The Role of Medicine Pricing Policy for Improving the Affordability of Medicines

  • Yusi Anggriani Universitas Pancasila


Medicine is a pharmaceutical product that has imperfect market characteristics. This affects affordability to the community, and therefore it is necessary for the government to regulate medicine prices. Medicine prices can be regulated in the medicine supply chain by the industry, importers, distributors and health facilities such as pharmacies, hospitals and medicine sellers. Developed and high income countries generally regulate the prices of medicines and are part of a health insurance system. In contrast with the situation in developed countries, medicine pricing regulation in developing countries and Lower Middle Income Countries is not well established. The regulation of mark-ups in distribution channels is the most common strategy used by LMIC. Small country with only a few pharmaceutical facilities has a weak bargaining position, generally the government cannot set prices. The application of cost-plus pricing is quite effective if it is implemented in a small country. In developing countries with a large market segment and adequate pharmaceutical industry facilities the price competition method is an effective strategy option to get lower prices. In practice, the application of  medicine pricing policy is dynamic. The medicine pricing system in a country can be changed or combined with other methods if the evaluation does not provide optimal results or generates unintended impacts.


1. WHO. Health reform and drug financing. WHO/DAP/98.3. Geneva: World Health Organization; 1998.

2. Rietveld AH, Haaijer-Ruskamp FM. Policy options for cost containment of pharmaceutical. In: Dukes MNG, Haaijer-Ruskamp FM, De Joncheere CP, Rietveld AH, editors. Drugs and Money: Price, affordablity and cost containment. Amsterdam: IOS Press Ohmsa (Published on behalf of WHO Regional office Europe); 2002.

3. Kumar S. India to extend price controls on drugs. BMJ. 2004 2004-08-12 00:00:00;329(7462):368.

4. Borrell JR. Pharmaceutical price regulation. A study on the impact of the rate-of-return regulation in the UK. Pharmacoeconomics. 1999 Mar;15(3):291-303. PubMed PMID: 10537436. eng.

5. Department of Health UK. The Pharmaceutical Price Regulation Scheme. Eleventh Report to Parliament. 2012 [cited 2012 October]. Available from:

6. Huttin C. Experiences with reference pricing. In: Dukes MNG, Haaijer-Ruskamp FM, de Joncheere CP, Rietveld AH, editors. Drugs and Money: Price, affordability and cost containment. Amsterdam: IOS Press Ohmsa (Published on behalf of WHO Regional office Europe); 2002.

7. Danzon PM, Chao L-W. Cross-national price differences for pharmaceuticals: how large, and why? Journal of Health Economics. 2000;19(2):159-95.

8. Schneeweiss S. Reference drug programs: Effectiveness and policy implications. Health Policy. 2007;81(1):17-28.

9. Ghislandi S. Competition and the reference pricing scheme for pharmaceuticals. Journal of Health Economics. 2011;30(6):1137-49.

10. Brekke KR, Grasdal AL, Holmås TH. Regulation and pricing of pharmaceuticals: Reference pricing or price cap regulation? European Economic Review. 2009;53(2):170-85.

11. Pavenik N. Do pharmaceutical prices respond to potential patient out-of-pocket expenses? Rand J Econ. 2002 Autumn;33(3):469-87. PubMed PMID: 12585303. eng.

12. Aronsson T, Bergman MA, Rudholm N. The impact of generic drug competition on brand name market shares – evidence from micro Data. Review of Industrial Organization. 2001;19(4):423-33.

13. Rothberg AD, Blignault J, Serfontein CB, Valodia B, Eekhout S, Pels LM. Experience of a medicines reference-pricing model. S Afr Med J. 2004 Mar;94(3):183-8. PubMed PMID: 15098277. eng.

14. Aaserud M, Dahlgren AT, Kosters JP, Oxman AD, Ramsay C, Sturm H. Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies. Cochrane Database Syst Rev. 2006;19(2). PubMed PMID: 16625648. eng.

15. Leopold C, Vogler S, Mantel-Teeuwisse AK, de Joncheere K, Leufkens HGM, Laing R. Differences in external price referencing in Europe—A descriptive overview. Health Policy. 2012;104(1):50-60.

16. Dylst P, Simoens S. Generic medicine pricing policies in Europe: Current status and impact. Pharmaceuticals. 2010;3(3):471-81. PubMed PMID: doi:10.3390/ph3030471.

17. Mossialos E, Brogan D, Walley T. Pharmaceutical pricing in Europe: Weighing up the options. International Social Security Review. 2006;59(3):3-25.

18. Mrazek FM. Comparative approaches to pharmaceutical price regulation in the European Union. Croat Med J. 2002 Aug;43(4):453-61. PubMed PMID: 12187524. eng.

