6-2 Reports of counterfeit medicines by therapeutic
class received in 2007 6.15
Table 6-1 Resources required for eective administrative
control 6.17
country studies
CS 6-1 e evolution of pharmaceutical legislation 6.4
CS 6-2 Harmonization eorts in the Americas 6.5
CS 6-3 Revising registration procedures in
Namibia 6.12
CS 6-4 Regulatory interventions in Lao P.D.R. 6.14
boxes
Box 6-1 Elements of a comprehensive drug law 6.7
Box 6-2 Adverse drug reaction monitoring 6.9
Box 6-3 Stages in the evolution of a medicine registration
system 6.11
Box 6-4 Interchangeability 6.12
Box 6-5 Regulatory hurdles in the development of
microbicides for HIV/AIDS 6.16
Part I: Policy and economic issues Part II: Pharmaceutical management Part III: Management support systems
Policy and legal framework
1 Toward sustainable access to medicines
2 Historical and institutional perspectives
3 Intellectual property and access to medicines
4 National medicine policy
5 Traditional and complementary medicine policy
6 Pharmaceutical legislation and regulation
7 Pharmaceutical production policy
8 Pharmaceutical supply strategies
Financing and sustainability
copyright
©
management sciences for health 2012
6.2 POLICY AND LEGAL FRAMEWORK
6.1 e role of pharmaceutical legislation
and regulation
e role of pharmaceuticals has become more prominent
on international agendas as health indicators have been
increasingly linked with a country’s successful development.
In addition, the legal and economic issues that surround
pharmaceuticals have become more complex and politi-
cized because of the increase in global trade.
Why pharmaceutical laws and regulations are
necessary
e use of ineective, poor-quality, or harmful medicines
can result in therapeutic failure, exacerbation of disease,
resistance to medicines, and sometimes death. It also under-
mines condence in health systems, health professionals,
pharmaceutical manufacturers, and distributors. To protect
public health, governments need to approve comprehensive
laws and regulations and to establish eective national regu-
latory authorities to ensure that the manufacture, trade, and
use of medicines are regulated appropriately and that the
public has access to accurate information on medicines.
Differences between pharmaceutical laws,
regulations, and guidelines
Laws today are usually written in fairly general terms to
meet present and possibly future needs. Laws usually have
language that enables the government to issue regulations
based on the law. Passing new laws may require a lengthy
process, with the country’s legislative branch giving nal
approval. Regulations can be passed more rapidly and sim-
ply than laws, sometimes requiring, for example, only the
approval of a single government minister on the advice of
experts. ey can also be altered more easily. Aer approval,
a regulation has the same power as the law itself. Guidelines,
which do not carry the force of law, can be more easily modi-
ed and updated and oer informal information on what
the government’s thinking is regarding the best way to
implement regulations. Following guidelines will help avoid
misinterpretation of and facilitate compliance with laws and
regulations.
Pharmaceuticals involve many parties, including patients,
doctors, other health workers, salespeople, and manufactur-
ers. e eld also involves important risks: people can suf-
fer or die not only from a lack of medicines, but also from
drugs that are impure, wrongly prescribed, or used incor-
rectly. us, it is easy to see why laws and regulations are
needed. However, some argue that medicines—like many
other commodities—should be subject only to the control
of the ultimate user. But medicines are indeed dierent, as
discussed in Chapter 1.
Additionally, informal controls are insucient: charla-
tanism or quackery (that is, the deliberate sale of remedies
known to be worthless) is centuries old, and rm action
may be needed to put a stop to it; however, as discussed
later in the chapter, the Internet presents new challenges in
Realistic and eective laws and regulations are needed
for the pharmaceutical sector because—
• Pharmaceuticals concern the whole population
• Many parties are involved: patients, health provid-
ers, manufacturers, and salespeople
• Serious consequences, including injury and death,
can result from the lack or misuse of medications
• e consumer has no way to determine product
quality
• Informal controls are insucient
Countries may choose to develop new legislation or to
revise existing laws. When starting afresh, it is useful to
prepare a general law. Models exist, and expert assistance
is readily available. Aer the law is passed, regulations
made under it can bring its various provisions into oper-
ation, one by one, as the necessary resources and experi-
ence are acquired.
In draing or revising legislation, a country should—
• Inventory the laws and regulations already in force
• Determine what type of legislative instrument is
required
• Involve both legal and health experts
• Keep all interested parties informed
National drug legislation generally includes provisions
relating to the manufacturing, importing, distribution,
marketing, prescribing, labeling (including language),
dispensing, and sometimes pricing of pharmaceutical
products, as well as the licensing, inspection, and control
of personnel and facilities. A regulatory authority is usu-
ally established for administrative control. Medicine
registration is oen a major element in legislation, to
ensure that individual products meet the criteria of e-
cacy, safety, and quality.
Countries that need to introduce comprehensive legisla-
tion can seek guidance from the experiences of others
and from WHO (2001a) guidelines.
suMMary
6 / Pharmaceutical legislation and regulation 6.3
controlling deceitful drug promotion. Counterfeiting, also,
has been on the rise in developed and developing countries.
U.S. customs ocials, for example, report that pharmaceu-
ticals are one of the fastest-growing categories of counterfeit
goods coming into the country illegally. Pharmaceuticals
accounted for 10 percent of total seizures in 2008 to become
the third-largest category, compared to 6 percent in 2007
(Mui 2009).
e approach to pharmaceutical regulation should not be
simply punitive: rules creating a positive situation tend to
be more eective. Finally, laws and regulations are eective
only to the extent that they meet society’s needs.
Evolution of policy and law
ere may be a long preparatory period before the sort of
consensus develops that can form the basis for a law. It is
sometimes preferable to work for a while with informal
agreements among parties or with government guidelines,
so that generally accepted rules of behavior can develop in
practice; the law then serves to conrm and formalize them
(see Country Study 6-1).
Whether or not a national drug policy exists, countries
need eective, enforceable legislation and regulation. ese
legislative acts may take the form of a single national drug
law that deals with all the issues or a series of complemen-
tary laws, each introduced when the time is right. In some
countries, certain aspects of the pharmaceutical sector are
governed by national laws, and other aspects, such as phar-
macy and medical practice, are governed by state or provin-
cial laws. is chapter focuses on a single, comprehensive
drug law at the national level. Most of the issues discussed
are also applicable in situations where legal responsibility
is divided between national and state or provincial govern-
ments.
A law on medicines must, rst and foremost, clearly
define what all the parties—manufacturers, doctors,
pharmacists—are required to do, so that no serious mis-
understanding is possible. Medicine registration laws and
regulations, for example, make clear what a manufacturer
needs to do to obtain a license to sell a product. ey dene
how a registration agency should assess both the manufac-
turer and the product to determine if they meet society’s
needs.
A good law also creates administrative bodies to put
rules into practice—for example, a national drug regulatory
authority with broad competence, or separate organs to deal
with the various aspects of pharmaceutical regulation such
as practice of pharmacy, inspection of factories, and adver-
tising of medicines.
Trying to achieve too much, too quickly, can be tempting.
It took more than a hundred years for pharmaceutical poli-
cies and laws to evolve to current levels in the industrialized
world. Sensible questions to ask are—
• What are the most important goals to achieve within
ve, ten, and een years?
• What means are available to achieve them?
• In which order can they best be tackled?
• What help is available?
e answers to these questions provide a good starting
point in developing both policies and the laws needed to
support them.
Laws and regulations are intended to be used together to
achieve their objective. It is appropriate to begin with passing
a broad law, emphasizing the requirement that pharmaceu-
tical products be safe and eective. e various provisions
of the law are then brought into operation through regula-
tion, step by step, addressing the most important things rst.
For instance, in resource-constrained countries, setting up
a new pharmaceutical distribution system may be urgently
necessary, but pharmaceutical registration can wait for sev-
eral years, while procuring essential medicines in the mean-
time through reputable channels where product quality is
controlled.
Globalization and harmonization
Laws and regulations evolve within countries over time, but
in recent years, the trend has been toward the globalization
of pharmaceutical issues, which aects national legislation.
is globalization, exemplied through changes in inter-
national trade, patent protection, and pricing, has resulted
in a number of initiatives that must be considered by coun-
tries developing pharmaceutical regulations. Some exam-
ples of these initiatives follow.
TRIPS Agreement. e TRIPS Agreement (Agreement
on Trade-Related Aspects of Intellectual Property Rights)
of the World Trade Organization (WTO) has greatly
aected international pharmaceutical regulation. TRIPS is
an attempt to reduce gaps in the way intellectual property
rights are protected around the world and to bring them
under common international rules; however, the impli-
cations of the agreement’s provision on patents caused
concerns in developing countries. In response to those
concerns, at the Doha Conference in 2001, WTO mem-
bers adopted a special armation—known as the Doha
Declaration—on issues related to TRIPS and public health.
e declaration arms that the TRIPS Agreement should
be implemented in ways that protect public health and
promote access to medicines. Chapter 3 on intellectual
property and access to medicines goes into more detail on
these issues.
Driven by the increase of global trade in pharmaceutical
products and the subsequent complexity of technical regu-
lations related to medicine safety and quality, several initia-
tives have been established to promote the harmonization
of international pharmaceutical guidelines and regulations
6.4 POLICY AND LEGAL FRAMEWORK
by intergovernmental organizations at regional and inter-
regional levels.
International Conference on Drug Regulatory
Authorities. Organized by WHO, the International
Conference on Drug Regulatory Authorities (ICDRA) pro-
vides ocials from the drug regulatory authorities from all
WHO member states with a forum to work on strength-
ening cooperation and collaboration. Held since 1980, the
annual conferences promote the exchange of information
and provide a platform to develop international consensus
on pharmaceutical regulation. e conferences are a unique
forum that assemble all drug regulatory authorities, regard-
less of their organizations’ stage of development. e ICDRA
has been instrumental in guiding regulatory authorities on
how the harmonization of regulation can improve the safety,
ecacy, and quality of medicines.
International Conference on Harmonisation. The
International Conference on Harmonisation of Technical
Venezuela’s rst medicine-related law was issued in
1883 as the Ordinance of the Council of Physicians on
Secret Medicines and Patents. Pharmaceutical laws have
been revised regularly; a signicant number of phar-
maceutical laws were adopted over the course of the
twentieth century. e law that established the medicine
registration system—the Law on the Exercise of the
Pharmacy—was passed in 1928, before the Ministry
of Health was set up in 1936. e National Institute of
Hygiene was established in 1938 to serve as the nation’s
national regulatory agency. Over the years, new rules
and organizations have been created to expand the scope
of regulation and to add capacity for executing the laws.
e section on pharmacological advice, the Laboratory
for Pharmacological Analysis, and the Center for
Pharmacological Surveillance were established in 1944,
1946, and 1962, respectively. Rules for good manufactur-
ing practices (GMP) were drawn up in 1990. A pharma-
ceutical law was approved in 2000 that addressed certain
concepts for the rst time, such as generic and essential
medicines.
Tunisia rst introduced pharmaceutical regulation in
1942, in the form of a decree on medical and pharma-
ceutical promotion and medicine control. All nished
pharmaceutical products, whether manufactured in
Tunisia or imported, must undergo a technical com-
mittee review and obtain a certicate of approval from
the Ministry of Health before they may be placed on
the market. Registration is also required for homeo-
pathic drugs, and some herbal medicines are registered
with the status of allopathic medicines. Key legislation
includes the 1961 Law on Inspection of Pharmacies
and Manufacturers, the 1969 Poisonous Drug Law, and
the 1985 Law on Production of Drugs for Human Use.
Between 1985 and 1991, several legal texts were pro-
mulgated concerning GMP, clinical trials, medical and
scientic information, procedures to obtain licensing
of manufacturing and registration. New organizations
were also created by law, for example the Pharmacy
and Medicines Directorate in 1981, the National
Pharmacovigilance Center in 1984, and the National
Medicines Control Laboratory in 1990.
In the Netherlands, the legal basis for licensing of
pharmaceutical manufacturing and distribution was
established in 1956. e Medicines Act of 1958 there-
aer regulated the admission of medicines to the Dutch
market through the Medicines Evaluation Board. But the
board started to operate only aer 1963, triggered by the
thalidomide disaster of 1961. European pharmaceutical
regulation is now playing a growing role. In 1995, the
European Medicines Evaluation Agency was founded to
coordinate the tasks of the drug regulatory authorities
of European Union member states. Certain aspects of
the Netherlands’ pharmaceutical regulation now follow
European Union rules. For example, GMP inspection is
based on the 1983 European Union guidelines for GMP.
Since January 1, 1995, a European procedure for registra-
tion has operated in the Netherlands. Now two types of
trade licenses exist: a European license and a national
license. Products with a European license may be sold
throughout the European Union, while the national
licenses are valid only for the country in which the
license was issued by means of the national registration
procedure.
Estonia’s drug regulatory framework began to take shape
only over the two decades since the country gained inde-
pendence. However, the pace of regulatory development
has been rapid. e Licensing Board of Pharmaceutical
Activities and the Center of Medicines were both created
in 1991. Registration and licensing were introduced that
year. In 1993, the State Agency of Medicines was created
to become the Drug Regulatory Authority. e main leg-
islation—the Medicinal Products Act—came into force
in 1996.
Source: Ratanawijitrasin and Wondemagegnehu 2002.
Country study 6-1
The evolution of pharmaceutical legislation
6 / Pharmaceutical legislation and regulation 6.5
Requirements for Registration of Pharmaceuticals for
Human Use (ICH) is a project that brings together the
regu latory authorities and experts from the pharmaceutical
industry of Europe, the United States, and Japan to discuss
scientic and technical aspects of product registration. e
purpose is to promote harmonization in the application of
technical guidelines and requirements for new product reg-
istration in order to reduce the duplication of and facilitate
the evaluation of testing carried out during the research
and development of new medicines. Harmonization con-
serves resources and increases the availability of new
medicines, while maintaining regulatory obligations to
safeguard the products. Although intended for new prod-
ucts, ICH guidelines are also being used to register exist-
ing products. e guidelines, formally produced by and for
ICH member countries, reect the technical capabilities
of their well-developed regulatory agencies and pharma-
ceutical industries. us, other countries should consider
their local situations before trying to apply ICH guidelines.
However, the ICH guidelines do end up aecting all coun-
tries, particularly as they relate to the quality specications
of medicinal products, including generic medicines, the
Although subregional harmonization activities have been
under way in a number of countries in the Americas (for
example, Mercosur, the Andean Community, NAFTA),
no overarching mechanism existed for exchanging infor-
mation and promoting harmonization in the Americas.
In 1999, a hemispheric forum was established, with
the Pan American Health Organization (PAHO) as
its secretariat, to communicate about pharmaceutical
regulation among the dierent subregions. e result-
ing organization, known as the Pan American Network
for Drug Regulatory Harmonization (PANDRH), has
a steering committee that represents the drug regula-
tors of subregional groups active in the pharmaceutical
regulatory harmonization process and formulates recom-
mendations on how to promote coordination among the
countries. PANDRH includes all representatives involved
in addressing the problems connected with pharma-
ceuticals: regulatory authorities, industry (domestic and
multi national), consumers, and professional associations.
In addition, PANDRH has formed a number of work-
ing groups to address issues of importance to phar-
maceutical regulations including good manufacturing
practices, bioequivalence, good clinical practices, drug
counterfeiting, pharmacopoeias, and external quality
control. Examples of working group activities include
harmonizing good manufacturing practices guidelines
for inspectors and making the guidelines easily available
on the PANDRH website (http://new.paho.org/hq/index.
php?option=com_content&task=view&id=1054&Item
id=513); developing specic criteria to prioritize neces-
sary bioequivalence studies; and developing inspection
guidelines for audits on good clinical practices, including
establishing legal penalties for noncompliance.
e PANDRH steering committee adopted statutes in
2009, which are available on the website.
As PANDRH secretariat, PAHO supports the member
countries with—
• Information on pharmaceutical legislation
• Collection and dissemination of documents, experi-
ences, and procedures on drug regulatory harmoni-
zation in each country and subregion
• Research to document compliance with existing har-
monization agreements
• Denition of the analytical methodology for
addressing common problems
• Exchange of information among the harmonization
eorts of the dierent integration processes
Subregional and technical meetings are held oen, and
PAHO convenes periodic conferences that bring together
all the groups to share information and advance har-
monization eorts. e Pan American Conference is a
meeting open to all interested stakeholders, including
consumers, industry representatives, and nongovern-
mental organizations. Providing an open forum helps
ensure the successful adoption and implementation of
harmonized outcomes.
One of the major issues of concern to PANDRH mem-
bers is the recognition that serious limitations exist in
some subregions, such as Central America, where no
legal framework exists to authorize and operationalize
the commitments made by technical groups; therefore,
PANDRH takes the particular needs of each subregional
bloc and the dierent degrees of development of their
constituent countries into account to implement the
subregional agreements. is specicity means that the
agreements must be implemented gradually.
Sources: PAHO 2005; PANDRH Steering Committee 2009.
Country study 6-2
Harmonization eorts in the americas
6.6 POLICY AND LEGAL FRAMEWORK
requirements for which vary considerably across countries
(Gray 2004). WHO, with its observer status on the ICH
steering committee, is expected to act as a link between
ICH and non-ICH countries (through the ICDRA) and to
disseminate information to non-ICH countries. e ICH
has also established a Global Cooperation Group that pro-
motes ICH guidelines by acting as an information resource
for nonmembers.
Country Study 6-2 discusses regulatory harmonization
eorts in the Americas.
Pharmacopoeias. Pharmacopoeias are documents that
outline technical information, manufacturing and testing
procedures, and standards for active pharmaceutical sub-
stances and products. Some countries, such as Germany and
ailand, also have pharmacopoeias specically for herbal
products. A pharmacopoeia is usually recognized as part
of a country’s national pharmaceutical laws; therefore, the
standards and procedures are legally enforceable. WHO has
also developed an international pharmacopoeia that, unlike
other pharmacopoeias, has no legal status, but is meant as
a reference for member countries that may adapt it and
incorporate it into their national legislation. Because of the
extensive resources required to produce and maintain these
complex documents, most countries do not have national
pharmacopoeias and rely on one or more internationally
recognized pharmacopoeias, such as those from the United
States, the European Union, Japan, or WHO. e organiza-
tions that publish pharmacopoeias, pressured by the need to
facilitate international trade, are actively working to harmo-
nize their requirements.
