CON­TROL­LING COSTS

Executive Magazine - - Cover Story -

Walid Am­mar, direc­tor gen­eral of the Min­istry of Public Health, ex­plains that the min­istry set out to mit­i­gate spend­ing by first work­ing to­wards lim­it­ing im­port prices and profit mar­gins. The ex-fac­tory price is the main tar­get, he says, where ex-fac­tory is the price of the prod­uct if it were bought at that fac­tory, e.g. with­out costs of trans­porta­tion. The min­istry de­ter­mines the lo­cal price by look­ing first to the prod­uct’s coun­try of ori­gin for ways to re­duce the profit mar­gin, then to those im­porters and phar­ma­cists in Le­banon. “We have is­sued sev­eral de­ci­sions over the years that have re­duced the profit mar­gins grad­u­ally and the most re­cent one is to have cat­e­gories where you have dif­fer­ent profit mar­gins depend­ing on the cat­e­gory. The higher ex-fac­tory price gets lower profit mar­gins — this is to en­cour­age the gener­ics mainly,” Am­mar adds.

The min­istry also com­pares prices of medicines in other coun­tries’ mar­kets and prior to 2005 based the lo­cal price of a given drug on its mean value across mar­kets, though now the gov­ern­ment sets the price to the low­est found in a com­par­i­son sur­vey of other mar­kets. What has had a big im­pact, says Am­mar, is the min­istry’s al­ter­ing of the profit al­lowed to the phar­ma­cists — rather than re­ceiv­ing a per­cent­age of the re­tail­ing price for a given medicine the phar­ma­cist now can only cal­cu­late their profit by a flat rate lump sum. Am­mar gives an ex­am­ple of how the min­istry has al­tered the phar­ma­cists’ profit mar­gin for medicines that fall into the high­est cat­e­gory on the drug public price list — in­stead of al­low­ing the phar­ma­cist to mark up the re­tail­ing price of a given medicine by a cer­tain per­cent the min­istry has capped ex­pen­sive drugs with a flat rate lump sum. “We have trans­formed the profit mar­gin of the phar­ma­cists from a per­cent­age to a lump sum; ev­ery­thing that has an ex-fac­tory above $300 the profit mar­gin of the phar­ma­cist is $86,” Am­mar says.

Ad­di­tional mea­sures to re­duce the cost of drugs have fo­cused on the pri­mary health­care net­work — lo­cal clin­ics and public hos­pi­tals — where gener­ics are dis­pensed when pre­scrib­ing med­i­ca­tion. But Am­mar says that the pri­mary health­care net­work has reached ca­pac­ity, so this is no longer an area that can squeeze profit mar­gins. The al­ter­na­tive has been to shift at­ten­tion back to the mar­ket, where “more than 80 per­cent of sold drugs are branded, and most are orig­i­na­tors [brand name],” says Am­mar. A strict reg­is­tra­tion mech­a­nism val­i­dates, among mul­ti­ple qual­ity con­trol­ling fac­tors, the man­u­fac­tur­ing con­di­tions and drug bioe­quiv­a­lency, en­abling the gov­ern­ment to con­trol com­par­isons of gener­ics to orig­i­na­tors and to clearly in­di­cate the equiv­a­lence.

In com­bi­na­tion, th­ese reg­u­la­tions are meant to re­duce the cost of health­care in Le­banon by con­trol­ling profit mar­gins and pro­mot­ing greater use of gener­ics where those medicines can be ap­pro­pri­ately sub­sti­tuted in lieu of the ex­pen­sive brand name drug. Fac­tor­ing in the soon to be im­ple­mented uni­fied pre­scrip­tion forms might fur­ther re­struc­ture the share of gener­ics pre­scribed and the land­scape of Le­banon’s phar­ma­ceu­ti­cal mar­ket. de­ducted from the phar­ma­cist’s profit. An ad­di­tional fee of 0.25 per­cent of the im­port bill is also paid to the Le­banese Or­der of Physi­cians.” Ex­ec­u­tive had re­quested th­ese data points from the Or­der of Physi­cians, which de­ferred to the Or­der of Phar­ma­cists; the lat­ter de­clined to share the statis­tics.

The new pre­scrip­tion form would seem to be a good devel­op­ment for phar­ma­cists — the forms would in­te­grate the phar­ma­cist into the con­sul­ta­tive process with the doc­tor and the pa­tient. It is, ac­cord­ing to Abdalla el Lakany, dean of the fac­ulty of phar­macy at Beirut Arab Uni­ver­sity, a needed step to­wards im­prov­ing the doc­tor–phar­ma­cist re­la­tion­ship. “This re­form benefits the phar­ma­cists to clar­ify their role as a med­i­ca­tion ther­apy ex­pert.” Tra­di­tion­ally, he says, the role of the phar­ma­cist has been limited to the dispensing of med­i­ca­tions rather than a di­rect role in pa­tient care vis-àvis doc­tors. In Europe and North Amer­ica the prac­tice is a pa­tient cen­tered, holis­tic ap­proach where the phar­ma­cist is a cor­ner­stone in a pa­tient’s treat­ment reg­i­men, says Lakany, be­cause of their drug ex­per­tise. “It is very nor­mal for doc­tors to ask the ad­vice of the phar­ma­cist,” in West­ern coun­tries, Lakany says, adding that Le­banon’s new pre­scrip­tion forms might be one step to­wards chang­ing the cul­ture.

The Or­der of Phar­ma­cists is back­ing the im­ple­men­ta­tion of the new pre­scrip­tion forms, Rabih Has­souneh, head of the syn­di­cate, tells Ex­ec­u­tive, but it is not en­thu­si­as­tic. “Fi­nan­cially, it is neg­a­tively af­fect­ing the phar­ma­cists, but we have agreed to abide by it and im­ple­ment this law be­cause we know this should be a huge ben­e­fit to the com­mu­nity,

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