19. Drummond M, Jonsson B, Rutten F. The role of economic evaluation in the pricing and reimbursement of medicines. Health Policy. 1997 Jun;40(3):199-215. PubMed PMID: 10168752.

20. McGuire A, Drummond M, Rutten F. Reimbursement of pharmaceutical in the European Union Open University 2004 [cited 2010 12 February]. Available from:

21. Bloor K, Maynard A, Freemantle N. Lessons from international experience in controlling pharmaceutical expenditure. III: Regulating industry. Bmj. 1996 Jul 6;313(7048):33-5. PubMed PMID: 8664771. eng.

22. Hoomans T, Severens JL, van der Roer N, Delwel GO. Methodological quality of economic evaluations of new pharmaceuticals in The Netherlands. Pharmacoeconomics. 2012 Mar;30(3):219-27. PubMed PMID: 22074610. Epub 2011/11/15 06:00. eng.

23. Lundkvist J. Pricing and reimbursement of drugs in Sweden. The European Journal of Health Economics. 2002 2002/03/01;3(1):66-70. English.

24. Graf von der Schulenburg JM, Hoffmann C. Review of European guidelines for economic evaluation of medical technologies and pharmaceuticals.
HEPAC Health Economics in Prevention and Care. 2000 2000/06/01;1(1):2-8. English.

25. Yang BM, Bae EY, Kim J. Economic evaluation and pharmaceutical reimbursement reform in South Korea's National Health Insurance. Health Aff
(Millwood). 2008 Jan-Feb;27(1):179-87. PubMed PMID: 18180493. Epub 2008/01/09 09:00. eng.

26. Vogler S, Habl C, Leopold C, Rosian-Schikuta, de Joncheree K, Thomsen T. Prescription pricing and reimbursement information (PPRI) report
Vienna2008 [cited 2012 January]. Available from:

27. Sarmiento AZ. Alternative drug pricing policies in the Americas Geneva: World Health Organization. Health Economics and Drug. DAP Series No1.
WHO/DAP/95.6; 1995 [cited 2010 March]. Available from:

28. Lee I-H, Bloor K, Hewitt C, Maynard A. The effects of new pricing and copayment schemes for pharmaceuticals in South Korea. Health Policy.

29. Gilman BH, Kautter J. Impact of multitiered copayments on the use and cost of prescription drugs among Medicare beneficiaries. Health Serv
Res. 2008 Apr;43(2):478-95. PubMed PMID: 18370964. eng.

30. PBS. What you pay for PBS medicines: Pharmaceutical Benefit Scheme; 2012 [cited 2012 September]. Available from:

31. Purcell D. Competition and regulation in the retailed pharmacy market: The Policy Institute. Trinity College Dublin.; 2004 [cited 2012 October]. Available from:

32. Sood N, De Vries H, Gutierrez I, Lakdawalla DN, Goldman DP. The effect of regulation on pharmaceutical revenues: experience in nineteen countries. Health Aff (Millwood). 2009 Jan-Feb;28(1):w125-37. PubMed PMID: 19088100. eng.

33. Vogel RJ. Pharmaceutical pricing, price controls, and their effects on pharmaceutical sales and research and development expenditures in the European Union. Clinical Therapeutics. 2004;26(8):1327-40.

34. Golec J, Vernon JA. European pharmaceutical price regulation, firm profitability, and R&D spending. : Working Paper 12676; 2006 [cited 2012 October]. Available from:

35. Thomas MC, Mann J, Williams S. The impact of reference pricing on clinical lipid control. N Z Med J. 1998 Aug 14;111(1071):292-4. PubMed PMID: 9760953. eng.

36. Pearson LS. A need for government intervention? Prescription drug prices and retail rark-ups Blacksburk, Virginia: Master Thesis. Faculty of the Virginia Polytechnic Institute and State University 2011 [cited 2012 September]. Available from:

37. Andersson F. Methodological aspects of international drug price comparisons. Pharmacoeconomics. 1993 Oct;4(4):247-56. PubMed PMID: 10146914. eng.

38. Bala K, Sagoo K. Patent and prices: Health Action International; 2000 [cited February 2009]. Available from:

39. Madden J. Comparing pilot survey results from different countries: WHO EDM No.33. World Health Organization; 2003 [cited 2010 January]. Available from:

40. WHO, HAI. Measuring medicine prices,availability, affordability and price components. Geneva: World Health Organization and Health Action International; 2008 [cited 2009 January]. 2nd:[Available from: .

41. Cameron A, Ewen M, Auton M, Abegunde D. The world medicines situation 2011 Geneva: World Health Organization; 2011 [cited 2012 June]. Available from:

42. Myhr K. Measuring medicine price and availability: WHO EDM No.33. World Health Organization; 2003 [cited 2010 January]. Available from:

43. van Mourik MS, Cameron A, Ewen M, Laing RO. Availability, price and affordability of cardiovascular medicines: a comparison across 36 countries using WHO/HAI data. BMC Cardiovasc Disord. 2010;10(25):25. PubMed PMID: 20534118. eng.