Drafting and revising pharmaceutical legislation
and regulations
Regulatory authorities are continually faced with new
issues—such as globalization and extension of free trade—
while increased responsibilities from market expansion
and the sophistication and new categories of products place
heavy demands on regulatory systems. e development of
cutting-edge technologies and health care techniques and
the extensive use of the Internet as a source of information
and commerce impose further complex challenges.
As a rst step before draing any new law, it is important
to inventory the laws and regulations already in force. Even
if no general drug law exists, pieces of legislation are likely
to touch on the eld—for example, laws on narcotics and
the licensing and responsibilities of pharmacists. An out-
of-date general drug law may exist that should be replaced
rather than merely amended. Determining the extent to
which existing laws and regulations contribute to attaining
the national policy objectives is essential. Because concepts
of pharmaceutical policy are modern, legislation more than
twenty years old may not be relevant; starting over may be
simpler.
e second step is for draers and experts to meet to
decide what type of legislative instrument is required. e
most straightforward model is likely to be a comprehensive
law that deals in outline with all the relevant issues, each
main section taking up a particular matter. Sections can
then be implemented one at a time, through the passage of
regulations.
In countries with a long history of regulation, laws on
pharmacists and the registration of medicines as well as reg-
ulations on prices and costs are likely to be separate, because
they came into being at dierent times. In starting afresh,
however, and particularly if the laws on these matters are
outdated or incomplete, it may be easier to pull together all
relevant elements into a single law.
Ideally, the task of writing or revising the law should be
entrusted to a group of legal and health experts who are
familiar with all the issues, but not all countries can assem-
ble such a group. Rather than solving the problem by copy-
ing laws from abroad, countries with limited expertise can
obtain assistance from international and bilateral agencies
to dra new pharmaceutical legislation that meets the coun-
try’s own needs. International and regional meetings of drug
regulatory authorities (for example, ICDRA) also provide
opportunities for learning how to approach the problem
and identifying expert colleagues who can be called on for
advice. In addition, WHO has a number of publications that
can assist countries in developing national medicine poli-
cies (available at http://apps.who.int/medicinedocs/en/cl/
CL1.1.1.1.2/clmd,50.html#hlCL1_1_1_1_2).
At all stages of the process, it is important to discuss early
dras of the law with all interested parties, including the
health professions, trade and industry groups, other con-
cerned government departments (such as those handling
commerce and education), and consumer groups. e
greater the consensus, the greater is the chance that a law
will be passed and will work in practice. Sometimes, coun-
tries react to a crisis by rushing through the enactment of
a new law without putting it through a consensual process
or carefully evaluating its eect on other sectors. However,
this attempt to respond quickly may backre if the law is not
carefully thought through.
When the law is approved, regulations are developed to
guide the implementation of the law. Regulations can be
modied more easily than laws as the local situation evolves.
When a regulation is revised, it is important to research
and take into account what other laws will be aected by
the revision. Declaring that a revision nullies all previous
laws and regulations in conict, without making sure what
those previous laws cover, can result in confusion. It is easier
to track revisions when a country’s laws are well codied,
such as in the U.S. Code of Federal Regulations. Following the
adoption of regulations, guidance documents may be devel-
oped to provide more exible and detailed information on
how to comply with regulations.
6 / Pharmaceutical legislation and regulation 6.7
6.2 Basic elements of national
pharmaceutical legislation
A well-dened set of elements constitutes the initial require-
ments for a strong and comprehensive national pharma-
ceutical law. ese elements, though basic, are suciently
wide and varied in their scope to meet most of the objec-
tives of a national pharmaceutical policy. Box 6-1 presents a
model for national pharmaceutical legislation, showing the
various key elements. is model can be adapted to support
the eorts of small national drug regulatory authorities in
countries where only one or two professionals are available
to deal with pharmaceuticals and related products.
6.3 Key provisions of national
pharmaceutical legislation
Because a consumer cannot independently assess the safety,
ecacy, or quality of pharmaceuticals, these products are
universally recognized as being dierent from ordinary
items of commerce, such as clothing or household appli-
ances, and therefore in need of handling by specially trained
health professionals. ese requirements make pharmaceu-
ticals subject to numerous controls at all levels, and legal
authority is granted to regulate their manufacture, distri-
bution, marketing, prescribing, labeling, dispensing, and
related activities, such as pricing.
An eective national pharmaceutical law is a primary
means of ensuring that pharmaceutical policy goals are
achieved while the unique character of pharmaceutical
products, personnel, and facilities is preserved. e law
may specify what products can legally be imported—for
example, those included on the national medicines list and
possessing a WHO-type certicate of quality—and which
individuals are legally qualied to prescribe and dispense
them, thus promoting certain national pharmaceutical
policies.
Likewise, control of the manufacture, storage, distribution,
and sale of pharmaceutical products enables a government
A. General provisions
1. Title*
2. Purposes*
3. Territorial extent
4. Application of other laws
5. Denitions*
B. Control of availability and marketing
1. Drug registration*
2. National essential medicines list/national
formulary
3. Scheduling prescription, and dispensing
authority*
4. Labeling*
5. Generic labeling, manufacturing, and
substitution
6. Pharmacovigilance
7. Information and advertising*
8. Public education
9. Imposition of fees
10. Price control
11. Special products (herbal medicines, medicines
for clinical trials, orphan drugs)
C. Control of supply mechanisms
1. Importation of medicines*
2. Exportation of medicines*
3. Controls, incentives, disincentives for local manu-
facture
4. Control of distribution, supply, storage, and sale*
D. Drug control administration
1. Organization and function*
2. Appeals against decisions of the drug control
authority*
E. Powers of enforcement
1. Prohibition of specied activities*
2. Penalties for each oense based on magnitude and
occurrence*
3. Legal procedures for oenses*
F. Powers to make rules and regulations
1. Who has authority*
2. Under which circumstances*
G. Repeals and transitional provisions
1. Repeal of sections of existing laws in conict with
the act
2. Transitional period to implementation*
H. Exemptions from provisions of the law*
* Elements for which model legislation has been developed by WHO.
Sources: Adapted from WHO 1998b, 1999c.
Box 6-1
Elements of a comprehensive drug law
6.8 POLICY AND LEGAL FRAMEWORK
to better ensure compliance with a national policy of having
essential medicines of appropriate quality, safety, and
ecacy available for their intended purposes. e processes
of licensing and registration can grant authorization only
to those personnel, products, and facilities that conform to
the national pharmaceutical law. For example, counterfeit
or dangerous medicines can be taken o the market,
and sanctions can be taken against those responsible for
introducing them illegally.
In addition, countries that host clinical trials to test
new medicines should incorporate regulations on how
the studies should be conducted, including an applica-
tion process that explains the purpose and protocol of the
intended research and the creation of an ethics committee
to approve and monitor any study protocol that includes
human partici pants. For countries needing assistance in this
area, WHO publishes guidelines on good clinical practices
(WHO 2005b).
e promulgation of regulations, the collection of licens-
ing and registration fees, and the enforcement of the national
law and its regulations are legally delegated to an agency—
usually called the national drug regulatory authority—
headed by a commissioner or director who is responsible to
a cabinet-level person, such as the minister of health. For
example, in the United States, the basic national pharmaceu-
tical law is called the Federal Food, Drug, and Cosmetic Act,
which is enforced by the Food and Drug Administration.
For controlled substances, additional restrictions are
imposed by the Drug Enforcement Administration. In the
United States, wholesale distributors, pharmacy practice,
and medical practice are regulated by individual states.
Defining the roles of various parties
Because so many parties are involved with medicines, the
laws need to clearly state the roles, responsibilities, and rights
of each, ranging from practitioners, auxiliaries, nurses, and
pharmacists to importers, manufacturers, and distributors.
Countries approach prescribing and dispensing dierently,
depending on their circumstances; for example, in Canada,
a physician must be the medicine prescriber, but in areas
where physicians are scarce, legal authority may be granted
to nurses or other health practitioners to prescribe essential
medicines. e legislation should establish the qualications
required for those handling medicines, or it must state who
has the authority to set these standards by passing appropri-
ate regulations (for example, a government minister).
Licensing, inspection, and quality control
e law should create mechanisms to ensure that relevant
parties are licensed and inspected so the community can
have condence in them. Doctors and nurses may be cov-
ered by other laws, but the medicine law needs to ensure that
the people who import, distribute, and sell medicines are
properly qualied, approved, registered, and inspected.
Pharmaceuticals themselves require a special form of
inspection. An inspector visiting a pharmacy or warehouse
may have reason to suspect that medicines are not of su-
cient quality or in good condition: they may be damp, dirty,
or disintegrating. More oen, samples need to be obtained
for testing in the quality-control laboratory, an essential part
of the inspection system.
Some countries have their own quality-control laborato-
ries, either specically for medicines or shared with other
commodities (such as foods). A number of countries use
regional laboratories, such as the ones serving sub-Saharan
Africa or the Caribbean. Whatever the structure, the phar-
maceutical law needs to designate a quality-control labora-
tory that has the capacity and equipment to do the job.
Countries that have pharmaceutical manufacturing
operations should enforce good manufacturing practices
(GMP), which is a system to ensure that products are con-
sistently produced and controlled according to quality
standards. GMP covers all aspects of production from the
starting materials, premises, equipment, and quality test-
ing to the training and personal hygiene of sta. WHO
has established detailed guidelines for good manufactur-
ing practice, and many countries have formulated their
own requirements based on WHO’s GMP. Other regions,
such as the Association of Southeast Asian Nations and the
European Union, have harmonized their GMP require-
ments.
Although important, GMP monitoring sometimes
receives more resources than the inspection of distribution
channels; however, the consumer’s interest is not served
by manufacturing a product under GMP but then storing
and distributing it under adverse conditions. Inspection of
distribution channels, including the importation of phar-
maceuticals, should also be emphasized, particularly in
countries where the distribution system has several inter-
mediate levels or the climate is unfavorable. WHO has
produced guidelines relating to good storage practices for
pharmaceuticals (WHO 2003a).
Chapter 19 has more information on quality-control and
inspection procedures.
Pharmacovigilance
e law should also provide a basis for a pharmacovigi-
lance (that is, postmarketing surveillance) system to report
problems with adverse reactions and product quality.
Pharmacovigilance is dened by WHO (2002a) as “the sci-
ence and activities relating to the detection, assessment,
understanding and prevention of adverse eects or any
other drug-related problems.”
Pharmacovigilance is an overarching concept that encom-
passes any system used to monitor medicine safety, use,
6 / Pharmaceutical legislation and regulation 6.9
and ecacy. For example, adverse drug reaction monitor-
ing as part of a product’s postmarketing surveillance con-
tributes to the assessment of benet, eectiveness, and risk
of medicines. A pharmacovigilance system is dicult—if
not impossible—to implement in an unregulated market
that allows the importation and sale of pharmaceuticals
through informal channels or the sale of powerful medi-
cines without prescription. Drug regulatory agencies should
have access to information from the WHO Programme
for International Drug Monitoring (http://www.who.int/
medicines/areas/quality_safety/safety_efficacy/Joining
WHOProgrammeforInternationaDrugMonitoring.pdf),
An adverse drug reaction (ADR) is a harmful and un-
expected reaction to a drug taken at a normal dosage.
e research done on medicines before they are allowed
on the market is incomplete; generally fewer than 5,000
people have been exposed to the medicine in pre market
tests, an insucient number to detect less common
ADRs. In addition, information on chronic toxicity and
reactions in special groups, such as pregnant women
and children, is oen unavailable from this premarket
research, because these groups are usually not included
as subjects in clinical trials. Postmarketing surveillance,
therefore, allows for the detection of rarer, but possibly
critical ADRs. In addition, postmarketing monitoring
may detect counterfeit or substandard products. Oen,
a country’s national drug regulatory authority is respon-
sible for ADR monitoring and reporting.
To facilitate information gathering, the drug regulatory
authority should provide case report forms to health
providers on adverse drug reactions. e completed
case report form is then sent to the national or regional
ADR center or to the manufacturer of the product. ese
forms vary by locale, but should include the following
minimum information.
Patient information—
• Patient identier
• Age at time of event or date of birth
• Gender
• Weight
Adverse event or product problem—
• Description of event or problem
• Date of event
• Date of report
• Relevant tests/laboratory data
• Other relevant patient information/history
• Outcomes attributed to adverse event
Suspected medication(s)—
• Name (international nonproprietary name and
brand name)
• Dose, frequency, and route
• erapy date
• Diagnosis for use
• Event abated aer use stopped or dose reduced
• Batch number
• Expiration date
• Event reappeared aer reintroduction of the treat-
ment
• Concomitant medical products and therapy dates
Reporter—
• Name, address, telephone number
• Specialty and occupation
It can take years or even decades before adverse events
are linked to the use of particular medicines. For exam-
ple, several years passed before certain birth defects were
associated with thalidomide use by pregnant women;
decades passed before aspirin was linked to gastro-
intestinal problems. In some cases, medicines are with-
drawn from the market, as was the case with bromfenac,
terfenadine, and encainide aer they were connected
to serious health outcomes. In other cases, labeling is
changed to include the new information on eects,
contraindications, or dosage as a result of information
received through postmarketing surveillance.
Clearly, the usefulness of a postmarketing surveillance
program depends on cooperation from health profes-
sionals. All health care providers, including physicians,
pharmacists, nurses, dentists, and others, should report
ADRs as part of their professional responsibility. Even
when some doubt exists about the relationship between
the product and the ADR, all suspected ADRs, especially
related to new medicines, should be reported as soon
as possible. Many countries provide an easy system for
reporting ADRs to their drug regulatory authorities, such
as a dedicated phone line as provided in Ghana and a
special reporting website as in Brazil.
Source: WHO 2002c.
Box 6-2
adverse drug reaction monitoring
6.10 POLICY AND LEGAL FRAMEWORK
which provides a clearinghouse for the millions of adverse
drug reaction reports received from almost 100 countries.
International pharmacovigilance activities have had a nota-
ble eect on international drug regulation. Box 6-2 describes
the elements that comprise an adverse drug reaction pro-
gram, and Chapter 35 has more information on implement-
ing a pharmacovigilance program.
Advertising and promotion
Although many countries have rules to ensure that advertis-
ing is not misleading, these rules are generally not sucient
to cover pharmaceuticals. With consumer products, a cer-
tain degree of exaggeration is oen tolerated as the normal
practice of the marketplace. But for medicines that have the
capacity to kill or cure, and with claims that people cannot
easily verify, it is important that advertising to health profes-
sionals and to consumers be objective and reliable; mislead-
ing and extravagant pharmaceutical advertising claims may
pose signicant risks to the public.
For these reasons, most laws on pharmaceuticals now
include a clause empowering regulation on advertising.
In many countries, it is illegal to advertise to consumers
medicines intended to be prescribed by health profession-
als. However, direct promotion of pharmaceutical products
through the Internet is practically impossible to control;
therefore, the national regulatory agency should educate
consumers on identifying reliable sources of information,
preferably in collaboration with national consumer and pro-
fessional organizations. All advertising and labeling must be
consistent with the information veried when the pharma-
ceutical product was registered or approved for marketing,
with modications required by the regulatory authority on
the basis of postmarketing experience.
Useful guides to the principles that should underlie hon-
est pharmaceutical promotion have been issued by WHO
and separately by manufacturers (WHO 1988, 1999b).
Sanctions
Because constant vigilance is needed if the public is to be
protected, pharmaceutical laws must be properly enforced
with appropriate penalties for violators. ere is no use
establishing that medicine quality is poor, a warehouse is
rat infested or damp upon inspection, or an advertisement
is untruthful unless something is done about it. e drug
regulatory agency must use its authority to impose appro-
priate penalties when necessary: sanctions may be penal
(nes, imprisonment, or both) or simply corrective (ban-
ning the drug, closing down the warehouse). Sometimes a
party has contravened the law so seriously that the appropri-
ate sanction is determined to be loss of license to prescribe,
manufacture, import, or distribute. On occasion, all of the
penalties may be imposed.
To be eective, the drug regulatory authority must be able
to apply sanctions on a timely basis, so it must have either
the legal sta to ensure compliance or the necessary links
with the relevant government department charged with
enforcement. erefore, the law governing pharmaceutical
products must give legal authority to the appropriate per-
sonnel to carry out any necessary enforcement activities.
In addition, because the pharmaceutical sector is vulner-
able to corruption, a country should not only include an
anticorruption mechanism in its regulatory framework, but
also have sanctions in place for bribery, fraud, collusion, and
other dishonest acts (WHO/PSM 2006). Many countries
have specic laws that address corruption in the public sec-
tor or provisions in their procurement regulations to ensure
transparency and provide sanctions against, for example,
brib ery.
6.4 Medicine registration, licensing, and
marketing authorization
e licensing and inspection of manufacturers and import-
ers, although important, do not provide assurance about
the products. Many countries have evolved systems of drug
registration to ensure that individual products approved for
sale meet the following criteria—
Ecacy: e medicine should be shown to be eective for
the indications claimed. However, note that no product
is ever 100 percent eective for all users. In practice, e-
cacy means that in a majority of cases the product meets
its therapeutic claim.
Safety: e medicine should not present risks that are dis-
proportionate to its benets. Some patients may suer
severe reactions even to medicines shown to be safe in
clinical studies. However, in the great majority of cases,
adverse eects are minor or very infrequent.
Quality: e medicine should be well made, as specied in
the ocial pharmacopoeia chosen as a standard. If not
listed in an ocial pharmacopoeia, the product’s manu-
facturing should comply with the quality documentation
submitted by the applicant that demonstrates its safety
and ecacy.
Clinical use information: All the clinical information needed
to use the medicine properly, including indications,
doses, precautions, and adverse eects, should be pro-
vided as part of the packaging, in language understand-
able to the health professional or patient, as appropriate.
Medicine registration, also referred to as licensing or mar-
keting authorization, is oen a major element in national
pharmaceutical law. In its fully developed form, however,
it is costly and labor intensive. Establishing a drug registra-
tion system is generally not justied until a country has a
6 / Pharmaceutical legislation and regulation 6.11
signicant volume of private-sector pharmaceutical sales.
e primary concern of many resource-limited countries is
ensuring a reliable ow of essential generic drugs from repu-
table suppliers into the public health system.
As a country’s economic development proceeds and
more resources become available, priorities may change.
e private sector may become more active, and local and
multinational rms may begin actively promoting their new
products to prescribers and even to the public. At this point
the need for a medicine registration system arises.
