Developing Nepal’s medicines pricing policy: evidence synthesis and stakeholders’ consultation

Figures & data

Table 1. Pharmaceutical pricing policies for Nepal.

Pricing Policies	Global Practices	Challenges	Application/Mark-ups/percentage	Applying at what level	Suggestion for Nepal
Cost-plus pricing	Cost-plus pricing has not been widely used for setting medicine prices.	The most challenging part of cost-plus pricing is obtaining and validating information on different cost components. Clarity and transparency on costs is needed. Cost-plus pricing requires significant technical and human resources.	Using twice the cost of production is suggested.	Apply at the ex-factory or ex-wholesaler levels.	Yes
External price referencing (EPR)	EPR is commonly used for new medicines.	Reference prices have accounted for all forms of discounts, rebates, and taxes with a high degree of confidence, and methods for determining prices follow a transparent and consistent process. EPR requires highly skilled staff to select, collect, check, calculate, and adjust prices over time.	Reference countries: India, Bangladesh, Sri Lanka	It is recommended to apply EPR at the level of the ex-factory price level.	Yes
Internal reference pricing	Internal reference pricing compares and links the prices of medicines that are therapeutically similar and can be substituted for one another within a country. Varies from one country to another. In Brazil, generic medicine price cannot exceed 65% of the respective reference medicine. (Koduah et al., 2022) In the Czech Republic, the first generic medicine has to be priced 32% below the originator, whereas the price of the first biosimilar has to be 15% lower than the reference product. (Vogler & Schneider, 2019)	Internal reference pricing requires technical expertise to determine whether medicines are therapeutically similar.	In Nepal, the first generic medicine should be priced 60% below the originator, whereas the price of the first biosimilar should be only 50% lower than the reference product. For the new presentation in the same dosage of medicine already marketed, the price should be worked out based on the arithmetic mean of the prices of previously launched medicines. (External reference pricing) For the presentation of different dosages of medicines already marketed, the price must not exceed the average price, weighted by sales, of available presentations of medicines that have the same active ingredients, strength, and dosage form.	Internal reference pricing requires resources to maintain a price database and track price variations due to increased competition. Consistent and transparent criteria for pricing generic and biosimilar medicines are explicitly evaluated and stated based on an established methodology. Internal reference pricing enables consistent pricing across medicines with the same or similar therapeutic effects.	Yes
Mark-up regulations			Currently, mark-ups of 6%–10% and 16% are applied to the wholesaler and the retailer in Nepal, respectively (to be applied on a case-by-case basis). A regressive mark-up structure, in which the mark-up rate decreases as the price increases (rather than a fixed percentage mark-up for all prices), needs to be developed.		Yes
Value-based pricing	A highly specialised unit is required for implementation.				To be considered in the future

Table

APPON	Association of Pharmaceutical Producers of Nepal
CR	cost ratio
CV	cost variation
DDA	Department of Drug Administration
EPR	external price referencing
GMP	good manufacturing practices
INN	International Nonproprietary Name
LMIC	low- and middle-income country
MIAN	Medicine Importers Association
MOHP	Ministry of Health and Population
MRP	maximum retail price
MTaPS	Medicines, Technologies, and Pharmaceutical Services
NCD	non-communicable diseases
NCDA	Nepal Chemist and Druggist Association
PDAN	Pharmaceutical Distributers Association of Nepal
R&D	research and development
SAARC	South Asian Association for Regional Cooperation
WHO	World Health Organization

Koduah, A., Baatiema, L., de Chavez, A. C., Danso-Appiah, A., Kretchy, I. A., Agyepong, I. A., King, N., Ensor, T., & Mirzoev, T. (2022 Dec 1). Implementation of medicines pricing policies in sub-saharan Africa: Systematic review. Systematic Reviews, 11(1), 257. https://doi.org/10.1186/s13643-022-02114-z

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Vogler, S., & Schneider, P. (2019). The practice of external price referencing. Medicine price surveys, analyses and comparisons: Evidence, methodology and guidance. Elsevier/ Academic Press.

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External reference pricing. WHO guideline on country pharmaceutical pricing policies. A plain language summary ISBN 978–92–4–002408–3 (electronic version) ISBN 978–92–4–002409–0 (print version) © World Health Organization 2021. https://apps.who.int/iris/bitstream/handle/10665/341894/9789240024083-eng.pdf.

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