Healthy Skepticism Library item: 20485

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Journal Article

Lexchin J
Drug economics in developing countries
The Lancet 1989 Sep 16;

Abstract:

Sir – The article by Dr Litvack and colleagues (Aug 12, p376), outlining a scheme for pricing drugs in developing countries to achieve cost recovery, seems to have a fatal flaw. Their approach calls for mark-ups on non-essential drugs to subsidise essential drugs. Table 2 in their article shows a hypothetical annual net revenue of $2681000 for a sample of drugs used to treat a variety of illnesses. However, without the revenue of $3189000 from two non-essential drugs that surplus becomes a loss of $508000. Presumably without the non-essential drugs the cost of some of the essential drugs would have to be raised to keep the programme self-financing. If prices of essential drugs are to be kept at acceptable costs (as calculated by Litvak, et al) it seems to be necessary to supply and sell non-essential drugs to generate a surplus; supply only essential drugs at acceptable costs and the programme runs into deficit. Neither alternative is acceptable. If a cost-recovery scheme is to be adopted it must be one in which essential drugs can be made to pay for themselves without financially overburdening the population being served.

Joel Lexchin
121 Walmer Road,
Toronto, Ontario, M5R 2X8, Canada