As proposed in the WHO (1999c) guidelines for small
drug regulatory authorities, a medicine registration system
can best be developed in stages, starting with an inventory
of all pharmaceutical products on the market, followed by a
provisional authorization that allows products to continue
to be sold until they complete the full registration procedure
as shown in Box 6-3. Country Study 6-3 shows how Namibia
maximized its resources by streamlining its medicine regis-
tration system.
In stage 1, the information requested initially may be sim-
ply the international nonproprietary name; product trade
name, if any; name of the manufacturer; and country of
origin. Later, this can be expanded to include composition,
including inactive ingredients; pharmacological action;
therapeutic classication; and claims made in the package
insert. Having a complete register of what is on sale in the
marketplace allows the regulatory agency to evaluate infor-
mation from other countries or from WHO about problems
with a particular medicine (for example, toxicity, contami-
nation, evidence of inactivity), to determine whether the
product is on sale in their country, and what actions might
be taken.
Stage 2 requires assessment for new pharmaceutical prod-
ucts. Because this procedure is costly and time-consuming,
countries can rely on decisions made in other countries
with well-developed regulatory agencies, such as those that
are members of the ICH. Is the drug approved for sale in
its home country? If so, what claims have been made for
it? Does it carry a WHO-type certicate indicating that it
is manufactured under satisfactory conditions? e rm
wishing to import the product must provide documented
answers to these questions. Regulatory authorities may con-
sult other countries directly before deciding to accept or
reject a product. WHO and other bodies hold international
and regional meetings of regulatory authorities from dier-
ent countries, which helps create trust across borders and
facilitates informal work sharing. Approval of locally manu-
factured pharmaceuticals requires inspection of the manu-
facturing premises and sta.
e task of full registration described in stage 3 should
never be taken up lightly—even a large regulatory agency
can be overwhelmed by the vast amount of material that
needs to be examined. Some groups of countries handle
assessment jointly; others look at where else in the world the
medicine is licensed, and under what conditions. Countries
that have the resources to handle registration and licensing
independently can oen obtain technical advice and practi-
cal help from WHO and support from other countries with
well-developed regulatory agencies.
Stage 4, the reevaluation of older products on the market,
is the nal stage in the development of a registration system
and is very ambitious. Few industrialized countries have yet
managed to complete it.
If a medicine is intended to be generically equivalent
to another already on the market, regulations must stipu-
late the evidence needed to support their equivalence (see
Box 6-4). WHO has a resource for countries without a fully
functioning system for premarket evaluation and mar-
ket authorization that wish to assess and authorize multi-
source (generic) pharmaceutical products (WHO 1998b).
WHO also makes available findings from assessment
reports generated as part of its program to prequalify medi-
cines for HIV/AIDS, tuberculosis, and malaria, including
information based on product data showing compliance
with international standards for quality, safety, and e-
cacy, bioequivalence (for generic products), and ndings
resulting from inspections of production sites according
to GMP standards (see http://mednet3.who.int/prequal/).
e WHO prequalication process should be useful to
Stage 1: Notication procedure. Standard infor-
mation is obtained on all pharmaceutical products
currently marketed in the country and entered into a
register. No judgment is made at this time regarding
the appropriateness of the drugs for sale in the country.
Stage 2: Basic authorization procedure. Products
listed in the register are provisionally authorized to
remain on sale. All other drugs that are to be sold
require a license, which is issued aer an appropri-
ate assessment of the ecacy, safety, and quality and
a review of truth and completeness of packaging and
labeling information.
Stage 3: Full registration or licensing procedure.
Full evaluation of individual products is conducted by
examining detailed data submitted by the manufac-
turer and obtained from the literature to assess their
quality, safety, and ecacy.
Stage 4: Reevaluation of older drugs. All older phar-
maceutical products on the market are systematically
reassessed for compliance with the standards.
Box 6-3
stages in the evolution of a medicine
registration system
6.12 POLICY AND LEGAL FRAMEWORK
In its rst een years of independence, Namibia devel-
oped very comprehensive pharmaceutical regulatory
procedures, considering its small population and limited
resources. Unfortunately, human resources capacity did
not keep pace with administrative requirements, and the
number of medicine registration applications quickly
created a huge backlog of about 1,000 medicines awaiting
marketing approval, including antiretroviral (ARV) med-
icines. At that time, forty-nine ARVs were on the market,
but the backlog prevented access to valuable xed-dose
combinations and pediatric products. One estimate
showed that at the current capacity, it would take eigh-
teen years to review all outstanding applications.
e Rational Pharmaceutical Management (RPM) Plus
Program worked with the government on interven-
tions to streamline the registration process. Key was a
policy change allowing the Medicines Control Council
(MCC) to give priority to ARVs for registration and
create a proxy evaluation process to quickly accept prod-
ucts already registered in International Conference on
Harmonisation countries or South Africa; for example,
the new policy permits the MCC to accept certain qual-
ity requirements that have already been approved by
recognized authorities, such as through WHO’s prequali-
cation program. Other interventions included training
nonprofessional sta to take on some application pro-
cessing responsibilities and creating a drug registration
database.
Within a year aer RPM Plus’s intervention began, 1,392
applications for new medicines were evaluated. Of those,
fourteen ARVs and twenty-four generic ARVs were
reviewed and approved (which increased the number
of ARVs on the market by 75 percent). e fourteen
approvals included much-needed pediatric dosage forms
and xed-dose combinations; the addition of generic
products helps reduce prices.
Source: Pereko and Nwokike 2006.
Country study 6-3
revising registration procedures in Namibia
New multisource (generic) pharmaceutical products
must be of good quality and at least as safe and ecacious
as existing products. e need for interchangeability
arises when a patient changes from one brand to another,
for example, when—
• Physicians prescribe by generic name
• Generic substitution is permitted by national legisla-
tion
• e same brand is not always available, for example,
in remote areas of the country
• Patients in hospitals are given whatever brand
the hospital has in stock, and sometimes dierent
brands on dierent occasions
• Patients receive a dierent brand aer discharge
from the hospital
A number of features are important to interchangeability,
although the science behind demonstrating interchange-
ability is still evolving: compliance with appropriate
quality standards and at least compliance with relevant
pharmacopoeial standards; stability; possible dier-
ences in sensitizing potential caused by the use of dif-
ferent excipients; therapeutic equivalence in terms of, as
appropriate, bioequivalence, pharmacodynamic studies,
clinical studies, or in vitro dissolution rate; and product
information and labeling.
By their nature, dierent brands of modied (sustained-,
continuous-, prolonged-, slow-) release products are
more likely not to be equivalent than are dierent brands
of immediate, conventional-release products. Some drug
regulatory agencies take the view that such products
should never be considered interchangeable, while oth-
ers dene a series of studies that should be conducted,
including in some circumstances comparative clinical tri-
als. For delayed-release products, such as enteric-coated
tablets, interchangeability is more easily demonstrated.
Source: WHO 1998b.
Box 6-4
Interchangeability
6 / Pharmaceutical legislation and regulation 6.13
developing-country regulatory authorities that do not have
sucient capacity to fully assess products and determine
their acceptability before licensing.
e registration systems of many African countries are
still lagging. For example, in twenty-six countries surveyed,
the technical standard of evaluations, if they existed, were
not in line with WHO standards; only 11 percent had ade-
quate standard operating procedures for assessment, 85 per-
cent did not have enough space to store data securely, and
only one-quarter of the countries had functioning comput-
erized registration systems (WHO 2010b) (see Figure 6-1).
Classifying pharmaceuticals for dispensing
As part of the marketing authorization process, the national
drug regulatory agency is also responsible for classify-
ing each pharmaceutical product in terms of how it is dis-
pensed and sold. For example, prescription-only medicines
require a directive from an authorized health practitioner;
pharmacist-only medicines are available without prescrip-
tion, but only under a pharmacist’s supervision; and over-
the-counter medicines are available without a prescription
in retail outlets besides the pharmacy, such as a grocery or
licensed drug seller. is classication aects the product’s
availability and appropriate use. Factors to consider in the
classication include—
• e safety of the active ingredient
• e need for professional counsel before use
• e nature of the ailment or symptoms the medicine is
intended to treat
• e risk/benet ratio (TGA 2003)
Consideration should also be given to the restrictions
for prescribing and dispensing controlled drugs as pro-
vided in the international drug control treaties, namely the
1961 Single Convention on Narcotic Drugs and the 1971
Convention on Psychotropic Substances. e list of narcotic
and psychotropic drugs is available from the International
Narcotics Control Board (http://www.incb.org).
Regulating traditional and herbal medicines
As discussed in Chapter 5, countries are increasingly rec-
ognizing the large role that traditional and complementary
medicine plays in their health care systems. An important
challenge is the evaluation and assurance of the quality,
safety, and ecacy of herbal and traditional medicines.
Since the earliest days of humankind, herbal medicines have
been applied in health care throughout the world. Many
are still widely used and have become important in inter-
national trade. Signicant quantities of herbal products are
now imported by countries in the European Union, North
America, and Asia. However, the use and production of
herbal products remains largely unregulated, and their
safety and therapeutic value cannot always be guaranteed.
Recognition of the clinical, pharmaceutical, and eco-
nomic value of herbal medicines is growing, although
the level of ocial recognition through legislation varies
widely among countries. WHO published a reference on the
national experiences of y-two countries in formulating
policies on traditional and herbal medicinal products and in
introducing measures for their registration and regulation
(WHO 1998c). WHO also published a summary of the legal
status of traditional and complementary medicines in 141
countries (WHO 2005c) and guidelines on how to develop
national policies on the safety, ecacy, and quality of herbal
medicines (WHO 1998a).
6.5 Controlling alternative and informal
distribution channels
In some countries, unregulated, informal, or even illegal
distribution (including sales in marketplaces and on streets)
and smuggling of medicines are widespread. Another major
Figure 6-1 Resources for medicine registration in twenty-six African countries
Number of NMRAs
25
20
15
10
5
0
Legal basis
outline
Guidelines
(tech. detail)
SOPs for
assessment
IT systemSecure
ling space
Assessors
Adequate
Existing but inadequate
Not existing
No information or
not applicable
NMRAs = national medicine regulatory authorities; SOPs = standard operating procedures; IT = information technology.
Source: Adapted from WHO 2010b.
6.14 POLICY AND LEGAL FRAMEWORK
problem is that medicines may be traded through several
intermediaries and free-trade zones and are sometimes
repackaged and relabeled to hide their true source or iden-
tity, leading to the circulation of substandard and counter-
feit medicines.
As the volume of expensive medicines such as for HIV/
AIDS and malaria increases in formal distribution chan-
nels, there will be an increase in leakage of these medicines
to informal channels. A WHO study of regulations in ten
countries (Ratanawijitrasin and Wondemagegnehu 2002)
showed that pharmaceuticals distributed through the infor-
mal sector received little regulatory attention from govern-
ments compared with those distributed through the formal
sector. Products of substandard quality and incorrect infor-
mation—especially exaggeration about ecacy—are oen
found in the informal sector.
It is important for countries to assess the inuence of
alternative and informal distribution channels on their
health care systems. If citizens purchase most of their medi-
cines from informal dealers, they may be getting substan-
dard-quality products, which may adversely aect public
health. Medicine regulation can be used to promote quality
criteria for medicines and health commodities by establish-
ing and enforcing standards for all distribution channels and
encouraging the public to be careful about where they buy
pharmaceutical products. Chapter 32 discusses how initia-
tives can improve the quality of products and services from
private-sector drug sellers. Country Study 6-4 describes how
the government in the Lao People’s Democratic Republic
(P.D.R.) has instituted regulations to improve the quality of
private pharmacies.
Another challenge to drug regulators that has emerged
in recent years is the widespread use of the Internet to sell
uncontrolled pharmaceuticals across national borders
(WHO 2003b). Regulation and enforcement can deter
illegal practices, although it requires cooperation among
national agencies such as those handling drug regulations,
customs, and the postal service. Because of the transnational
nature of e-commerce, international cooperation in its con-
trol is also needed.
6.6 Substandard and counterfeit medicines
Substandard medicines are products whose composition
and ingredients do not meet the correct scientic specica-
tions and consequently may be ineective, dangerous to the
patient, or both. Substandard products may occur as a result
of negligence, human error, insucient human and nan-
cial resources, or counterfeiting.
Counterfeit medicines are considered a subset of substan-
dard medicines, but the dierence is that they are deliber-
ately and fraudulently mislabeled regarding their identity
or source. Counterfeiting can apply to both branded and
generic products, and counterfeit medicines may include
products with the correct ingredients but fake packaging,
In Lao P.D.R., private pharmacies make up the majority
of the retail market for medicines. However, little or no
control of private pharmacies existed until 1996, when
such regulation was incorporated into the National
Drug Policy. District pharmacists became responsible
for inspecting and monitoring private pharmacies, and a
special unit was created at the provincial level to oversee
the regulations. Inspectors made sure that the pharma-
cies had up-to-date regulatory documents. In addition,
the central drug regulatory authority instituted a number
of policies to improve the quality assurance system in
the country. ese included the development of a good
manu facturing practices regulation with associated
training, improvements in the medicine registration sys-
tem, and the institution of nes and sanctions to enforce
the new regulations.
In 1997, a baseline assessment was conducted in 115 of
214 licensed private pharmacies in Savannakhet prov-
ince before the new regulations had fully taken hold.
A follow-up study in 1999 used the same indicators to
assess the eect of the new policies and activities on pri-
vate pharmacy services. e results showed signicant
improvement in almost all indicator values, including
the organization in the pharmacy; availability of essential
medicines and essential materials for dispensing, such as
a hygienic counter; and information given to the custom-
ers. Analysis of samples from the 115 pharmacies showed
a decrease in the proportion of substandard medicines—
from 46 percent in 1997 to 22 percent in 1999—still high,
but substantially better.
Before the regulatory interventions, the quality of phar-
maceutical service was low in Savannakhet province.
e development of a regulatory framework with regular
inspections and enforcement through sanctions was not
only possible to initiate in a resource-limited country, but
also appeared to be an important catalyst for better qual-
ity medicines and pharmacy practices.
Sources: Stenson et al. 2001; Syhakhang et al. 2001.
Country study 6-4
regulatory interventions in Lao P.D.r.
6 / Pharmaceutical legislation and regulation 6.15
with the wrong ingredients, without active ingredients, or
with insucient active ingredients.
In wealthier countries, the most frequently counterfeited
medicines are new, expensive lifestyle medicines. In devel-
oping countries, the most counterfeited medicines are those
used to treat life-threatening conditions such as malaria,
tuberculosis, and HIV/AIDS. Figure 6-2 gives the number
of reports of counterfeit medicines, by therapeutic class,
submitted in 2007 and shows that the highest percentage
reported concerned genito-urinary medicines.
Trade in these medicines is more prevalent in countries
with weak pharmaceutical regulatory control and enforce-
ment, scarce or erratic supply of basic medicines, unregu-
lated markets, and unaordable prices. Governments need
to develop strategies and put appropriate legislation and
sanctions into place to reduce corruption and criminal
activity. As in the case of e-commerce, enforcement of these
laws requires cooperation among regulatory authorities,
police, customs services, and the judiciary to control more
eectively the pharmaceutical market.
6.7 Establishing eective administrative
control
In many countries, medicine legislation and regulation are
not regularly updated or are imported from other countries
and do not reect national realities. Countries can draw
guidance from the experiences of others, but problems
have arisen when overly complex provisions were adopted.
Legislation and administrative practices must be attuned to
available resources, and every opportunity must be taken to
understand and use the information provided by regulatory
authorities in other countries (WHO 1990). e example of
approving microbicides to control HIV infection shows the
regulatory diculties faced by resource-constrained coun-
tries (Box 6-5).
Required resources
To perform eectively, national regulatory authorities must
have the necessary political support, legal power, human
and nancial resources, and independence in decision
making. ey also must have strong public support and
proper management. Where national regulatory authori-
ties have a high prole within the government, they are
organized as a commission, board, statutory authority, or
department, with the legal power from government to
acquire and use resources, including hiring qualied full-
time sta at a salary scale that discourages corruption and
conicts of interest.
Ideally, one central, autonomous agency should be
accountable for the overall eectiveness of pharmaceutical
regulation. In countries whose regulatory functions are split
among two or more agencies, the fragmentation can lead to
duplication of eort, lapses in implementation, inconsistent
regulation, and wasted resources. In recent years, several
countries (for example, Argentina and Brazil) have success-
fully established such centralized agencies to regulate food,
medicines, and consumer products. However, a survey of
twenty-six countries in sub-Saharan Africa showed that
most countries’ regulatory systems were uneven—with gaps
and overlaps in responsibilities spread over several bod-
ies other than the drug regulatory authority, including the
ministries of trade and health, pharmaceutical councils, and
regional authorities, especially for licensing and inspection
(WHO 2010b).
Table 6-1 details the resources required to achieve eec-
tive administrative control; at a minimum, these needs
include a drug regulatory authority with sta, a team of
inspectors to visit warehouses and retailers, and access to a
laboratory capable of performing quality-control testing.
Personnel are the key resource for making eective phar-
maceutical regulation possible. Because of the technical
nature of their work, the law oen prescribes that inspectors
be pharmacists or have other relevant education and train-
ing. Others can be trained to undertake licensing, registra-
tion, and enforcement duties. Depending on the size of the
country and the degree of pharmaceutical development, the
entire sta may consist of only a few individuals. Sometimes
contracting out specic duties may be appropriate; however,
it is important for the contractor not to have any conicts of
Figure 6-2 Repor ts of counterfeit medicines by
therapeutic class received in 2007
Total number of cases: 1,513. One case reects at least one production lot
(e.g., thousands of tablets, capsules, or other forms).
Data from the Pharmaceutical Security Institute (http://www.psi-inc.org).
Genito-urinary
37%
Central nervous
system
12%
Gastro-
intestinal
9%
Cardiovascular
9%
Other
21%
Anti-infectives
12%
6.16 POLICY AND LEGAL FRAMEWORK
interest, such as an ongoing consultancy with a pharmaceu-
tical company that could specically benet from the con-
tracting arrangement.
Computer soware now greatly simplies many of the
administrative tasks of the regulatory agency. Personnel
should have access to the latest scientic and technical infor-
mation to facilitate their work.