44. Gelders S, Ewen M, Noguchi N, Laing RO. Price, availabilty, and afffordability: an international comparison of chronic disease medicine. Background report prepared for the WHO Planning meeting on the Global Initiative for Treatment of Chronic Diseases held in Cairo in December
2005. Cairo, Egypt: WHO/HAI, WHO's Regional Office for Eastern Mediterranean; 2006 [cited 2011]. Available from:

45. Babar ZU, Ibrahim MI, Singh H, Bukahri NI, Creese A. Evaluating drug prices, availability, affordability, and price components: implications for access to drugs in Malaysia. PLoS Med. 2007 Mar 27;4(3):e82. PubMed PMID: 17388660. eng.

46. Sooksriwong C, Yoongthong W, Suwattanapreeda S, Chanjaruporn F. Medicine prices in Thailand: A result of no medicine pricing policy. Southern Med Review. 2009 September;2 (2):10-4.

47. Nguyen AT, Knight R, Andrea MA, Minh CQ, Auton M. Medicine prices, availability, and affordability in Vietnam. Southern Med Review. 2009;2(2):2-9.

48. Yang H, Dib HH, Zhu M, Qi G, Zhang X. Prices, availability and affordability of essential medicines in rural areas of Hubei Province, China. Health Policy Plan. 2009 May;25(3):219-29. PubMed PMID: 19955093. eng.

49. Ye L. Medicines price, availability and affordability in Shanghai China Amsterdam: Health Action International; 2006 [cited 2012 Januari]. Available from:

50. Sun Q, Santoro MA, Meng Q, Liu C, Eggleston K. Pharmaceutical policy in China. Health Aff (Millwood). 2008 Jul-Aug;27(4):1042-50. PubMed PMID: 18607039. eng.

51. Anvarova J, Maqsudova N, Haknazarova M. Medicine prices in the Republic of Tajikistan: Health Action International; 2005 [cited 2011 December]. Available from:

52. Sweeny K. Medicine prices in Australia: An international comparison: Woorking Paper. Pharmaceutical Industry Project; 2005 [cited 2011 January]. Available from:

53. HAI. A one day snapshot of the price for a course of ciprofloxacin 500 mg tabs Amsterdam: Health Action International; 2009 [cited 2011 January]. Available from:

54. Kotwani A, Ewen M, Dey D, Iyer S, Lakshmi PK, Patel A, et al. Prices & availability of common medicines at six sites in India using a standard
methodology. Indian J Med Res. 2007 May;125(5):645-54. PubMed PMID: 17642500. eng.

55. Kotwani A. Medicine prices, availability, affordability in NCT, Delhi: Survey report. Health Action International; 2011 [cited 2012 October]. Available from:

56. Siahaan S, Putri AE, Tjahjono L, Budiharto M, Sundari S, Angkasawati T, et al. The prices people have to pay for medicines in Indonesia Jakarta: National Institute for Health Research and Development (NIHRD) Indonesia, World Health Organization, and Health Action International 2004 [cited 2009 December]. Available from:

57. Ewen M, Sakit MA, Saadeh R, Valentin CV, Seita A. UN Relief and Work Agency for Palestine Pefuge in Near East's medicine procurement processes and prices: a comparative perfomance assesstment; 2011 [cited 2012 October]. Available from:

58. Batangan DB. Medicine prices, availability, affodability and price component in Philippines Amsterdam: Healt Action International; 2005 [cited 2012 January]. Available from:

59. Ball D. Pharmaceutical pricing policies and intervention. Working paper 3: The regulation of mark-up in the pharmaceutical supply chain: World Health Organization and Health Action International; 2011 [cited 2012 January]. Available from:

60. Mestre-Ferrandiz J. Reference prices and generic medicines: What can we expect? Journal of Generic Medicines. 2003 //;1(1):31-8.

61. Drummond M. Twenty years of using economic evaluations for reimbursement decisions: What have we achieved? United Kingdom: Centre for Health Economics, University of York; 2012 [cited 2013 10 January]. Available from:

62. Moon S, Jambert E, Childs M, von Schoen-Angerer T. A win-win solution?: A critical analysis of tiered pricing to improve access to medicines in developing countries. Globalization and Health. 2011;7(1):39. PubMed PMID: doi:10.1186/1744-8603-7-39.
How to Cite
ANGGRIANI, Yusi. The Role of Medicine Pricing Policy for Improving the Affordability of Medicines. JURNAL ILMU KEFARMASIAN INDONESIA, [S.l.], v. 16, n. 2, p. 172-181, oct. 2018. ISSN 2614-6495. Available at: <>. Date accessed: 25 june 2024. doi: