Pharmyard rivalry

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The UAE's high drug costs are proving to be a bitter pill for patients. Arabian Business reports on the side effects of top-price prescribing, and reveals why copycat drugs may overhaul the healthcare market.

It analyst amit mehta lives in the UAE but fills his prescriptions in India. The drug he relies on to keep his cholesterol in check, simvastatin, costs $27 for 30 tablets in the UAE. In India, he claims, it is less than a third of the price.

"I stock up when I go home, or my family brings my prescription when they visit," he says, adding that he doesn't have health insurance. "I can't afford the medication costs here."

He's not alone. A recent report from the World Health Organisation (WHO) revealed that patients in the UAE pay some of the highest prescription drug prices in the Middle East, second only to those in Kuwait. According to the World Health Statistics 2009 survey, generic drugs sold in UAE pharmacies cost more than thirteen times the international reference price, the median procurement price for generics - or unbranded drugs - sold by suppliers to developing countries.

Patients also pay top dollar for brand name drugs. In the 23 pharmacies surveyed, branded drugs cost on average 23.5 times the reference price.

Regionally, only Kuwait ranked higher. Generic drugs sold in the Gulf state cost on average 15.7 times the reference price. By comparison, generics in Yemen are marked at 3.5 times the reference cost. In Iran, the mark-up is just 1.3.

"There is no question costs here are high in comparison to other Gulf countries, particularly Saudi Arabia," admits George Varghese, pharmacy manager at The City Hospital, Dubai.

The high prices, he says, are reflective of the UAE's small population and piecemeal ordering system. As a minor player in the global drug industry, the Gulf state doesn't have the scale to wrestle down prices.

"The consumption here, when compared to a country like Saudi Arabia, is very low," he notes. "The batch size is small so the drug price is high, then the margin of the wholesaler is high and the end user pays the price. It's the size of the population."

More than 90 percent of the UAE's estimated $0.8bn pharmaceutical market is imported through agents.

For the same reason, drug shortages are a common occurrence among hospitals and pharmacies. Agents will wait to accumulate a minimum number of orders before shipping more stock in, and give preference to countries with bigger orders.

Varghese claims he has to wait up to six weeks for fresh shipments of adrenaline, an essential drug used in emergency situations such as during cardiac arrest.

"There are always shortages, and that's not just one or two [drugs], it's many," he reveals. "These firms supply the largest markets first, as the margins are better. We're a lower potential market."

According to the WHO survey, which polled the price and availability of 25 essential drugs in 30 developing countries, government pharmacies in the UAE stocked just 16.7 percent of branded drugs, alongside 61.1 percent of generics. Private pharmacies had 73.9 percent of generics available, and all branded drugs.

In the US and Europe, price competition between drugmakers is brutal. Medication costs in the US have halved in the last decade, despite the country's aging population and surging chronic disease rates, largely because the rise of copycat drugs, costing up to 80 percent less than their branded rival, has pinched prices. What is shoring up prices in the UAE, argues Dubai-based analyst Imran Ahmed, is the lack of low-cost alternatives to top-dollar branded drugs.

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