Financing
e law must provide a realistic mechanism for funding
regulatory functions. Funds may be provided from general
tax income and from charges levied on the manufacturers,
importers, and distributors to cover the bulk of the costs of
the pharmaceutical control system. e level of charges may
be set from year to year, but the nature of the charges can be
dened in the law. For example, the law may set lower fees
for essential medicines; importers can be required to pay
a fee when they submit a new medicine application to the
regulatory authority for consideration, a supplementary fee
when the license is issued, and an annual fee for as long as
the medicine remains on sale; and manufacturers might be
required to relicense their products periodically (for exam-
ple, every ve years).
Fees and charges substantially fund the cost of operat-
ing the national regulatory agencies in most developed
and some developing countries. In Canada, the United
Kingdom, and the United States, the agencies recover 70
percent, 100 percent, and about 50 percent, respectively,
of their regulation costs (WHO 2003b). Because of their
large markets, developed countries tend to charge higher
fees than developing countries. In addition, in developing
countries, fee revenues are oen added to the general trea-
sury rather than being assigned specically to the drug reg-
ulatory agency, which makes it hard to adequately nance
regulation. However, regulatory agencies should not be
completely dependent on fees to fund all of their activities;
they should receive some nancial support from their gov-
ernments to help ensure their independence and ability to
carry out basic responsibilities. Most of the twenty-six drug
regulatory authorities surveyed in Africa get their funding
from more than one source (e.g., fees, government, donors);
however, none had sucient or sustainable operating funds
(WHO 2010b).
Guiding principles for small national drug
regulatory authorities
Regulation is not the only component of pharmaceutical
policy, and sometimes in resource-limited settings, it is not
even the most pressing one. Nonetheless, the existence of a
well-functioning national drug regulatory authority to help
ensure medicine quality, safety, and ecacy is the best guar-
antee that the public is getting the medicines it deserves. A
national regulatory authority needs a clear mission state-
ment including goals and objectives to direct its work. Goals
More women than men account for new HIV infections
in many parts of the world. In certain places, women’s
lack of power means they cannot insist on condom use
to protect themselves, and even if they have a single part-
ner or husband, they are still at risk. is situation has
resulted in much interest in the development of micro-
bicides—a topical medicine used vaginally to prevent
HIV transmission—that gives women control of usage.
A major obstacle to the approval of an eective micro-
bicide is the fact that those now in clinical testing are
new medicines that have not been on the market yet.
Many developing countries do not have the resources or
regulatory framework available to perform the testing
and review of new medicines themselves, so they rely
on product reviews from the United States or Europe to
determine acceptability for their countries. However,
because microbicides will be marketed primarily in
developing countries, developed countries have no incen-
tive to review and license them for their own markets.
To help ll the gaps, the European Parliament approved
an initiative for the European Medicines Agency (for-
merly known as the European Medical Evaluation
Agency) to scientically assess products such as micro-
bicides that are proposed for use primarily in developing
countries. e drug regulatory agencies in developing
countries would then use the scientic assessments to
make decisions about licensing. Other steps that could
help overcome these regulatory hurdles would be collab-
oration between regulatory authorities in developing and
industrialized countries to jointly review product proles
and to help resource-limited countries develop the capac-
ity to make drug registration decisions autonomously.
Although results of clinical trials of microbicides for HIV
have been mixed, research continues, and the European
assessment mechanism is one that could be used with
other similar products.
Sources: Coplan, Mitchnick, and Rosenberg 2004; Davis 2009; Fox,
Beasley, and Kelland 2010.
Box 6-5
regulatory hurdles in the development of microbicides for HIV/aIDs
6 / Pharmaceutical legislation and regulation 6.17
usually include protecting public health by ensuring the
safety, ecacy, and quality of medicines and their appro-
priate use. Plainly outlined objectives provide a measure to
evaluate how well the agency is functioning.
Primary pharmaceutical regulation activities should not
be compromised by other nonregulatory tasks with which
the national regulatory authority may be charged. If the
authority responsible for pharmaceutical regulation has
nonregulatory functions, such as manufacturing, procure-
ment, or service delivery, conicts of interest may occur
regarding mandates and resource allocation.
When a country is ready to introduce pharmaceutical
regulation, work by WHO (1990) provides useful guidance
for authorities with limited human, nancial, scientic,
and technological resources. To be eective, a small drug
regulatory authority needs to operate within the national
pharmaceutical laws and policies that have been established
and must relate to other interested bodies, including orga-
nizations responsible for pharmaceutical procurement in
the public sector and the national formulary committee. As
mentioned, eectively enforcing pharmaceutical legislation
requires national regulatory authorities and other govern-
ment enforcement agencies, such as customs, police, and
prosecutors, to work together. National regulatory agen-
cies should also seek the cooperation of health profession-
als, pharmaceutical and consumer associations, and other
interested parties through stakeholder workshops, meet-
ings addressing specic issues, or other venues open to the
public.
A drug regulatory authority’s objectives can be accom-
plished eectively only if a mandatory system of licensing
products, manufacturers, importing agents, and distributors
is in place. A small authority has limited capacity to under-
take these tasks. For imported pharmaceutical substances,
a small authority is dependent on information generated in
the exporting country. e WHO certication scheme on
the quality of pharmaceutical products moving in inter-
national commerce (WHO 2000) was designed to provide
this information, although recommendations have been
made on how to update the scheme (WHO 2008). As dis-
cussed in Chapter 19, this scheme must be supplemented by
direct contacts with international agencies and other regula-
tory agencies to obtain necessary information; however, the
certication scheme is only as good as the certifying author-
ity. WHO’s prequalication program provides information
on approved sources for products related to HIV/AIDS,
malaria, tuberculosis, and reproductive health.
Many national regulatory authorities do not make pub-
licly available their regulatory policies, administrative
procedures, guidelines, and criteria for decisions. Lack of
transparency means that communication is probably lack-
ing on medicine regulation between national regulatory
authorities and their stakeholders. Moreover, transparency
is required to make the agency accountable for its actions
and to limit the inuence of political pressures and per-
sonal favors in the decision-making process. Transparency
will also contribute to the credibility and authority of com-
munications between the agency and those aected by
its actions: manufacturers, importers, distributors, health
professionals, and consumers. An assessment tool is avail-
able to measure transparency in the pharmaceutical sectors
(WHO 2009a) and a report describes the assessment of four
Table 6-1 Resources required for eective administrative control
resources required specic function or purpose
Personnel •Regulatory activities (licensing, registration, and so forth)
•Monitoring, inspection, and surveillance
•Enforcement
Physical and infrastructure • Office space for regulatory and enforcement personnel
•Access to appropriate analytical laboratory resources
•Computers, software, sampling equipment, and office equipment
•Vehicles for distribution, inspection, and enforcement activities
Technical • Preservice and in-service training
•Knowledge of pharmaceutical manufacturing processes, packaging, and so forth
•Collation of data
•Dissemination of information
•Reference library (books, journals, bulletins)
Financial •Capital and recurrent expenditures
•Technical programs
•Payments for patents and royalties
•Payments for consultants
•Payments for quality-control samples
•Publications (forms, licenses, pharmacopoeia)
•Travel for inspection and enforcement activities
Source: Adapted from Jayasuriya 1985.
6.18 POLICY AND LEGAL FRAMEWORK
countries’ pharmaceutical registration, selection, and pro-
curement systems: Lao P.D.R., Malaysia, Philippines, and
ailand (WHO 2006a).
To increase the amount of information and communica-
tion, WHO is helping drug regulatory authorities develop
websites with information on—
• Lists of approved medicines
• National pharmaceutical regulations
• Methods to ensure safe, ecacious, and rational use of
specic medicines
• Lists of approved companies and their authorized
activities
• Details of persons and institutions with responsibility
for pharmaceutical regulation
WHO resources available for drug regulatory authorities
include—
• A model website for drug regulatory authorities that
aims to enhance communication and transparent
dialogue among national drug regulatory authorities,
industry, consumers, and health professionals (http://
www.who.int/medicines/areas/quality_safety/
regulation_legislation/model_site/en)
• A list of recognized drug regulatory authorities’
websites (http://www.who.int/entity/medicines/
areas/quality_safety/regulation_legislation/
ListMRAWebsites.pdf)
• A tool to assess regulatory authorities (http://www.
who.int/medicines/areas/quality_safety/regulation_
legislation/assesment/en/index.html)
• Practical guidance for conducting a review (based
on the WHO Data Collection Tool for the Review of
Drug Regulatory Systems) (http://www.who.
int/medicines/areas/quality_safety/regulation_
legislation/GuideAssessRegSys.pdf)
• A drug regulatory status database (http://www.who.
int/hiv/amds/patents_registration/en/index.html)
In summary, the regulatory authority should be vested
with legal powers to—
• Issue, vary, and revoke licenses for pharmaceutical
products on grounds of quality, safety, and ecacy
• Ensure the safe and eective use of each product by
controlling, through the terms of the license, the con-
tent of all labeling (including package inserts, associ-
ated prescribing information, and advertising) and the
channels through which the product may legitimately
be supplied
• Inspect and license all manufacturing premises,
importing agents, wholesalers, distributors, hospital
dispensaries, independent pharmacies, and other retail
outlets to ensure that they comply with prevailing
regulations and guidelines
To implement these responsibilities, the authority must
have the power to order that certain things be done and to
prosecute those who disregard the law. To retain public con-
dence and respect, the authority must be seen as operating
in an independent, authoritative, and impartial manner. It
should be concerned exclusively with the determination of
standards and the implementation of controls. Although it
needs to work closely with the body responsible for public
pharmaceutical procurement, it should not be responsible
for procurement and should remain independent in its
operations and decisions.
6.8 Evaluating the eectiveness of
pharmaceutical legislation
Evaluating the eectiveness of pharmaceutical legislation
and accompanying regulations is not always easy. e pro-
cess of evaluation depends on the types of performance indi-
cators and criteria used and on the availability of adequate
data. e questions in the Assessment Guide at the end of
this chapter provide a framework.
e most important factor in the eectiveness of phar-
maceutical laws and regulations is the extent to which the
legislative framework is in tune with national policy and the
existing situation in the pharmaceutical sector. Changes in
policy need to be reected in the legislation and in its imple-
mentation.
Measuring the eectiveness of a law on pharmaceuticals is
easier for certain elements than for others. For instance, the
registration process can be evaluated in relation to quantita-
tive targets and time schedules to see whether the agency is
on schedule.
e degree of noncompliance with a law or regulation
may suggest not only the need to take action against those
responsible but also the desirability of identifying the causes
of noncompliance: it may be related to technical defects
in the law or in its wording, or to operational problems of
implementation, such as lack of transparency or poor com-
munication, which can be resolved. Enforcement person-
nel should periodically report on their perception of how
the law functions and the types of problems encountered to
facilitate any necessary revisions. Many legislative and regu-
latory provisions can be improved and updated when the
legislation is suciently exible to allow for modications
by the regulatory agency.
Responsibility for evaluating the eectiveness of a drug
law oen falls on the regulatory authority established by
law for policy making, implementation, or both. e level
of accountability and transparency under which the drug
regulatory authority operates can be evaluated by examining
6 / Pharmaceutical legislation and regulation 6.19
reporting requirements, external reviews of performance,
processes involved with lodging complaints, and appeals
procedures. Periodic self-evaluation to identify weaknesses
in policy making and implementation activities is impor-
tant. e body must devise its own systems to judge whether
it receives sucient feedback and whether its operational
eectiveness can be improved. n
References and further readings
H = Key readings.
Coplan, P. M., M. Mitchnick, and Z. F. Rosenberg. 2004. Regulatory
Challenges in Microbicide Development. Science 34:1911–2.
Davis, S. 2009. Microbicide Hopes Fade with Poor Trial Results. Science
and Development Network 16 December. <http://www.scidev.net/
en/news/microbicide-hopes-fade-with-poor-trial-results-1.html>
Feeley, R., B. O’Hanlon, A. Stene, and Y. Sezgin. 2009.Finding
Middle Ground: Making Better Use of the African Private Health
Sector rough More Eective Regulations. Bethesda, Md.: Private
Sector Partnerships (PSP)-One, Abt Associates. <http://www.
globalhealthlearning.org/assets/lelib/076/le_FINAL_Leg_Reg_
Report.pdf>
Fox, M., D. Beasley, and K. Kelland. 2010. AIDS Gel with Gilead
Drug Protects Women in Study. 20 July. Vienna: Reuters.
<http://www.reuters.com/article/idUSTRE66I49G20100720?page
Number=1>
H Gray, A. 2004. Resource Guide on Drug Regulation in Developing
Countries. London: UK Department for International Development
Health Systems Resource Centre. <http://www.bvsde.paho.org/
bvsacd/cd65/Gray.pdf>
Hayashi, Y., and R. Palop. 2002. Harmonization. In Proceedings of
the Tenth International Conference of Drug Regulatory Authorities
(ICDRA), Hong Kong, China, 24–27. Geneva: World Health
Organization.
Hill, S., and K. Johnson. 2004. Emerging Challenges and Opportunities
in Drug Registration and Regulation in Developing Countries.
London: UK Department for International Development Health
Systems Resource Centre. <http://www.hlsp.org/LinkClick.aspx?l
eticket=0TXMdaAk5KA%3D&tabid=1643>
Jayasuriya, D. C. 2002. Medicinal Products and the Law in Developing
Countries—Concepts, Issues and Approaches. New Delhi: Har-
Anand Publications.
Jayasuriya, D. C. 1985. Regulation of Pharmaceuticals in Developing
Countries. Geneva: World Health Organization.
Kaplan, W., and R. Laing. 2003. Paying for Pharmaceutical Registration
in Developing Countries. Health Policy and Planning 18:237–48.
Mui, Y. Q. 2009. “Crackdown Targets Counterfeit Drugs: Fake
Medicines a Growing Enterprise.” 20 November. Washington Post.
PAHO (Pan American Health Organization). 2005. Proceedings of IV
Pan American Conference on Drug Regulatory Harmonization. Boca
Chica, Dominican Republic, March 2–4.
PANDRH Steering Committee (Pan American Network for Drug
Regulatory Harmonization). 2009. Statutes. Washington, D.C.: Pan
American Health Organization.
Pereko, D., and J. Nwokike. 2006. “Improving the Availability of
ARVs in Namibia by Using Policy Change to Streamline the Drug
Registration Process.” Paper presented at the XVI International
AIDS Conference, Toronto, August 13–18.
Ratanawijitrasin, S., and E. Wondemagegnehu. 2002. Effective
Drug Regulation: A Multicountry Study. Geneva: World Health
Organization.
Stenson, B., L. Syhakhang, C. S. Lundborg, B. Eriksson, and G. Tomson.
2001. Private Pharmacy Practice and Regulation: A Randomized
Trial in Lao P.D.R. International Journal of Technology Assessment in
Health Care 17(4):579–89.
Srivastava, D. 2008. A Country Level Report on the Pharmaceutical
Sector in India. Part One: Institutions Involved in Pharmaceutical
Regulation. London: UK Department for International
Development.
Syhakhang, L., B. Stenson, R. Wahlström, and G. Tomson. 2001. e
Quality of Public and Private Pharmacy Practices: A Cross-Sectional
Study in the Savannakhet Province, Lao PDR. European Journal of
Clinical Pharmacology 57:221–7.
TGA (Therapeutic Goods Administration). 2003. Australian
Regulatory Guidelines for OTC Medicines. Woden, A.C.T., Australia:
TGA. <http://www.tga.gov.au/industry/otc-argom.htm>
H TCM/HTP/WHO (Department of Technical Cooperation for
Essential Drugs and Traditional Medicine/Health Technology and
Pharmaceuticals/World Health Organization). 2007. Report of the
WHO Consultation on Regulatory Technical Package and Model for
Regulatory Decision Making, WHO Headquarters, Geneva 27–29
November 2006. <http://www.who.int/medicines/publications/
ReportWHOconsultationNov06.pdf>
WHO (World Health Organization). 2010a. Medicines: Counterfeit
Medicines. Fact Sheet No. 275. Geneva: WHO. <http://www.who.
int/mediacentre/factsheets/fs275/en>
————. 2010b. Regulatory Harmonization: Updating Medicines
Regulatory Systems in Sub-Saharan African Countries. WHO Drug
Information 24(1):6–20.
H ————. 2009a. Measuring Transparency in the Public Pharmaceutical
Sector: Assessment Instrument. Geneva: WHO. <http://apps.
who.int/medicinedocs/documents/s16732e/s16732e.pdf>
————. 2009b. Annex 3: Procedure for Prequalication of Pharma-
ceutical Products. In WHO Expert Committee on Specications for
Pharmaceutical Preparations. 43rd Report. <http://www.who.int/
medicines/publications/pharmprep/pdf_trs953.pdf#page=164>
————. 2008. WHO Certification Scheme on the Quality of
Pharmaceutical Products Moving in International Commerce.
WHO Drug Information 22(3):207–18.
H ————. 2007a. Practical Guidance for Condu cting a Review.
[Based on the WHO Data Collection Tool for the Review of
Drug Regulatory Systems.] Geneva: WHO. <http://www.who.
int/medicines/areas/quality_safety/regulation_legislation/
GuideAssessRegSys.pdf>
H ————. 2007b. WHO Data Collection Tool for the Review of
Drug Regulatory Systems. [To Be Used Jointly with Practical
Guidance for Conducting a Review.] Geneva: WHO. <http://www.
who.int/medicines/areas/quality_safety/regulation_legislation/
ENdatacollectiontool.pdf>
————. 2006a. Measuring Transparency in Medicines Registration,
Selection and Procurement: Four Country Assessment Studies.
Geneva: WHO. <http://apps.who.int/medicinedocs/documents/
s14096e/s14096e.pdf>
————. 2006b. Annex 7: Multisource (Generic) Pharmaceutical
Products: Guidelines on Registration Requirements to Establish
Interchangeability. In WHO Expert Committee on Specications for
Pharmaceutical Preparations. 40th Report. Geneva: WHO. <http://
whqlibdoc.who.int/trs/WHO_TRS_937_eng.pdf>
————. 2005a. Annex 5: Guidelines for Registration of Fixed-Dose
Combination Medicinal Products. In WHO Expert Committee on
Specications for Pharmaceutical Preparations. 39th Report. Geneva:
WHO. <http://apps.who.int/prequal/info_general/documents/
TRS929/WHO_TRS_929_annex5FDCs.pdf>
————. 2005b. Handbook for Good Clinical Research Practice (GCP):
Guidance for Implementation. Geneva: WHO. <http://apps.who.int/
medicinedocs/documents/s14084e/s14084e.pdf>
6.20 POLICY AND LEGAL FRAMEWORK
Policy, legislation, and regulation
• Is there a national medicine policy approved by the
government? Is the policy suitable to regulate the
market? When was it last updated?
• Is there a comprehensive medicine law? Is it appro-
priate? Is it a new law or a revision of an existing law?
When was it last updated?
• Is the legislation exible in allowing for the passage
and revision of regulations in response to new scien-
tic information and market changes?
• Is there a drug regulatory authority responsible for
the promulgation of regulations and for enforce-
ment? Does the necessary political will and funding
exist to support it?
• Are regulatory policies, procedures, and criteria for
decisions available to all stakeholders?
Medicine selection and registration
• Is there a system for medicine registration? Is this a
notication procedure? A basic authorization pro-
cedure? A full registration procedure? Is periodic
renewal required?
• Is medicine registration based on an assessment of a
medicine’s ecacy, safety, quality and truth of pack-
aging information? Are pharmacological or thera-
peutic standards used?
• Are there dierent registration procedures for essen-
tial medicines, generic products, multisource drugs,
or imported products from selected countries?
• Is the WHO certication scheme on the quality of
pharmaceutical products moving in international
commerce used systematically for the registration of
imported medicines?
• Are relevant medicines procured from suppliers
prequalied by WHO?
• Is there a system for the collection of data regarding
the ecacy and safety (adverse eects) of marketed
medicines?
Licensing, inspection, and control
• Do mechanisms exist for the licensing, inspection,
and control of pharmaceutical personnel and for
manufacturing, distribution, and dispensing facili-
ties?
• Do inspectors use a checklist for inspecting dierent
types of pharmaceutical establishments?
• How many inspections were made during each of
the last three years for the dierent types of pharma-
ceutical establishments?
• Is there an audit system to evaluate the inspection
system?
Advertising and promotion
• Is there any specic regulation regarding therapeutic
claims in drug labeling and promotion?
• Is there any legal provision for the compulsory use
of generic names in medicine labeling and promo-
tion?
• Are there controls on pharmaceutical promotion,
and are these consistent with the WHO ethical crite-
ria for medicinal drug promotion?
Compliance and enforcement
• What measures exist for enforcement of pharma-
ceutical laws and regulations? Are they enforceable
administratively or through court actions? Are
statistics available about compliance and enforce-
ment?
• During the last three years, how many pharmaceu-
tical products were eliminated from the register?
How many batches of pharmaceutical products were
recalled from the market?
• Is there a system for reporting pharmaceutical prod-
uct problems? What types of and how many com-
plaints were registered in the past three years, and
what corrective measures were taken?
• How many violations have occurred with regard to
pharmaceutical advertising and promotion in the
past three years? What corrective measures were
taken?
• Are there any statistics about the reaction of the
industry and consumers to regulatory actions?
assEssMENT GuIDE
6 / Pharmaceutical legislation and regulation 6.21
————. 2005c. National Policy on Traditional Medicine and Regulation
of Herbal Medicines—Report of a WHO Global Survey. Geneva:
WHO. <http://apps.who.int/medicinedocs/pdf/s7916e/s7916e.pdf>
————. 2003a. Annex 9: Guide to Good Storage Practices for
Pharmaceuticals. In: WHO Expert Committee on Specications for
Pharmaceutical Preparations. 37th Report. Geneva: WHO.
H ————. 2003b. WHO Policy Perspectives on Medicines 7—Eective
Medicines Regulation: Ensuring Safety, Efficacy and Quality.
Geneva: WHO. <http://apps.who.int/medicinedocs/pdf/s4921e/
s4921e.pdf>
————. 2002a. Annex 3: Good Practices for National Pharmaceutical
Control Laboratories. In WHO Expert Committee on Specications
for Pharmaceutical Preparations. 36th Report. <http://apps.who.int/
medicinedocs/en/d/Jh3009e/16.html>
————. 2002b. e Importance of Pharmacovigilance: Safety Monitoring
of Medicinal Products. Geneva: WHO. <http://whqlibdoc.
who.int/hq/2002/a75646.pdf>
————. 2002c. Safety of Medicines: A Guide to Detecting and Reporting
Adverse Drug Reactions. Geneva: WHO. <http://whqlibdoc.who.int/
hq/2002/WHO_EDM_QSM_2002.2.pdf>
H ————. 2001a. How to Develop and Implement a National Drug
Policy. 2nd ed. Geneva: WHO. <http://whqlibdoc.who.int/
publications/924154547X.pdf>
————. 2001b. Pharmaceuticals and the Internet: Drug Regulatory
Authorities’ Perspective: Meeting Report, September 24–25, 2001,
Copenhagen, Denmark. Geneva: WHO. <http://whqlibdoc.who.int/
hq/2001/a74987.pdf>
————. 2000. WHO Certication Scheme on the Quality of Pharma-
ceutical Products Moving in International Commerce. Geneva: WHO.
————. 1999a. Eective Drug Regulation: What Can Countries Do?
Geneva: WHO. <http://whqlibdoc.who.int/hq/1999/WHO_HTP_
EDM_MAC(11)_99.6.pdf>
————. 1999b. Medical Products and the Internet. Geneva: WHO.
<http://whqlibdoc.who.int/hq/1999/WHO_EDM_QSM_99.4.pdf>
H ————. 1999c. Annex 8: National Drug Regulatory Legislation:
Guiding Principles for Small Drug Regulatory Authorities. In WHO
Expert Committee on Specications for Pharmaceutical Preparations.
irty-Fih Report. Geneva: WHO.
————. 1998a. Guidelines for the Appropriate Use of Herbal Medicines.
Manila: WHO Regional Oce for the Western Pacic. <http://
whqlibdoc.who.int/wpro/-1993/9290611103.pdf>
H ————. 1998b. Marketing Authorization of Pharmaceutical
Products with Special Reference to Multisource (Generic) Products:
A Manual for Drug Regulatory Authorities. Geneva: WHO. <http://
whqlibdoc.who.int/hq/1998/WHO_DMP_RGS_98.5.pdf>
————. 1998c. Regulatory Situation of Herbal Medicines: A Worldwide
Review. Geneva: WHO. <http://whqlibdoc.who.int/hq/1998/
WHO_TRM_98.1.pdf>
————. 1990. Guiding Principles for Small National Drug Regulatory
Authorities. In WHO Expert Committee on Specifications for
Pharmaceutical Products. Technical Report Series, no. 790. Geneva:
WHO.
————. 1988. Ethical Criteria for Medicinal Drug Promotion. Geneva:
WHO.
WHO/IMPACT (World Health Organization/International Medical
Products Anti-Counterfeiting Taskforce). 2008. Counterfeit Drugs
Kill! Geneva: WHO. <http://www.who.int/impact/FinalBrochure
WHA2008a.pdf>
H WHO/PSM (World Health Organization/Department of
Medicines Policy and Standards). 2006. Ethical Infrastructure for
Good Governance in the Public Pharmaceutical S ector: Working
Dra for Field Testing and Revision. Geneva: WHO/PSM. <http://
www.who.int/medicines/areas/policy/goodgovernance/Ethical_
Infrastructure.pdf>
H WHO/QSM (World Health Organization/Quality Assurance and
Safety of Medicines). 2004. WHO Medicines Regulatory Package.
<http://www.who.int/medicines/areas/quality_safety/regulation_
legislation/reginfo/en/index.html>
WHO/WPRO (World Health Organization/Regional Oce for the
Western Pacic). 2004. Enhancing Health Policy Development:
A Practical Guide to Understanding the Legislative Process.
Manila: WHO/WPRO. <http://www.wpro.who.int/publications/
pub_9290610859.htm>
chapter 7
Pharmaceutical production policy
Summary 7.2
7.1 Levels and types of local production 7.3
Primary production • Secondary production • Tertiary
production
7.2 Trends in local production 7.3
7.3 e eect of globalization on local
production 7.5
7.4 Issues that aect local production decisions 7.6
Human and physical infrastructure • Market
factors • Regulatory and legal provisions • Economic
incentives and disincentives • Duties and import
controls • Collaboration and public-private partnerships
7.5 Assessing the feasibility of local production 7.8
References and further readings 7.10
Assessment guide 7.11
illustrations
Figure 7-1 Preinvestment, investment, and operating phases of
the project cycle 7.8
Figure 7-2 Information ow for an industrial feasibility
study 7.9
Table 7-1 Distribution by country groups of tari rates for
nished pharmaceutical products, 2009 7.7
country studies
CS 7-1 Proles of three pharmaceutical facilities operating
in West Africa 7.5
CS 7-2 Health policy versus industrial policy: rifampicin in
India 7.6
CS 7-3 Local public-sector production problems 7.10
Part I: Policy and economic issues Part II: Pharmaceutical management Part III: Management support systems
Policy and legal framework
1 Toward sustainable access to medicines
2 Historical and institutional perspectives
3 Intellectual property and access to medicines
4 National medicine policy
5 Traditional and complementary medicine policy
6 Pharmaceutical legislation and regulation
7 Pharmaceutical production policy
8 Pharmaceutical supply strategies
Financing and sustainability
copyright
©
management sciences for health 2012
7.2 POLICY AND LEGAL FRAMEWORK
Policy makers must be concerned about pharmaceuti-
cal production for the same reasons that underlie other
policy and legal decisions: pharmaceuticals can be dan-
gerous as well as lifesaving. Health professionals and
patients have no ready way of making judgments about
medicines without public surveillance as a guide.
e potential for national or local production of
quality-assured, low-cost pharmaceuticals to meet
national needs is an issue that has been debated and
discussed for several decades. e justications for
local production have included the problems of lack
of access, high prices for imported pharmaceuticals,
and poor pharmaceutical quality. ese challenges
prompted public and political interest in considering
local production to promote self-suciency, achieve
independence from international suppliers, develop
local industrial capacity, and create jobs. e chang-
ing landscape in the global pharmaceutical market,
however, has made local production of pharmaceuticals
in many countries unlikely as a viable option, except
under certain circumstances, such as the existence of
a large national market or a need to address specic
requirements within a local market. Furthermore, self-
suciency in pharmaceutical supply has proved to be a
myth; because most active pharmaceutical ingredients
are now sourced globally, even the most developed
countries cannot be considered wholly self-sucient in
pharmaceutical production.
e globalization of the pharmaceutical sector and the
advent of worldwide public health funding initiatives
have led to a more competitive market for generic phar-
maceuticals, resulting in signicant decreases in the
prices of some essential medicines. Domestic production
operations have had diculty achieving the high quality
expected in the market at prices that compete with those
of large-scale international producers, and many coun-
tries have limited capacity to monitor and regulate phar-
maceutical production activities. Decisions regarding
producing or importing pharmaceuticals are complex
and involve health policy, industrial policy, a country’s
national development strategy, and related political pres-
sures. Despite the argument that actual production deci-
sions should be le to private-sector and market forces,
policy makers must sometimes respond to pressures to
become more involved in decisions about pharmaceuti-
cal production. e principal policy question now is
oen not whether to make or buy pharmaceuticals, but
rather what pharmaceuticals to buy and where to buy
them.
ree important points related to decision making about
local pharmaceutical production guide this chapter—
• Pharmaceuticals are potentially lifesaving and life-
threatening. Pharmaceutical production requires
precise standards, quality control, a highly skilled
labor base, capital, national regulatory capacity, and
management. Modern pharmaceutical production
oen uses raw materials that are most economical
in the international market, which means that high-
quality, low-cost medicines are not likely to be pro-
duced from the raw materials stage in countries that
do not have the required market size and resources
in terms of skilled people, technology, and quality
control.
• Section 7.1 describes several types of pharmaceuti-
cal manufacturers that operate in low- and middle-
income countries, ranging from subsidiaries of
multinational rms to small, hospital-based opera-
tions that repackage medicines into course-of-
therapy packs. Policy makers must assess the feasi-
bility for the range of production options, from the
primary manufacture of raw materials to the pack-
aging of nished products.
• Because consumers are unable to judge medicine
quality on their own, policy makers must be con-
cerned about regulating the production quality of
medicines from either international or domestic
sources. Regulatory policy should focus on assur-
ing that manufacturers who supply products to
the national market follow good manufacturing
practices. Whether policy makers take an active or a
passive role, they must recognize that the regulations
and incentives existing in a country always aect
pharmaceutical production. e most constructive
stance is to shape policies and regulations that pro-
mote the goal of reliable access to eective, safe, and
inexpensive medicines rather than to focus on where
the production takes place. If preferences are given
to locally produced medicines, the sick may pay
directly or indirectly for these preferences through
higher prices or poorer quality.
suMMary
7 / Pharmaceutical production policy 7.3
7.1 Levels and types of local production
Most countries are part of the global pharmaceutical mar-
ket, but few try to be entirely self-sucient. Raw materials,
which form the backbone of the industry, are produced and
traded as commodities worldwide. Almost all countries,
even the largest ones, actively acquire at least some raw
materials, machinery, and packaging goods abroad—at the
most economical prices and at dierent stages of produc-
tion—and then complete the process at home. It is a matter
of competitive advantage, not imaginary independence, in
an increasingly globalized economy.
Production standards known as good manufacturing
practices (GMPs) are quality requirements that have been
adopted as guidelines by the industry and the World Health
Organization (WHO). e GMP system ensures that prod-
ucts are consistently produced according to quality stan-
dards appropriate to their intended use and as required by
the product specication. Some countries require more-
exacting standards to further ensure quality, and any hope
for an export market increasingly requires compliance with
international GMP standards.
e three dierent levels of production are primary, sec-
ondary, and tertiary.
Primary production
Primary production is the processing of raw materials to
create active pharmaceutical ingredients (APIs) and ancil-
lary substances used in pharmaceutical formulations. e
nal API, which is the biologically active compound in the
pharmaceutical that produces the therapeutic eect, should
meet pharmacopoeial or similar requirements. Primary
manufacturing may involve either chemical or biological
processes requiring dierent types of production facilities,
technologies, skills, and knowledge. e manufacture of
active ingredients is the most expensive aspect of pharma-
ceutical production because of the necessary investment in
capital equipment, process development, and quality assur-
ance systems.
e more modern or sophisticated the products, the
more skills and greater capability are needed to develop
and maintain the production processes. Few middle- to
low-income countries will have all the infrastructure
needed, including a pool of skilled workers (scientists and
engineers), industrial technology, a research and develop-
ment base, quality-control experience, capital, and reliable
utilities—as well as the potential market size—to make
primary production an initial goal. Rather, because these
basic commodities are most eciently produced in large
volumes—much greater than the markets could absorb in
many countries—they tend to be traded and bought as are
other international commodities, such as steel, some foods,
and other chemicals.
Secondary production
Secondary production is the large-scale processing of n-
ished dosage forms, such as tablets, capsules, or injections,
from raw materials or intermediate products, oen from
both local and imported sources. Production of sterile prep-
arations (such as injections, antibiotics, and intra venous
uids) and nonsterile preparations (oral solids, liquids, and
topical preparations) can be carried out with either locally
produced or imported packing materials. Although less
technically demanding than primary production, this stage
must be completed to precise specications. It requires
modern, high-speed, precision equipment to produce pills,
capsules, and liquids, oen in large quantities and at very
low unit costs, which are targets that small facilities nd dif-
cult to achieve, especially while also meeting international
GMP standards.
Tertiary production
Tertiary production includes packaging and labeling n-
ished products from primary and secondary sources into
bulk packs, smaller dispensing packets, bottles, or course-
of-therapy units for individual use. e initial quality of the
pharmaceutical product established in the earlier phases of
production must be maintained in the tertiary and nal step,
so ensuring high quality standards through rigorous opera-
tional procedures is important. is type of production can
be developed rst in many countries as a positive contribu-
tion that also builds industrial skill and experience. Tertiary
production also addresses specic local needs for certain
formulations, labeling, and packaging.
7.2 Trends in local production
During the 1970s and 1980s, some international organiza-
tions and governments were promoting the idea of creating
or strengthening the pharmaceutical manufacturing capac-
ity of developing countries under the assumptions that such
initiatives would—
• Increase countries’ self-suciency in pharmaceutical
supply
• Improve medicine quality
• Produce foreign exchange through exports of domesti-
cally manufactured medicines
• Create new jobs
However, even with the enthusiasm about the potential
role of pharmaceutical production in the developing world, a
1986 World Bank report (Lashman 1986) concluded that the
economies of scale and technological requirements for manu-
facturing medicines made local production an unrealistic
7.4 POLICY AND LEGAL FRAMEWORK
option for most countries. e exceptions were countries
with large local markets and the capacity to produce APIs,
including Argentina, Brazil, China, Egypt, India, Mexico,
and ailand.
At that time, the pharmaceutical industry in most devel-
oping countries depended on production by multinational
aliates and the licensed production of generic prod-
ucts; very few developing countries were able to initiate
any systematic pharmaceutical export (Balance, Pogany,
and Forstner 1992). In addition, the increased market for
generic medicines plus greater price competition led to sig-
nicant decreases in the prices of many essential medicines.
is market shi worked against domestic manufacturers,
who were largely unable to produce medicines at prices that
were competitive with those of large-scale international
pharmaceutical producers. ese factors led to a trend away
from the promotion of local pharmaceutical production and
toward more emphasis on quality-control and procurement
issues (Kaplan and Laing 2005).
In a 2004 report, the World Health Organization esti-
mated the worldwide pharmaceutical production capacity
of 188 countries, which had changed little from the 1992
statistics—
• Ten countries had a sophisticated pharmaceutical
industry and a signicant research base (eight Western
European countries, plus Japan and the United States).
ese countries—led by the United States and Japan—
were responsible for 84 to 88 percent of the world’s
pharmaceutical production value.
• Sixteen countries had innovative capabilities: a sound
production capacity and at least one new molecular
entity marketed between 1961 and 1990 (including
several European countries, Argentina, Australia,
Canada, China, India, Israel, Mexico, and the Republic
of Korea). India and China had seen huge growth in
their pharmaceutical production over the preceding
decade. India, in fact, had developed highly specialized
manufacturing capabilities and had become one of the
largest exporters of API raw materials for the produc-
tion of generics (World Bank 2005).
• irteen countries produced both active ingredi-
ents and nished products (including Brazil, Egypt,
Indonesia, Norway, and Turkey).
• Eighty-four countries from virtually every continent
only produced nished products from imported ingre-
dients.
• Forty-two countries and areas had no pharmaceutical
industry (primarily low-income African and Asian
countries).
Moving from one category to the next requires substan-
tial technical and nancial resources, and still, no country
is completely self-sucient in pharmaceutical production.
Even countries that export more pharmaceuticals than they
import still rely on imports of some nished products, APIs,
or other materials.
Currently, several types of pharmaceutical manufactur-
ers, with dierent business models, operate manufacturing
facilities in low- and middle-income countries (World Bank
2005)—
• Subsidiaries of large multinational companies that
manu facture patent-protected, branded products for
local and regional markets.
• Global manufacturers of generics that focus on devel-
oped markets in the United States, Europe, and large
middle-income markets such as India and China.
Some have manufacturing operations in smaller devel-
oping countries or joint ventures with local manufac-
turers.
• Generics companies with predominantly national
operations that focus on the domestic market with
occasional exports into neighboring countries. eir
ability to comply with good manufacturing practices
varies.
• Small-scale local manufacturers that usually make a
limited number of products, including traditional
medicines, to serve local or regional markets. Most are
not able to meet GMP standards.
In addition, most hospitals repackage medications in
smaller, unit-dose containers and may compound specialty
items, such as creams with special formulations, for their
own patients and for satellite facilities. e type of small-
scale production of pharmaceuticals in a hospital pharmacy
could include secondary production from existing raw
materials that are usually imported and the packaging or
repackaging of nished goods into smaller dispensing packs
and course-of-therapy packages (see Chapter 45).
National manufacturers vary widely in the scope of their
operations. Some in larger markets may have substantial
capabilities in primary and secondary manufacturing activ-
ities and extensive pharmaceutical distribution networks.
Smaller countries may be limited to a few major companies
that do basic manufacturing or formulation and packaging.
Many developing countries may have only one or two local
importing distributors who represent all the international
manufacturers. Multinational manufacturers of proprietary
medicines have used this pathway to globalize their opera-
tions, and as multinational generic producers grow, they will
likely follow the same expansion model (Guimier, Lee, and
Grupper 2004). Country Study 7-1 proles three types of
manufacturers operating in West Africa.
Finally, one of the most important global trends has been
the rapid growth of active-ingredient manufacturing com-
panies in India and China. India, especially, led the way in
developing highly specialized manufacturing capabilities
7 / Pharmaceutical production policy 7.5
that cover a large range of medicines, from antibiotics to
anti retrovirals. Leading companies have invested in manu-
facturing facilities that meet the highest international stan-
dards for GMPs. Technical advances in China have caught
up as it has entered into joint ventures with pharmaceutical
manufacturers in developed countries as a way of acquir-
ing technological expertise. China and India will probably
maintain a competitive production advantage because of
their skilled labor forces, low resource costs, and large, high-
volume domestic markets, which will help them keep their
pharmaceutical prices low (Attridge and Preker 2005).
7.3 e eect of globalization on local
production
e creation of high-prole international initiatives, such as
the Global Fund to Fight AIDS, Tuberculosis and Malaria,
and increased funding for public health treatment programs
are part of the growing momentum to increase access to
medicines in developing countries (see Chapter 2). In addi-
tion, initiatives to reduce pharmaceutical prices, such as the
Clinton Foundation’s negotiations with multinational pro-
ducers and global procurement mechanisms, such as the
Global Fund’s voluntary pooled procurement system, are
expanding the number of procurement options for these
countries. As a result, the market is growing for pharma-
ceuticals that treat diseases that disproportionately aect
poor countries. In addition, the scale-up of public health
treatment programs, such as antiretroviral therapy, is creat-
ing a large demand for pharmaceuticals in the public sec-
tor. Countries that are tempted to add to or expand their
production of pharmaceuticals to fulll the needs of such
targeted public health programs must carefully evaluate the
cost-eectiveness of global production compared with that
of their procurement options. Global funding mechanisms
require that products either be prequalied by WHO or
approved by a stringent regulatory authority. So far, mainly
A 2004 study looked at the pharmaceutical production
capacity in West Africa using data available from inter-
views with key stakeholders and eld visits to Ghana and
Côte d’Ivoire. e following proles illustrate the simi-
larities and dierences of three dierent types of pharma-
ceutical production operations.
e rst rm is an owner-operated company that started
small and grew into an operation employing more than
300 people, with production lines for tablets, liquids, cap-
sules, syrups, and powders. e company sells most of its
products to private-sector customers, but some sales go
to the public sector. e rm does not export its products
but has developed a large sales and distribution network
covering the entire country. e company funded its
expansion using sales prots that were supplemented
by loans from commercial banks. Because the company
already had signicant domestic market share, it was
looking for new markets and new products, including
medicines to treat HIV/AIDS and malaria. Although the
company’s owner-operated status has probably helped
keep costs manageable, strict control by the owners could
discourage the recruitment of talented workers from out-
side the rm whose expertise could help the rm expand
into a large-scale, international player.
Large European multinational pharmaceutical compa-
nies own the majority of the second rm, and it oper-
ates under licensing agreements with them and other
international partners. e company’s structure allows
it to benet from both the nancial support and techni-
cal expertise of these experienced partners. However,
because the rm buys most of its APIs through its parent
companies, costs are higher than what the rm could
achieve by procuring through open international ten-
ders. Consequently, the prices of imported medicines
from Asia are generally lower. e company is not plan-
ning on producing any new medicines to treat HIV/
AIDS, tuberculosis, or malaria.
e third company is privately owned but run by profes-
sional expatriate managers brought in by the principal
investors, who are based outside the country. On one
hand, the company benets from easier access to inter-
national nancing and management expertise, but on the
other hand, the expatriate management team is costly.
e company is looking to expand its reach to export
markets throughout West Africa and is planning to add
an artemisinin-based combination therapy (ACT) prod-
uct to its production portfolio.
e structure of each of these rms oers advantages and
disadvantages to operating pharmaceutical production
facilities in West Africa. e rst and third companies,
however, which plan on adding antiretrovirals and ACTs
to their production, may have a dicult time meeting
WHO prequalication requirements.
Source: Guimier, Lee, and Grupper 2004.
Country study 7-1
Proles of three pharmaceutical facilities operating in West africa
7.6 POLICY AND LEGAL FRAMEWORK
large, well-established companies have been able to achieve
prequalication standards.
An additional factor aecting the globalization of the
pharmaceutical sector is the World Trade Organization’s
Agreement on Trade-Related Aspects of Intellectual Prop-
erty Rights (TRIPS). TRIPS allows countries aected by
a public health crisis such as HIV/AIDS to bypass pat-
ent laws and issue a voluntary or compulsory license to
a company to manufacture or import a particular medi-
cine to ease the crisis. However, the consensus is that many
smaller middle- and low-income countries lack the neces-
sary infrastructure to take advantage of this mechanism
by investing in and successfully operating pharmaceuti-
cal plants (although they may issue compulsory licenses
to import such products). is situation may be chang-
ing, however. In 2010, WHO founded Quality Chemical
Industries, Ltd., of Kampala, to be the rst manufacturer
in a least-developed country in compliance with GMPs—
moving a step closer to achieving prequalication status in
the WHO system.
7.4 Issues that aect local production
decisions
In some countries, national pharmaceutical policies pro-
mote local pharmaceutical production as a way of improving
access to medicines and achieving national self-suciency.
But decisions regarding which pharmaceuticals and how
many should be imported or locally produced are complex
and involve health policy, industrial policy, and a country’s
national development strategy. Sometimes, a health policy
with the goal of increasing access to aordable and quality-
assured medicines is pitted against an industrial policy with
the goal of promoting a local industry whose products may
be more expensive than those on the international market
(see Country Study 7-2). Countries should consider their
economic conditions and health services infrastructure
when deciding on investments in the local pharmaceutical
indu str y.
e greatest challenge for policy makers is oen not the
creation of a comprehensive policy on local production,
but rather the creation of policy elements that function as
constructive next steps and build on existing conditions and
local institutional capacities. Many countries are limited
in their capacity to monitor, supervise, and regulate phar-
maceutical production. Policies need to take into account
a country’s capacity to implement and enforce appropriate
regulations.
e Assessment Guide for this chapter lists many of the
factors and policy issues that aect production decisions.
Each issue contains elements that may favor or hinder the
production decision or leave it unaected. In general, policy
makers should concentrate on promoting guidelines that
support the essential medicines concept: improving the
prospects of access to low-cost, quality-assured, eective
medicines. Producers can make their own decisions about
what and how much to make, and essential medicines pro-
gram managers can concentrate on choosing to buy from
the best sources, whether they are domestic or international.
Human and physical infrastructure
A primary issue in many countries, especially low-income
countries, is the ability to nd experienced and skilled
sta, particularly scientists and engineers. Managing the
issues of quality assurance, including regulatory compli-
ance and meeting GMP standards, is key to ensuring high
quality. In the current market, technical expertise to pro-
duce complex formulations, such as xed-dose combina-
tions, is critical. In the short term, human resources can
be supplemented from external sources, but production
decisions are long-term investments that require sustain-
able, local stang.
In addition to human resources, the reliability of water,
power, and environmental controls are central to the pro-
duction decision. If materials, equipment, and spare parts
are not available, items will have to be imported from coun-
tries with established pharmaceutical industries.
e international market for rifampicin, an essential
antituberculosis medicine, presented an example
of rivalry between the pharmaceutical production
sectors in China and India. In India, the cost of
imported rifampicin from China, at 40 U.S. dol-
lars (USD) per kilogram, was lower than the cost
of Indian manufacturers, at USD 70 per kilogram.
However, Indian manufacturers questioned the qual-
ity of the Chinese medicine and demanded that
their govern ment place restrictions on these imports.
India already had an overcapacity for rifampicin
manufacturing; therefore, this situation illustrates
a typical schism between health policy goals and
industrial policy goals. Because India was estimated
to have 25 percent of the world’s tuberculosis cases,
the government had to decide which was more
important: getting the cheapest rifampicin from
China, which would presumably make the medicine
more aordable for patients, or sustaining and devel-
oping national rifampicin manufacturers.
Source: Attridge and Preker 2005.
Country study 7-2
Health policy versus industrial policy:
rifampicin in India
7 / Pharmaceutical production policy 7.7
Market factors
Population size and distribution combine with per-capita
income to determine how many potential customers in the
national market will be able to buy medicines. Although
aspirations for health are high, dicult economic times
can lead to falling real personal incomes and low govern-
ment capacity to provide health services, both of which limit
actual market size in many countries. e national markets
of most developing countries are too small to absorb all the
outputs of domestic production if done at scale; therefore,
a manufacturer producing essential medicines at a scale
adequate to lower unit production costs to competitive lev-
els will oen have to consider exporting its products, which
requires a more sophisticated distribution network and the
ability to ensure that its products meet international quality
standards.
Other local competitors and importers also need to be
taken into account, along with the possibility of a preference
in the public-sector market for local production. Barriers to
importation of nished products may help local producers
initially, but they will increase local prices paid by consum-
ers (and public health organizations) and make the national
producers uncompetitive internationally.
Regulatory and legal provisions
As discussed in Chapter 6, pharmaceutical registration
requirements are rules that prohibit dangerous, unproven,
or useless items and promote the availability of quality-
assured and eective medicines. However, a cumbersome
or corrupt registration process can limit a producer’s incen-
tives to oer a product. From the producer’s viewpoint, the
important issues related to registration are the transparency,
speed, fairness, and expense of the process.
With the globalization of the pharmaceutical sector, an
increasing movement exists to establish and enforce GMPs
as common high standards for quality. e enforcement of
these standards is through regular inspection of manufac-
turing facilities by authorities. erefore, a strong regulatory
agency in the home country facilitates an export business,
because it provides a credible proof of quality.
A manufacturer’s adherence to GMPs can add signi-
cantly to investment and operating costs. If the national drug
regulatory authority is not strong enough to enforce GMPs,
facilities may be tempted to relax their practices. Given the
shi toward globalized quality standards in pharmaceutical
production, however, the rationale for local production at
some lower quality standard has shrunk, and such second-
tier products will be exposed in the world market. Currently,
developing countries vary greatly in their capacity to moni-
tor GMPs, and pharmaceutical manufacturing should be
encouraged only in countries that have an eective regula-
tory agency to enforce them.
Economic incentives and disincentives
Pharmaceutical production involves a worldwide market-
place, and the raw materials that constitute about half of
production costs are traded widely as competitive commod-
ities. Reliable, rapid access to foreign exchange is essential.
e pharmaceutical industry is commonly one of the most
price-controlled industries, which can help as well as distort
a local production decision; price controls, by denition,
distort the marketplace. (See Chapter 9 for more informa-
tion on pharmaceutical pricing policies).
Tax treatment and local development incentives can
aect the cost of production start-ups through direct sub-
sidies, assisted capitalization schemes, training support, or
tax abatement. However, evidence suggests that legislated
incentives to promote exports from local production do not
aect developing-country production: by 1999, less than
5 percent of low-income country pharmaceuticals were
exported on average, a gure that had been on the decline
for two decades (WHO 2004).
Duties and import controls
Dierential taxation of pharmaceutical materials, both
imported and local, can signicantly aect the production
decision. If the public-policy goal is to create a level playing
eld for producer decisions on what and where to produce,
there should be no dierence in the tax treatment of raw
materials, both active and inactive ingredients, and nished
Table 7-1 Distribution by country groups of tari rates for nished pharmaceutical products, 2009
Tari rate (%)
Number of
countries (n = 136)
Low-income
countries
Low–middle-
income countries
upper–middle-
income countries
High-income
countries
0 62 16 13 12 21
0–5.0 32 9 14 6 3
5.1–10.0 28 5 9 12 2
10.1–20.0 13 3 5 2 3
> 20.0 1 0 1 0 0
Source: Stevens and Linfield 2010.
7.8 POLICY AND LEGAL FRAMEWORK
products. Heavy taxation of packaging materials and pro-
duction will deter local industrial development.
The Organisation for Economic Co-operation and
Development (OECD) countries have an agreement to
impose zero taris on specied lists of active ingredients
for medicines, which has facilitated internal OECD phar-
maceutical trading. Average tari rates have been decreas-
ing; however, in a 2009 analysis, 54 percent of countries
were applying import taris, down from 61 percent in 2005
(Stevens and Lineld 2010). As Table 7-1 shows, for many
middle-income and low-income countries, substantial tari
barriers remain.
Many pharmaceuticals are classied as chemicals, with
taris that have been levied to protect and promote a
national chemical industry. Many countries, including
India, use nontari barriers to protect national industries
from cheaper pharmaceutical-related imports, which may
decrease their consumers’ and health systems’ access to
inexpensive products. Such barriers include antidumping
regulations, onerous systems of certication of origin and
quality, and legislation requiring local pharmaceutical man-
ufacture (see, for example, Olcay and Laing 2005).
To increase pharmaceutical access, countries may be bet-
ter o focusing on reducing or eliminating their taris and
taxes on pharmaceuticals. Markups added throughout the
pharmaceutical distribution system may be far greater than
import taris; additionally, such internal distribution taris
could outweigh any price benets achieved through local
production. Chapter 9 discusses the eects of taxes and tar-
is within the pharmaceutical distribution system.
Collaboration and public-private partnerships
e use of public-private partnerships in the research
and development of pharmaceuticals has been growing.
Eorts such as the Drugs for Neglected Diseases Initiative
are described in Chapter 3. In addition, public-private
partnerships and joint ventures can be mechanisms for
developing countries to gain some of the benets of local
production, such as the acquisition of technical expertise,
without taking on business risk. In fact, partnering with
inter national companies is oen the most common form of
local production support, with joint ventures and majority
or minority ownership shares depending on the strength of
the local economy and the political and market potential.
e potential for prot repatriation by the external part-
ners is critical.
As pharmaceutical markets become more globalized on
many levels, suppliers may be more likely to form alliances
and partnerships that increase their capability to compete in
the world market. Likewise, multinational pharmaceutical
producers have developed a better awareness of the need to
consider the social implications of their business practices,
and as a result, to be more open to entering into collabora-
tive arrangements that promote technology transfer in low-
income countries (Chapter 3).
In addition to beneting from collaboration between
large multinational companies and smaller enterprises,
small country markets can coordinate or join together to
create economies of scale. Some African governments have
adopted policies that favor local industrial development and
investment and have created trading blocs in an eort to
harmonize taris, currency, and medicine registration pro-
cesses (Guimier, Lee, and Grupper 2004).
7.5 Assessing the feasibility of local
production
Despite the argument that production decisions should be
le to private-sector and market forces, policy makers must
sometimes respond to pressures to become more involved
in decisions about pharmaceutical production. A feasibility
study may serve either to warn against a hasty decision to
consider manufacturing locally or, if the decision is made
to go forward, to establish an appropriate framework, time-
table, and resource plan for analysis. Figures 7-1 and 7-2
illustrate the project investment cycle and the complexity of
the analysis process only for the feasibility stage. e issues
to be considered in a careful investigation include marketing
analysis, raw materials and supplies, location, engineering
and technology, organization and overhead costs, human
resources, implementation planning and budgeting, nan-
cial analysis, and investment appraisal.
OPERATING
PHASE
PREINVESTMENT
PHASE
INVESTMENT
PHASE
Expansion
Innovation
Replacement
Rehabilitation
Identication
OPPORTUNITY STUDY
Appraisal
APPRAISAL REPORT
Preselection
PREFEASIBILITY STUDY
Preparation
FEASIBILITY STUDY
Commissioning
and start-up
Training
Preproduction
marketing
Construction
Engineering
design
Negotiations
and contracting
SUPPORT
STUDIES
Figure 7-1 Preinvestment, investment, and operating
phases of the project cycle
7 / Pharmaceutical production policy 7.9
When a project feasibility analysis is carried out in the
public sector, many dierent government agencies (min-
istries of treasury, industry, and commerce, as well as the
ministry of health) must be involved to appraise the forces
and issues that will determine the outcome of the analysis.
e complexity of these negotiations means substantial
time commitments from senior analysts and policy makers.
Nevertheless, the vast majority of worldwide production is
done by private companies that have learned from experi-
ence how to manage the process eciently. Country Study
7-3 illustrates the diculties encountered by some public-
sector production programs.
A feasibility assessment of how well sub-Saharan African
countries could use local production to increase access to
medicines concluded that a few countries appeared to meet
the criteria for developing a successful pharmaceutical pro-
duction industry; however, long-term nancial viability was
unknown because of major factors out of the companies’
control, such as the price they would have to pay to import
APIs and the stability of their market share (Guimier, Lee,
and Grupper 2004).
