The Impact of Pricing And Affordability of Medicines on Access to Healthcare in Kenya

Introduction

Medicines are one of the critical elements in the provision of health care. Ensuring access to
essential medicines, especially by the poorest and those in most need is a challenge to many
countries, including Kenya. The price of medicines is one of the most significant barriers to
ensuring universal access to healthcare, especially in developing countries contributing to
many families being driven into poverty by the exceedingly high prices of medicines.1

This essay will explore the pharmaceutical landscape in Kenya, focusing on the factors
influencing the pricing and affordability of essential medicines in the country. The essay will
propose recommendations on how the country can implement interventions to ensure fair
pricing of essential pharmaceuticals in Kenya, drawing on lessons learnt in other countries
with a similar economic, epidemiological and health coverage profile.

Health Financing Landscape in Kenya

Kenya is categorised as a Low Middle-income country with a total population of

approximately 47.6 million (2019)2, a per capita GDP of US$1710 (2018) and a per capita
expenditure on health of US$78.6 (2016)3. The total health expenditure (THE) in Kenya
accounted for 5.2% of the GDP in 2016. The government health expenditure (GHE) as a per
cent of THE was 37 % in FY 2015/16. Out of pocket (OOP) expenses accounted for 26.1% of
THE 4.

In 2016, Total Pharmaceutical expenditure accounted for 36.64% of the total health
expenditure in Kenya with a per capita pharmaceutical expenditure of US$ 9.9. Government
expenditure on pharmaceuticals represented 9.03 % of the total expenditure on
pharmaceuticals with donations accounting for 27.3% and private expenditure contributing
66.67% of the total pharmaceutical expenditure.5

Patients have access to medicines through community pharmacies and hospitals, either as
inpatients or outpatients. The medicines supply chain comprises three principal participants:
manufacturers (originators and generics), wholesalers and dispensing pharmacies.

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With regards to the pricing of pharmaceuticals in Kenya, there are no legal or regulatory
provisions affecting the pricing of medicines as price controls were abolished in 1994. The
basic underlying expectation was that this liberal pharmaceutical pricing regulation would
encourage stiff completion amongst suppliers resulting in highly competitive consumer
prices. Besides, the government imposed no duties on imported active pharmaceutical
ingredients, or on imported finished products. The effect of this policy changes was the
lowering of entry barriers into pharmaceutical distribution and in particular retailing.
However, studies done over the years have demonstrated high and extremely variable prices
of medicines in Kenya, which have had a significant impact on financial access to equitable
health care in Kenya.

A study conducted in 2013 (see figure below) revealed that end-user prices of
pharmaceuticals in Kenya increase up to 5 times from the manufacturer’s price as the
medicines move along the complex, fragmented and unregulated pharmaceutical value chain.
This is in contrast to a global average of 0.6 times increase from the manufacturer’s price and
up to two times increase in similar low and middle-income countries.6

2013 Value weighted Average

100
90
80
70
60
50
40
30
20
10
0
Brazil India Indonesia Kenya Netherlands Russia South Africa

Net Manufacturer Selling Price CIF, Import tariffs & charges Distributor margin
Retailer Margin Taxes

Adapted From: Aitken, M. (2016) Understanding the Pharmaceutical Value Chain. Pharmaceuticals Policy and Law. Doi: 10.3233/PPL-
160432.

In 2004, a WHO/Health Action International pricing survey conducted in Kenya revealed that
there was extreme variability in the end-user prices of essential medicines in the public and
private health sectors in the country.7 The study showed that treatment of hypertension with

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 generic medication from the public health sector would cost about one day’s wages of the
lowest-paid government worker compared to about half a month’s wage if the same
medicines were procured in the private health sector. Whereas medicines in the public sector
were affordable, they were not available at all times, necessitating patients to mostly procure
from the more expensive private sector and contributing to Impoverishing and Catastrophic
Health expenditure for many Kenyan families.

Lowest Priced Generics for Hypertension - 1 Month's

14
Course 14 Days
No of Day’s wages-Lowest Paid Government worker

12 12.3 Days
10

0
Public Sector Patient Prices NGO patient Price Private Sector Price
Furosemide 40mg Daily Atenolol 50mg Daily Enalapril 10mg twice daily
Hydrochlothisazide 25mg daily Nifedipine retard 20mg twice daily Lorsatan 50mg daily

Source: Health Action International Africa, World Health Organization. A survey of Medicines Prices in Kenya 2004.

Affordability analysis from the same study also demonstrated that Originator brands and
generic equivalents were procured almost 16 times and three times higher, respectively,
compared to international markets.

