Role of Price in Pharmaceutical Business in Nepal
Introduction
The pharmaceutical industry is highly strict in terms of the product, processes and formulation, patents, and other areas wherein the firms can be protected according to their contribution in the medical society. To answer the growing number of illnesses across the globe, discovering the new formulas and developing a different drug that can cure various diseases are the topmost objective of every pharmaceutical firm. In accordance to their mission in delivering the quality health, the firms are also aiming to produce the quality drugs by the means of profit. The continuous promotion of health is based on the interaction of patient and health care provider, and the level of compliance of the patient according to the given drug for treatment. There is an assurance that manufacturers are guided by their standard procedures and innovative processes to achieve the adequate formulas in bringing the medicines for the public, and can be a reason on pricing the particular drug.
Background and Problem Statement
There is a large gap in the issue on availability and affordability of the prices which is beyond the international reference prices. In addition, the medicines that is in high prices which is unaffordable to poor people makes the problem in quality health services worse. The availability of medicines and effectiveness can be the great force in patients in paying higher prices. It is identified that high medicines prices are largely due to wholesaler, distributer and retailer mark-ups, and the existence of government taxes and duties (Cameron, et al., 2009). However, does price play vital role in medicine selling, particularly in Nepal?
Research Aim and Objectives
The main aim of the study is to recognize the role of prices among the medicine or pharmaceutical products in Nepal. It is understandable that the pharmaceutical firms or businesses need the sales to continue their service in the society. Therefore, the study must give the essential ideas regarding the role of prices in medicines with the help of the three core objectives. First is to identify the various medicines that are usually high in prices and the level of needs among the poor people. Second is to determine if there are any existing substitutes and the level of its effectiveness. And third is to discover the various government actions in regulating the prices in medicines.
Literature Review
High selling price of medicine creates such burden on the dependent, users, or consumers, most especially to the point where an average-income earner spend more than half of his monthly salary just to satisfy the needs of the body in medication (Cameron, et al., 2009). Pricing strategies can be explained as part of the pharmaceutical firms’ agreement and used as the reference pricing towards the pharmaco-economic growth and competition (Seget, 2005). Still, the issue of the availability and affordability in the promotion of accessibility in medicines remains the center of government policies in healthcare. It is suggested that government should control the supply chain costs, which includes the action in limiting wholesaler, distributer, and retail mark-ups. Added to that is the removal of the government duties and taxes that adds to the prices of pharmaceutical firms. To support the average wage and salary of an individual, it is better that the use of generic products are endorsed across the market. Furthermore, the pharmaceutical firms need to improve the effectiveness of medicines in terms of financing and distribution, which bound to explain the need of the efficiency of the medicines. Based on the standard set of reference prices, the medicine prices can be expressed through the facilitation of national and international comparisons. The standard are updated frequently which are available for both not-for-profit and for-profit suppliers to developing countries (Cameron, et al., 2009). In Nepal, there is a regulatory guideline called the Nepal Drug Act of 1978 that governs the sale and distribution of pharmaceutical products. The regulations are based on the 1995 National Drug Policy which concentrates in the promotion on the drug financing programs in the community thus, establishes the profit and distribution areas (Rao and Thapa, 2006). Nepal’s continuous encouragement on the equity and access of pharmaceutical products can create an efficiency output.
Methodology
The suggested method in the study is the use of secondary information that centers in the pharmaceutical industry and the issue of pricing strategies. Secondary data can gain from pharmaceutical business’s review, government regulations, and evaluation regarding the importation and generic substitution. Through the use of secondary information as the main method, the level of Medicare, Medicaid, and overall healthcare for the poor people can be measured.
References:
Cameron, A., Ewen, M., Ross-Degnan, D., & Laing, R., (2009) “Medicine Prices, Availability, Affordability in 36 Developing and Middle-Income Countries: Secondary Analysis”, Lancet 17 Jan No. 373, pp. 240-249, Accessed 15 June 2010, from http://www.who.int/medicines/news/QA_LancetMedicinesPricing.pdf
Rao, R., & Thapa, D., (2006) “Nepal: Reproductive Health Commodity Pricing Survey – Understanding Equity, Access, and Affordability of Essential Reproductive Health Commodities”, (USAID) U.S. Agency for International Development, Accessed 15 June 2010, from http://pdf.usaid.gov/pdf_docs/PNADG034.pdf
Seget, S., (2005) “Pharmaceutical Pricing Strategies – Price Optimization, Reimbursement and Regulation in Europe, US, and Japan”, Business Insights Ltd, Accessed 15 June 2010, from http://www.globalbusinessinsights.com/content/RBHC0135t.pdf
Credit:ivythesis.typepad.com
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