As mentioned, new global public health initiatives
have greatly inuenced the pharmaceutical marketplace.
Countries’ desire to increase access to antiretrovirals, arte-
misinin-based combination therapies for malaria, and other
essential medicines have renewed their interest in assessing
the feasibility of local production, based on the assump-
tion that domestically manufactured medicines would be
cheaper than those bought from a foreign manufacturer.
e World Bank (2005) points out that local manufacturing
has the potential to strengthen political support for public
health treatment programs and institute pride in a national
industry. Under the challenging conditions for developing
and maintaining a successful domestic production enter-
prise, however, national stakeholders will have to consider
whether scarce resources should support local pharmaceu-
tical production or be used to improve the health system
infrastructure or other areas of pharmaceutical manage-
ment, such as the distribution system and the pharma-
ceutical regulatory system. Investments in local medicine
production will be cost-eective only if domestic pharma-
ceuticals can be produced more cheaply than they can be
imported on the open market (Guimier, Lee, and Grupper
2004). For example, the institutions and governments that
buy recommended medicines to treat HIV/AIDS, tuber-
culosis, and malaria must follow the procurement guide-
lines of their major donors. erefore, domestic producers
must meet international quality standards, such as WHO’s
prequalication standards, as well as be price competitive
with large international competitors. If the cost of develop-
ing local production capacity is too high or the quality of
the products is doubtful, local production must be viewed as
probably not justiable.
WHO, the United Nations Conference on Trade and
Development, and the International Centre for Trade and
Sustainable Development are collaborating on a project to
promote local production of medical supplies and related
technology transfer in developing countries. Started in
2009, the project is working to identify the challenges and
obstacles of local production and make evidence-based rec-
ommendations on their feasibility and sustainability (WHO
n.d.). n
Figure 7-2 Information ow for an industrial feasibility study
revenues and
marketing costs
Operating
costs
Investment
costs
Financial
analysis
Sales program
and revenue
Production program Land, site Fixed investment
Marketing
costs
Raw materials and
factory supplies
Civil engineering
Preproduction
expenditures
Marketing
personnel
Production personnel
Environmental
protection costs
Net working capital
Wages,
salaries
Wages,
salaries
Technology Total investment
Land, site, related
annual costs
Machinery, equipment Source of finance
Technology
costs
Cash flow (working
capital)
Balance sheet
Factory
overheads
Net income statement
Administrative
overhead costs
Net present value, internal
rate of return
Total costs
of products sold
Source: Behrens and Hawranek 1991.
7.10 POLICY AND LEGAL FRAMEWORK
References and further readings
H = Key readings.
H Attridge, C. J., and A. S. Preker. 2005. Improving Access to
Medicines in Developing Countries: Application of New Institutional
Economics to the Analysis of Manufacturing and Distribution
Issues. Washington, D.C.: World Bank. <http://siteresources.
worldbank.org/HEALTHNUTRITIONANDPOPULATION/
Resources/281627-1095698140167/AttridgeImprovingAccessFinal.
pdf>
Balance, R., J. Pogany, and H. Forstner. 1992. e World’s Pharmaceutical
Industries: An International Perspective on Innovation, Competition,
and Pol icy. Brookeld, Vt.: Ashgate Publishers.
Bate, R. 2008. Local Pharmaceutical Production in Developing
Countries: How Economic Protectionism Undermines Access to
Quality Medicines. London: International Policy Network. <http://
www.policynetwork.net/health/publication/local-pharmaceutical-
production-developing-countries>
Behrens, W., and P. M. Hawranek. 1991. Manual for the Preparation
of Industrial Feasibility Studies. Vienna: United Nations Industrial
Organization.
CVI (Children’s Vaccine Initiative). 1992. Local Vaccine Production:
Issues of Quality and Viability. Geneva: World Health Organization.
<http://whqlibdoc.who.int/hq/1999/CVI_99.02.pdf>
H Guimier, J-M., E. Lee, and M. Grupper. 2004. Processes and Issues
for Improving Access to Medicines: e Evidence Base for Domestic
Production and Greater Access to Medicines. London: DFID Health
Systems Resource Centre. <http://www.who.int/3by5/capacity/4)
processes_issues_improvingaccess.pdf>
H Kaplan, W., and R. Laing. 2005. Local Production of Pharma-
ceuticals: Industrial Policy and Access to Medicines. Washington,
D.C.: World Bank. <http://siteresources.worldbank.org/HEALTH
NUTRITIONANDPOPULATION/Resources/281627-1095698
140167/KaplanLocalProductionFinal.pdf>
Lashman, K. H. 1986. Pharmaceuticals in the Third World: An
Overview. Population, Health and Nutrition Technical Note 86-31.
Washington, D.C.: World Bank.
• e Social Security Agency (CSS) laboratory in
Panama had produced a number of pharmaceutical
products for decades. e government gave the labora-
tory a permit to operate, but it did not require registry
of the laboratory’s products, which would entail insti-
tuting some quality-control measures. In 2006–2007,
more than 120 people died aer taking cough syrup
contaminated with diethylene glycol, an industrial
solvent, and the CSS treated more than 50,000 patients
exposed to the contaminated medicines. e director
of CSS explained that analyses are performed on the
medications to guarantee quality, “but unfortunately
in this case they did not detect the toxic substance.”
e laboratory was closed. Investigation showed that
adulterated glycerin (which contained over 20 percent
diethylene glycol) that a local rm sold the laboratory
had come from China via Spain. More than a dozen
people in Spain and Panama (but not China) were
charged with crimes related to the incident.
• One Latin American ministry created an “in-house”
pharmaceutical factory to produce essential medicines
for its own system. Production had little connection
with the ministry market, however, and the product
line dried into over-the-counter preparations and
beauty aids, largely missing its original purpose.
• In another semi-autonomous government labora-
tory, production of essential medicines is usually two
to three years behind schedule, throwing ministry
purchasing into turmoil and resulting in higher prices
because of emergency purchases.
• A parastatal company in East Africa faced multiple
problems in producing pharmaceuticals at competi-
tive prices. Inadequate capitalization and inadequate
foreign-exchange allocation le the rm unable to
purchase enough raw materials to operate at the break-
even level of 60 percent capacity. For the pharmaceu-
ticals that were produced, containers of inadequate
quality—metal tins without aluminum coating—were
all the local suppliers had, and these had to be lined
with polyethylene bags, adding to production costs.
Plastic containers were tried, but the lids t poorly
because a proper mold could not be obtained locally
at reasonable cost. e cardboard used for boxes to
pack intravenous uids collapsed when stacked, and
the containers broke when transported over rough
roads. When the government attempted to purchase
pharmaceuticals on tender from the company, it could
not meet the competitive prices on the market, and as
a result of a structural adjustment program, the com-
pany was put up for sale.
• For political reasons, a Latin American government
was obligated to purchase a nonfunctional private
facility as a means of expanding its production capac-
ity. Originally constructed to produce small quantities
of a large number of sterile injectable products, it had
never functioned because of an inadequate water sup-
ply, which rendered it useless as a production facility.
In addition, the plant lacked the production capacity,
types of equipment, and storage capacity to produce
the priority items required by the ministry.
Country study 7-3
Local public-sector production problems
7 / Pharmaceutical production policy 7.11
Mohammed, N. 2009. e Role of Local Manufacturers in Improving
Access to Essential Medicines: e Case of Uganda. Africa Health
November 2009:40–2. <http://www.medicinestransparency.org/
leadmin/uploads/Documents/MeTA-Uganda_AfricaHealth.pdf>
MSH (Management Sciences for Health). 2008. International Drug
Price Indicator Guide (updated annually). Cambridge, Mass.: MSH.
<http://erc.msh.org/mainpage.cfm?le=1.0.htm&module=DMP&
language=English>
Olcay, M., and R. Laing. 2005. Pharmaceutical Taris: What Is
eir Eect on Prices, Protection of Local Industry and Revenue
Generation? <http://www.who.int/intellectualproperty/studies/
TarisOnEssentialMedicines.pdf>
Stevens, P., and H. Lineld. 2010. Death and Taxes: Government Mark-
ups on the Price of Drugs. London: International Policy Network.
<http://oi.org.mk/upload/Death-and-Taxes-web.pdf.>
UNIDO (United Nations Industrial Development Organization).
2003. UNIDO’s Manuals on Preparing Industrial Feasibility Studies.
Vienna: UNIDO.
World Health Organization (WHO). 2007. Quality Assurance
of Pharmaceuticals: Compendium of Guidelines and Related
Materials: Good Manufacturing Practices and Inspection.
2nd ed. Vol. 2. Geneva: WHO. <http://whqlibdoc.who.int/
publications/2007/9789241547086_eng.pdf>
————. 2006a. WHO Basic GMP Training Modules. Geneva:
WHO. <http://apps.who.int/prequal/trainingresources/pq_pres/
gmptraining/GMPBasicTraining.htm>
————. 2006b. A WHO Guide to Good Manufacturing Practice (GMP)
Requirements: Part 3, Training. Geneva: WHO. <http://whqlibdoc.
who.int/hq/2006/WHO_IVB_05.24_eng.pdf>
————. 2004. e World Medicines Situation. Geneva: WHO. <http://
whqlibdoc.who.int/hq/2004/WHO_EDM_PAR_2004.5.pdf>
————. 2003. Good Manufacturing Practices for Pharmaceutical
Products: Main Principles. WHO Expert Committee on Specications
for Pharmaceutical Preparations: irty-Seventh Report. Annex 4.
Geneva: WHO. <http://apps.who.int/medicinedocs/pdf/s5517e/
s5517e.pdf>
————. 2002. Guidelines on Packaging for Pharmaceutical Products.
WHO Expert Committee on Specifications for Pharmaceutical
Preparations: irty-Sixth Report. Annex 9. Geneva: WHO. <http://
whqlibdoc.who.int/trs/WHO_TRS_902.pdf>
————. 1997a. A Guide to WHO Good Manufacturing Practice (GMP)
Requirements: Part 1, Standard Operating Procedures and Master
Human and physical resources
• Are technical specialists available?
• Are skilled production sta available?
• Is there an educational system that can supply
trained workers?
• What are the cost and reliability of water, power,
construction, equipment, and other resources?
• Are there nancial resources available to retain
skilled workers and to support the maintenance of
infrastructure?
Market factors
• What are the population size, geographic distribu-
tion, and income levels in the country?
• Is there existing local production capacity (competi-
tion)?
• What are the barriers to imported products (degree
of protection)?
• Can the size, reliability, and preference of the public-
sector market ensure economies of scale?
• Is there predictable demand for medicines?
Regulatory environment
• What is the status of laws on pharmaceutical regis-
tration?
• What is the status of product and process patent
protection?
• Does the regulatory agency have systems and capac-
ity to assure product quality through GMPs and
enforcement of standards?
• Are there generic labeling, prescribing, and dispens-
ing laws and practices?
Investment and industrial development
environment
• How strong is the country’s nancial sector (banking
and nonbanking activities)?
• Is there sucient access to capital?
• Are tax or other investment incentives available?
• Are industrial development funds available (access
to start-up capital)?
• What are the ownership requirements (limits on for-
eign ownerships, requirements of local ownership)?
• Are there restrictions on repatriation of prots (for-
eign investors)?
Economic incentives
• Does the government enforce price controls?
• Is there access to foreign exchange?
• Are there export incentives?
Duties and import controls
Are there duties or import controls on—
• Active pharmaceutical ingredients (versus nished
products)?
• Inactive pharmaceutical ingredients and other raw
materials?
• Packaging materials?
• Specialized pharmaceutical equipment?
• Nonspecialized equipment?
assEssMENT GuIDE
7.12 POLICY AND LEGAL FRAMEWORK
Formulae. Geneva: WHO. <http://whqlibdoc.who.int/hq/1997/
WHO_VSQ_97.01.pdf>
————. 1997b. A Guide to WHO Good Manufacturing Practice (GMP)
Requirements: Part 2, Validation. Geneva: WHO <http://whqlibdoc.
who.int/hq/1997/WHO_VSQ_97.02.pdf>
————. n.d. WHO Project on Improving Access to Medicines in
Developing Countries through Local Production and Related
Technology Transfer. Geneva: WHO. <http://www.who.int/phi/
implementation/TotLCProject.pdf>
H World Bank. 2005. Pharmaceuticals: Local Manufacturing.
Washington, D.C.: World Bank. <http://siteresources.worldbank.
org/HEALTHNUTRITIONANDPOPULATION/Resources/
281627-1109774792596/HNPBrief_3.pdf>
chapter 8
Pharmaceutical supply strategies
Summary 8.2
8.1 Systems for pharmaceutical nancing and
distribution 8.3
8.2 Perspectives on the role of the state in health
care 8.5
8.3 Basic pharmaceutical supply systems 8.7
Central medical stores • Autonomous supply
agency • Direct delivery system • Primary distributor
system • Primarily private system
8.4 Contracting for pharmaceutical supply
services 8.13
8.5 Comparison of basic supply systems 8.13
8.6 Vertical supply systems 8.14
8.7 Meeting health needs through private
channels 8.14
Not-for-prot pharmaceutical services • For-prot
pharmaceutical services: retail pharmacies and drug sellers
8.8 Health systems strengthening, decentralization, and
pharmaceutical supply management 8.16
8.9 Analyzing options for supplying essential
medicines 8.18
8.10 Implementing sustainable changes in pharmaceutical
supply systems 8.18
References and further readings 8.19
Assessment guide 8.20
illustrations
Figure 8-1 Supply chain management framework 8.4
Figure 8-2 Checklist for evaluating an autonomous essential
medicines supply agency 8.9
Figure 8-3 Public- and private-sector roles in pharmaceutical
supply 8.12
Table 8-1 Systems for nancing and distributing
medicines 8.3
Table 8-2 Comparison of basic pharmaceutical supply
systems 8.6
country studies
CS 8-1 An autonomous medical supply service: Medical
Stores Department in Tanzania 8.8
CS 8-2 Developing a prime vendor pharmaceutical supply
system for the Tanzanian mission sector 8.11
CS 8-3 NGO essential medicines services in East
Africa 8.15
CS 8-4 Decentralization’s eect on the supply of essential
medicines in Indonesia 8.17
Part I: Policy and economic issues Part II: Pharmaceutical management Part III: Management support systems
Policy and legal framework
1 Toward sustainable access to medicines
2 Historical and institutional perspectives
3 Intellectual property and access to medicines
4 National medicine policy
5 Traditional and complementary medicine policy
6 Pharmaceutical legislation and regulation
7 Pharmaceutical production policy
8 Pharmaceutical supply strategies
Financing and sustainability
copyright
©
management sciences for health 2012
8.2 POLICY AND LEGAL FRAMEWORK
e basic goals of national medicine policies and public-
sector pharmaceutical supply systems are to provide
access to needed medicines and supplies, promote the
rational use of medicines, and ensure the quality, safety,
and ecacy of medicines. Various strategies exist to
achieve these goals through dierent combinations of
public and private involvement in the pharmaceutical
management cycle. National systems vary with respect
to public and private roles in nancing, distribution, and
dispensing of pharmaceuticals, ranging from fully public
to fully private systems.
At least ve alternatives have traditionally existed for
supplying medicines and supplies to governmental and
nongovernmental health services—
• Central medical stores (CMS): Traditional public-
sector pharmaceutical supply system, in which
medi cines are procured and distributed by a central-
ized government unit.
• Autonomous supply agency: An alternative to the
CMS system, managed by an autonomous or semi-
autonomous pharmaceutical supply agency.
• Direct delivery system: A decentralized, non-CMS
approach in which medicines are delivered directly
by suppliers to districts and major facilities. e gov-
ernment pharmaceutical procurement oce selects
the supplier and establishes the price for each item,
but the government does not store and distribute
medicines.
• Primary distributor (or prime vendor) system:
Another non-CMS system in which the govern-
ment pharmaceutical procurement oce establishes
a contract with one or more primary distributors
as well as separate contracts with pharmaceutical
suppliers. e contracted primary distributor
receives medicines from the suppliers and then
stores and distributes them to districts and major
facilities.
• Primarily private supply: An approach used in some
countries that allows private pharmacies in or near
government health facilities to provide medicines
for public-sector patients. With such an approach,
measures are required to ensure equity of access for
the poor, medically needy, and other target popula-
tions.
ese systems vary considerably with respect to the role
of the government, the role of the private sector, and
incentives for eciency. Mixed systems in which dier-
ent categories of pharmaceuticals are supplied through
dierent mechanisms are frequently seen, and countries
that take advantage of the capacities in both the public
and private sectors usually have systems that are more
eective; they also tend to be more resistant to shock
from disaster events.
In many countries, missions, charities, and other not-for-
prot, nongovernmental organizations (NGOs) provide
an important share of health care. NGOs in some coun-
tries have established not-for-prot essential medicines
supply agencies to provide high-quality, low-cost phar-
maceuticals for their health facilities. Some of these have
been very successful, but the model has not worked in all
countries.
In most countries, the commercial sector is able to pro-
vide a range of services that can enhance public access to
essential medicines. In general, this sector would poten-
tially respond well to new opportunities for providing
supply services; however, the private commercial sector
is not always suciently well developed or motivated to
provide critical supply services to the public sector and
should not be seen as a cure-all remedy for solving prob-
lems with existing systems.
e commercial sector also plays a vital role in pro-
viding access to many people, especially in rural and
underserved urban areas where retail drug outlets
are the rst stop to treat common illnesses. Because
these outlets operate in a relatively uncontrolled envi-
ronment, improving and monitoring the quality of
products and services is challenging, and drug sellers
generally lack qualications or training in pharmaceu-
tical management. Much work remains to be done to
solve these problems, although strategies that engage
the interests of shop owners, dispensers, the govern-
ment, and the public have recently been developed and
tested with some success. Chapter 32 covers drug seller
initiatives.
In many countries—especially in countries that have
been rolling out large-scale HIV/AIDS programs—the
relative roles of the public and private sectors in phar-
maceutical supply management are undergoing change
in both the pharmaceutical sector and the overall health
sector. Changes in public and private roles need to be
designed to account for the planned magnitude of scale-
up and to promote accessibility to medicines and rational
medicine use.