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 Affordability of Medicines for a family in Private Pharmacies in Kenya
30
No of Day’s wages-Lowest Paid Government worker

Total = ˜25 Days Total = ˜7 Days

25
1.5

2.7

20

7.2

15

10
0.2

13.4
1.7
5
1.4

3.6

0
Innov ator Brands Lowest Priced Generics
Adult/Peptic Ulcers/Ranitidine Adult/ Diabetes/Glibenclamide Child/Asthma/Salbutamol Inhaler Child/RTI/Cotrimoxazole

8
Source: Health Action International Africa, World Health Organization. A survey of Medicines Prices in Kenya 2004.

Some of the key driving factors to this variability in prices include the following;

1. Inadequate public funding of health resulting in frequent stock-outs of essential

medicines in public health facilities. Patients result in getting their pharmaceutical
requirements in the more expensive private sector leading to huge out of pocket
payments for medicines. This then contributes to impoverishing and catastrophic
health expenditure for most families.
2. Lack of a pharmaceutical pricing policy guidance in Kenya. Lack of a market reference
index leads to wide variability in the prices of essential medicines in Kenya.

Possible Recommendations

I put forward the following recommendations for addressing the highlighted problems

1. Development & Implementation of a medicine pricing policy to achieve greater

transparency, uniformity & predictability in the pricing of medicines in Kenya. The
government of Kenya recently committed to institute a medicines pricing policy and
align the pricing of medicines in line with the WHO recommendations in a bid to tame
runaway prices of essential medicines.8This has been implemented successfully in
Brazil and some lower-income OECD countries with promising results.910 The policy

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 could also consider reference pricing for medicines in the private sector as a means of
comparison of prices with other countries with similar GDP & health coverage.
2. Promote generic prescribing in all sectors and, public procurement of quality-assured
generic medicines as a cost containment strategy. The WHO recommends this strategy
especially for countries with limited budgets.11
3. Regular medicine price surveys to monitor the effects of policies & other effects on
interventions on medicines prices. This will provide a basis for assessing the impact of
various policy interventions in containing the price of medicines within the country.
4. Allocate more funding for pooled procurement of medicines in the public sector.
Evidence has demonstrated that medicines are more affordable in public health
facilities and when well managed, public procurement of medicines would ensure
more affordable medicines. The country will need to increase the fiscal space for
health and by extension, the budget for procurement of medicines in the public sector.

Conclusion

The Kenyan Government committed itself to provide Universal Health Coverage(UHC) for all
its citizens by 2024.12 Without addressing the currently complex, fragmented and unregulated
pharmaceutical industry in Kenya the dream of UHC for all Kenyans by 2022 is illusory. The
recommendations put forward have shown positive results in other relatively similar context
and are worth giving serious consideration. However, the overarching objective of any
intervention is to find a model for fair pricing that is workable in the Kenyan context makes
essential medicines available in sustainable quantities at prices that are sustainably
affordable for patients, payers, and health system budgets and also allow for an acceptable
profit margin for the private sector pharmaceutical players.

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References

1. Drugs and Money - Prices, Affordability and Cost Containment: Part II: Selected experiences with policy
options: Chapter 15: Access to medicines in low-income countries.
https://apps.who.int/medicinedocs/en/d/Js4912e/3.10.html.

2. Kenya National Bureau of Statistics (KNBS). 2019 Kenya Population and Housing Census Volume I :
Population By County and Sub-County. Vol I.; 2019. http://www.knbs.or.ke.

3. World Bank Group. Kenya | Data. https://data.worldbank.org/country/kenya. Accessed January 20,

2020.

4. Ministry of Health. Kenya National Health Accounts 2015/2016. Ministry of Health; 2017.

5. Republic of Kenya: Ministry of Medical Services and Ministry of Public Health and Sanitation; World
Health Organization. KENYA PHARMACEUTICAL COUNTRY PROFILE.

6. Aitken M. Understanding the pharmaceutical value chain. Pharm Policy Law. 2016;18:55-66.
doi:10.3233/PPL-160432

7. Health Action International Africa, World Health Organization. A survey of Medicines Prices in Kenya
2004. 2004:57. http://apps.who.int/medicinedocs/documents/s18710en/s18710en.pdf.

8. Ministry intends to align drug prices with WHO standards - Daily Nation.
https://www.nation.co.ke/news/Health-ministry-intends-to-lower-drug-prices/1056-4923810-
8u8fkv/index.html. Accessed January 26, 2020.

9. Pricing & Reimbursement Laws and Regulations | Brazil | GLI.

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Accessed January 26, 2020.

10. OCDE. Pharmaceutical Pricing Policies in a Global Market: Key Characteristics of the Pharmaceutical
Sector in OECD Economies. doi:10.1787/9789264044159-en

11. Practical Guidelines on Pharmaceutical Procurement for Countries with Small Procurement Agencies:
2. Introduction. http://apps.who.int/medicinedocs/en/d/Jh2999e/4.html. Accessed January 26, 2020.

12. Universal Health Coverage | The Presidency. https://www.president.go.ke/universal-health-coverage/.

Accessed January 26, 2020.

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