Standards limit international aspirations

Local pharmaceutical manufacturers aspire to bid for big-ticket international contracts, but not before they clear the hurdle of standards.

Over the years, the policy goal of successive governments for the pharmaceutical industry has been to improve access to essential medicines, provide quality assurance for drugs on the market, and evolve an efficient supply chain.

The creation of the National Health Insurance Scheme (NHIS) has significantly improved access to medicines for insured patients, evident in increased utilisation of facilities and the rapidly-growing turnover of revolving drug funds.

That should be welcome news to local drug manufacturers because the government sector, with its thousands of clinics and health facilities, could potentially be the biggest buyer of the medicines that they produce.

Yet, manufacturers complain about the ridiculously low prices for medicines set by the National Health Insurance Authority (NHIA).

So as much as they relish doing business with government health facilities, pharmaceutical companies think they do not always get the best price, and aspire to bid for big-ticket international contracts for the supply of medicines for malaria, tuberculosis, AIDS and other diseases that inflict misery on the poorest countries of the world.

There is one serious challenge, though. It is the issue of standards. Expenditure on drugs as a proportion of total health expenditure in developing countries ranges from 24% to 66%. This huge expenditure on medicines is driven by the roles they can play in saving lives, restoring health, preventing diseases and stopping epidemics. In order to do so, medicines must be safe, efficacious, and of the quality prescribed by the relevant standards.

Consequently, the development of pharmaceutical medicines through clinical trials, production, importation, exportation, distribution, storage and ultimate use is subject to regulation to ensure that the standards of safety, efficacy and quality are met and maintained throughout the period of use of the product.

The World Health Organisation (WHO) has an international mandate to set standards for drugs and drug-manufacturing companies. And agencies of the United Nations that procure drugs to fight global ailments require suppliers to meet the WHO standard, often called a “pre-qualification standard.” However, no local drug manufacturer or any of their products are WHO pre-qualified.

There are 35 local manufacturers licensed by the regulator, the Food and Drugs Board (FDB), to produce various forms of pharmaceutical products in the country. These companies produce mainly essential generic medicines and specialty Over-The-Counter (OTC) drugs. About two firms produce IV fluids and there is one manufacturer of anti-retrovirals.

“In every country, all pharmaceutical manufacturers must meet the standard of that country’s regulator-- in this case the FDB. The UN agencies interested in procuring medicines have empowered the WHO to set a certain standard that every company they want to buy from must meet.

So if a company wants to sell to these UN agencies, they must meet the WHO standards,” says Mr. Kwabena Asante, General Secretary of the Pharmaceutical Manufacturers Association of Ghana (PMAG).

“There is a certain perception that regulation (by the FDB) is poor. If the regulator is seen as a stringent regulator, then the medicines it certifies must be of the highest standard. It is a matter of the regulator upgrading its standard if it is to be certified by the WHO, before that certification then benefits its members,” he says.

Winning a contract to supply medicines to UN agencies can bring good business to local drug manufacturers, he admits. There are attempts now to strengthen the capacity of local producers to meet WHO standards.

The project, known as “Strengthening Local Production of Essential Generic Drugs in Developing and Less Developed Countries,” is collaboration between the Ministry of Trade and Industry, the United Nations Industrial Development Organisation (UNIDO), FDB and PMAG to help local companies develop a road-map to meet WHO standards.

Mr. Asante explains the road-map and PMAG’s expectations from government: “We are working in partnership with the United States Pharmacopeia. They have submitted the first part of the road-map and we are considering it.

Producers want government to help pay for the upgrade because in the end we will be producing good medicines for the people of Ghana and beyond.”

Discussions have included a review of tax incentives to the industry. Drug manufacturers currently enjoy zero rating on Value Added Tax (VAT), which means initial VAT paid by them is refunded after production and sales. Such a brilliant arrangement has become a nightmare for producers as they cannot recoup their monies, says Mr. Asante.

“In view of the rather long delay in recovery of the taxes under the zero rating arrangement, producers are asking for VAT exemption. Discussions have gone well and we have agreed on a list, not just a blanket exemption. It is up to the Minister of Finance to take it to parliament for it to be approved. It was supposed to take effect by the beginning of the year.”

Producers are advocating that the savings government is making as a result of the 95% donor- funded Affordable Medicines for Malaria programme should be put into a fund to help pay for the upgrading of local pharmaceutical companies.

“Under the Affordable Medicines for Malaria (AMFM) programme, 95% of the cost of malaria medications is borne by donors -- the medications are brought into the country and sold for 5% of the cost. Automatically, the anti-malaria market has gone to foreigners. They make up 30-40% of the drug market in developing countries,” Mr. Asante says.

PMAG, according to him, is counting on the government to support its upgrading through the adoption and implementation of fiscal incentives to strengthen the industry. “We are hoping the government will say, ‘we are going to support you to upgrade and meet the WHO pre-qualification standard; and with the donor money that comes in, we are going to purchase the drugs from local producers so that the money will stay in the country so we can create jobs for our people.”

One important facility the industry requires is a bio-equivalence centre where local companies -- and indeed companies in the sub-region -- can have their products tested to ascertain if they meet the innovator brand. None exist in West Africa; the closet one is in South Africa.

Mr. Asante explains that the West Africa Health Organisation (WAHO) is currently looking for funds to site the project in Ghana. “Maybe next year, the establishment of the centre will begin,” he says. And perhaps the centre will provide a stimulus to the effort to raise the standard of drugs produced in the industry.