Perspectives on the role of government in health care
vary from a solidarity, or social welfare, approach (which
holds that the state should provide all health and other
social services except when it is unable to do so) to a self-
suMMary
8 / Pharmaceutical supply strategies 8.3
8.1 Systems for pharmaceutical nancing
and distribution
Approaches to pharmaceutical supply can be described in
terms of public and private roles in nancing, wholesale dis-
tribution, and retail distribution. e six main approaches
range from fully public to fully private, as summarized in
Table 8-1.
1. Fully public: e classic public system follows a CMS
approach, in which a centralized government unit
nances, procures, and distributes medicines. e state
is the owner, funder, and manager of the entire supply
system. Many countries in Africa, Asia, Europe, and
Latin America have made this their standard strategy.
2. Private supply to government health services: rough
direct delivery or prime distributor contracts
(described later in this chapter), private channels
are used to provide publicly funded medicines to
government-operated health facilities. Although most
common in North America, where it is known as a
prime vendor system, this approach can also be found
in Africa, Asia, and Latin America.
3. Social health insurance systems: Public funding from
central budgets and social health insurance premi-
ums can be used to reimburse pharmacies or patients
themselves for medicines that are provided through
private pharmacies. Australia, many countries in
Western Europe, and North America have followed
this approach in recent years.
4. Private nancing and public supply: Government
medical stores or state-owned wholesalers may supply
medicines that are dispensed by government health
facilities but paid for (in whole or in part) by patient
fees. Many former socialist economies followed this
approach. In the 1990s, it was being used by China
and by government health services in Asia, Africa, and
Latin America that implemented user fees for pharma-
ceuticals but continued to operate government medical
stores. China specically has shied its health nanc-
ing scheme from a socialized system to a market-
oriented one. Some countries, such as Uganda, have
eliminated user fees and increased public spending,
whereas others are working toward instituting social
health insurance systems in place of user fees (WHO
2003; WHO/WPRO n.d.).
5. State wholesale monopoly: At least through the 1980s,
in parts of Europe and Africa, pharmaceuticals were
imported and distributed by a state monopoly that
supplied private pharmacies as well as government
help, or market-economy, approach (which holds that the
private market should provide most health services). is
chapter does not argue for or against either approach but
advocates that, for most countries, the best strategy is a
balanced approach drawing on the strengths and capa-
bilities of both public and private sectors.
is chapter provides an overview of systems and strate-
gies for organizing pharmaceutical supply for public
health services and issues related to health-sector reform,
including the decentralization of pharmaceutical
management functions. Issues and options related to
meeting public health needs through the private pharma-
ceutical sector are also considered, including the poten-
tial contribution of private nonprot essential medicines
services. In the context of rapidly growing programs to
treat critical diseases, such as HIV/AIDS, the chapter
outlines approaches for addressing supply problems.
Finally, the chapter summarizes dierent government
roles, including periods of transition from one model of
service delivery to another.
Table 8-1 Systems for nancing and distributing medicines
Financing
Distribution
Wholesale retail
Public
Fully public Public Public
Private supply to government health services Private
Social health insurance systems Private Private
Private
Private financing and public supply Public Public
State wholesale monopoly Public Private
Fully private Private Private
8.4 POLICY AND LEGAL FRAMEWORK
health services in some cases. Although this model has
historical signicance, it is rarely seen now.
6. Fully private: Patients pay the entire cost of medicines
and purchase them from private retail pharmacies and
drug sellers, which now exist in nearly every country
in the world and account in some cases for a large
percentage of pharmaceutical distribution. Outside
the market economies that have high levels of social
and private health insurance, this approach is also the
major source of prescription medicines in many coun-
tries, including many of those that nominally provide
free pharmaceutical services.
e context of nancing public health in resource-limited
countries has changed because of global funding initia-
tives to combat specic diseases—primarily HIV/AIDS
and malaria. e Global Fund to Fight AIDS, Tuberculosis
and Malaria; the Global Drug Facility; the U.S. President’s
Emergency Plan for AIDS Relief; and others are dramati-
cally changing the public health nancing paradigm for
these programs, with a particular emphasis on pharmaceu-
ticals. More information on these donor initiatives can be
found in Chapters 2 and 14.
Public nancing includes government budgets (central,
regional, and local) and compulsory social health insur-
ance programs. Private nancing includes out-of-pocket
payments by individuals and households, private health
insurance, community medicine schemes, cooperatives,
employers, and nancing through other nongovernmental
entities. Chapter 11 includes more information on nanc-
ing, and Chapter 12 covers pharmaceutical benets in
insurance.
Public distribution includes wholesale distribution and
retail dispensing by government-managed pharmaceutical
supply and health services as well as distribution through
state-owned enterprises (state corporations). Private distri-
bution includes private for-prot wholesalers, retailers, and
nonprot essential medicines supply services. Figure 8–1
illustrates a pharmaceutical supply chain framework featur-
ing the public and private sectors and possible partners.
Figure 8–1 Supply chain management framework
Levels
International
National
District
Community
Private sector
Multinational
suppliers
Local
manufacturers
Local
wholesalers
Shops,
pharmacies
Private
prescribers
Public sector
International procurement
agencies
Government
supply services
Regional
Distributors
Regional facilities
District facilities
Primary care facilities
Users
Partners
NGO and community
organizations
Professional associations
Academic institutions
Regulatory agency
Third-party payers
Donors
Key
Primary product ow
Alternative ow
Information ow
Supply chain
Source: CPM/MSH 2011.
8 / Pharmaceutical supply strategies 8.5
8.2 Perspectives on the role of the state in
health care
Dierent perspectives on the role of the state in providing
health care result in dierences in assigning the responsibil-
ity for pharmaceutical supply. e debate over the proper
role of government is as old as government itself. is debate
has been heightened, on the one hand, by the failure of cen-
trally planned economies to ensure economic security for
their populations and, on the other hand, by the inability
of some market economies to ensure access to basic social
services such as health care. Two views of the role of govern-
ment can be identied—
• Social welfare perspective: the government should
provide all health and other social services, except in
specic instances when it is unable to do so.
• Market economy perspective: the private market should
be le to provide all health and other social services,
except when the private market fails to do so and the
state can be expected to achieve better outcomes.
Such totally divergent views may exist in theory, but
in practice, neither approach suciently provides ade-
quate access to health services for all population groups.
Increasingly, countries recognize that they must strike a bal-
ance between public and private control to create the most
ecient service delivery system, and each country’s context
for making these decisions diers.
Governments everywhere, regardless of level of economic
development, are subject to a common set of constraints.
ese include—
• Ineciency in service delivery, which may result from
lack of individual incentives for good performance,
bureaucratic inexibility, and overemployment
• Interest-group pressures from political supporters,
business partners, members of one’s local community,
or concerned parties, which may lead to inecient or
inequitable use of public resources
• Lack of good governance, which may manifest itself in
self-interested manipulation of the medicine selection
process, corruption in the award of tenders, nepotism
in the appointment of key sta, or the of pharmaceu-
tical products by health sta
Although government eectiveness has its limits, leaving
the supply of pharmaceuticals entirely to the market econ-
omy may also fail to achieve public health objectives. Issues
that must be considered include—
Equity: Because of the relatively high cost of medicines
compared with incomes, without government involve-
ment, the poor and medically needy may be denied
access to necessary and oen lifesaving medicines.
Information failure: Patients and some health professionals
do not have full information about the quality, safety, e-
cacy, value for money, and appropriateness of individual
medications.
Competition failure: Patents and brand names may establish
a virtual monopoly for some products, and cumbersome
or obstructive registration procedures, combined with
the high initial investment required to build manufactur-
ing facilities and develop new medicines, may limit the
number of new competitors.
Externalities: Health services such as vaccination and treat-
ment of contagious tuberculosis or sexually transmitted
infections benet people besides those who receive the
services.
Chapter 10 has more information on pharmacoeconomic
issues.
e remaining sections of this chapter discuss major areas
of public involvement in pharmaceutical supply: organiz-
ing pharmaceutical supply for government and NGO health
services, decentralization and pharmaceutical management,
and use of private channels to meet needs for essential medi-
cines and health commodities.
Government action in each of these areas should be
informed by a realistic assessment of the appropriate role
8.6 POLICY AND LEGAL FRAMEWORK
Table 8-2 Comparison of basic pharmaceutical supply systems
responsibilities
Model
Contracting
suppliers
storage and
delivery
Monitoring
medicine
quality advantages Disadvantages
Central medical stores
Conventional supply
system; medicines
procured and distributed
by centralized
government unit
CMS CMS CMS, DRA • Maintains government
control over entire system
•Is easy to monitor
•High capital cost for offices,
storage, and transport
facilities
•Recurrent cost of staff,
transport, other operating
costs
•Limited incentive for
efficiency
•Open to political and other
interference
autonomous
supply agency
Bulk procurement,
storage, and distribution
managed by autonomous
or semi-autonomous
agency
Autonomous
agency
Autonomous
agency
PPO and
autonomous
agency, DRA
•Maintains advantages of
centralized system
•Flexibility in personnel and
management systems may
improve efficiency
•Is less open to interference
•Separate finances facilitate
revolving drug funds
•Cost and effort of
establishing supply agency
•May retain some constraints
of CMS
•Limited competitive
pressure for efficiency if
operated as monopoly
Direct delivery system
Decentralized approach;
tenders establish the
supplier and price for
each item; medicines
delivered directly by
supplier to districts and
major facilities
PPO Suppliers PPO, DRA • Eliminates cost of
government-operated
storage and distribution
•Decentralized order
quantities and delivery
help adjust to variations in
seasonal and local demand
•Maintains price benefits of
centralized tendering
•Reduces inventory costs
and expiration for high-cost,
low-volume medicines
•Coordination and
monitoring of deliveries,
payments, and quality are
demanding
•Feasible only where
adequate private
infrastructure exists
•Suppliers limited to
those able to ensure local
distribution (may reduce
competition, increase cost)
•Direct delivery by multiple
suppliers (especially to
remote areas) is inefficient,
may raise costs
Primary distributor
system
PPO establishes contracts
with pharmaceutical
suppliers and separate
contract with a single
primary distributor,
which warehouses and
distributes medicines
to districts and major
facilities
PPO Primary
distributor
PPO and
primary
distributor
•Maintains advantages of
single distribution system
•Potential primary
distributors compete on
service level and cost
•Monitoring of service level
and pharmaceutical quality
is demanding
•Competition depends on
well-developed private
distribution system
Primarily private supply
Private sector
manages all aspects of
pharmaceutical supply
Procurement
and
distribution
by private
enterprises
Procurement
and
distribution
by private
enterprises
DRA • Least demanding and least
costly for the government
•Does not ensure equity of
access for poor, medically
needy, or other target
groups
•Medicine quality is more
difficult to monitor
CMS = central medical stores; DRA = national drug regulatory authority; PPO = pharmaceutical procurement office (ministry of health or other government office).
8 / Pharmaceutical supply strategies 8.7
of the state, given the country’s circumstances. Whatever
a society’s expectations or a government’s promises, con-
straints exist to government involvement, and dangers arise
in an unregulated market approach to pharmaceutical sup-
ply. Government supervision of the private pharmaceuti-
cal market involves complex and oen contentious issues.
Public health objectives may conict with short-term com-
mercial interests. Ideological or political considerations not
directly related to either public health or commercial per-
spectives may further cloud discussions.
8.3 Basic pharmaceutical supply systems
Of all the decisions policy makers and managers face, the
most complex and costly oen concern the nancing and
supply of medicines for government health services. In
some countries, public-sector pharmaceutical supply is well
nanced and administratively ecient. In other countries,
the pharmaceutical supply system is unreliable and short-
ages are common; such systems suer from inadequate
funding, outdated procedures, interference of various sorts,
and a variety of other problems.
e pharmaceutical management framework—including
all aspects of procurement and distribution—is the subject
of Part II of this book. Before confronting the particulars of
the pharmaceutical management framework, however, the
basic structure of the supply system must be established, and
pharmaceutical and supply chain management practices
should be applied to achieve maximum eciency.
Although many variations exist, ve basic approaches are
used for organizing pharmaceutical supply for public health
services (see Table 8-2)—
• Central medical stores
• Autonomous supply agency
• Direct delivery system
• Primary distributor system (also known as prime ven-
dor system)
• Primarily private system
A mixed system is frequently seen in practice, where
dierent approaches are used for dierent levels of health
facili ties or dierent categories of products. Sometimes, sep-
arate supply systems for disease-specic programs operate
parallel to the primary supply system; these vertical supply
systems are discussed in Section 8.6.
is discussion speaks primarily from a government
perspective. However, the mechanisms described here are
equally relevant to faith-based and other nonprot health
services, private hospital purchasing groups, for-prot
health systems, and other institutional health services. is
is particularly true for the autonomous agency, direct deliv-
ery, and primary distributor approaches.
Central medical stores
e traditional approach to public-sector pharmaceuti-
cal supply is the CMS, in which medicines are nanced,
procured, and distributed by the government, which is the
owner, funder, and manager of the entire supply system. e
government handles selection, procurement, and distribu-
tion—usually through a unit within the ministry of health.
Financing is usually from central treasury allocations and
donors, although this model can be adapted to a revolving
drug fund (see Chapter 13). In countries that have decen-
tralized budgeting and procurement, lower-level units, such
as districts, may have the authority to purchase directly from
the CMS.
With the CMS approach, problems with nancial man-
agement, quantication of requirements, management of
tenders, warehouse management, transport, and security of
pharmaceuticals are common. ese problems oen arise
from political or administrative interference; civil service
constraints on discipline or dismissal of poorly performing
or dishonest sta; overall inadequacy of nancial resources;
procurement constraints arising from the treasury payment
cycle, erratic release of ministry of health funds, or slow
payment from districts; and transport diculties resulting
from the need to maintain a large vehicle eet. In Malawi,
for example, regulations force the CMS to continue shipping
medicines to districts that have not paid, which provides a
disincentive for districts and creates decapitalization in the
CMS.
One way to address some of these constraints is to con-
tract out (or outsource) specic aspects of the supply system
(see Section 8.4). Outside contractors that specialize in cer-
tain services may be able to provide them at lower cost and
higher quality. Port clearing, warehouse management, and
transport are among the services that are sometimes con-
tracted out to the private sector.
Autonomous supply agency
Problems with CMS systems have led some governments
to establish systems that place the responsibility for bulk
procurement, quality assurance, storage, distribution, and
nancial management in the hands of an autonomous or
semi-autonomous supply agency. is model has been
tried in several countries, particularly in Africa and Latin
America (Country Study 8-1).
Autonomous supply agencies are oen established as
parastatals, either under the ministry of health or as inde-
pendent organizations with a board of directors with rep-
resentatives from several government ministries and
sometimes from the private and nonprot sectors. ese
supply agencies operate like the nonprot essential medi-
cines supply services described in Section 8.7, except that
their primary client is the government’s health services. e
8.8 POLICY AND LEGAL FRAMEWORK
Before 1994, Tanzania functioned with a traditional
CMS model for procurement, storage, and distribu-
tion. roughout the 1980s, CMS management became
increasingly ineective, and operational and nan-
cial sustainability were major issues. Recognizing the
seriousness of the situation, the Ministry of Health
made reforming the CMS a cornerstone of its 1992
Pharmaceutical Master Plan. e reforms resulted in
the development of an autonomous Medical Stores
Department (MSD) to procure, store, distribute, and sell
health commodities to the public sector and authorized
private organizations. e department had a mandate
to make available essential medicines and supplies on a
nationwide basis, to be nancially self-sustaining, and to
base decision making on “sound commercial principles.”
Although MSD is still a government-owned institution,
it has autonomous status and makes its own rules, regula-
tions, and procedures.
Now MSD is the predominant single distributor of
pharmaceuticals and medical supplies in Tanzania. It
operates a self-sustaining revolving drug fund with eight
zonal stores. MSD serves national referral hospitals,
regional health facilities, district health facilities, health
centers and dispensaries, faith-based health facilities, and
approved NGOs.
MSD improved the supply of essential medicines and
health commodities to the public sector compared with
the CMS, but major increases in workload in recent years
have stretched MSD’s physical and managerial capacity.
At one time, MSD had a virtual monopoly on distribut-
ing pharmaceuticals and supplies to all public-sector and
mission or faith-based health facilities. Now, however,
because of decentralization, districts and hospitals have
control over their own budgets and can procure medi-
cines and supplies from sources other than MSD. A 2007
survey showed that only 33 percent of health facilities
procured exclusively from MSD, whereas most also pro-
cured medicines and supplies from private pharmaceuti-
cal wholesalers and private pharmacies. e government
provides no guidelines to health facilities on when they
should procure from private sources. Between 2000 and
2007, the number of private wholesalers had doubled to
almost 200. Although facilities may not use MSD as their
exclusive supplier, MSD sales turnover has been steadily
increasing (see table).
MSD Total sales and percentage markups: 2004–2006
2004 2005 2006
Sales in U.S. dollars 38,417,481 52,000,000 86,980,000
Percent markup
of total sale 17.0 17.0 15.5
Storage space and general stock availability from MSD
have been problematic. In a 2001 assessment, on aver-
age, MSD was able to supply less than 80 percent of
items requested, with some zonal stores achieving less
than 70 percent. A spot assessment in 2003 showed
that the MSD facilities had an average of 49 percent
of vital medicine items available, although its target is
to have 100 percent availability for these medicines.
In 2007, however, the availability of tracer items in
the MSD zonal stores was only about 50 percent when
measurement included buer stock; not surprisingly,
primary health facilities received only 67 percent of
their orders from MSD. MSD and its zonal stores
reported product delivery delays and insucient fore-
casting as the main problems resulting in stockouts;
product rationing at dierent levels of the supply chain
distorts the perception of demand. e assessment
did nd good practices in place for storage and stock
manage ment operations at the central and regional
stores. At every MSD warehouse visited, stocks were
secure, protected from light, in properly ventilated
areas, and well organized. e information technology
stock management system was functioning.
A major concern in 2007 was the eect of vertical
program supply systems, which, because of their large
value relative to the essential medicines supply system,
distort health priorities. e assessment concluded that
government-funded essential medicines were being
“crowded out” by the disproportionate funding and
attention given to vertical programs. In addition, the
report noted that vertical systems caused duplication
and overburdened sta, who have to manage parallel
information and funding ows. Evidence also suggests
that MSD receives only a fraction of what it is owed for
distributing vertical program goods.
Sources: CPM 2003; Euro Health Group and MSH Tanzania 2007;
MoHSW 2007.
Country study 8-1
an autonomous medical supply service: Medical stores Department in Tanzania
