Buysse, I.M. Impact of the economic recession on the pharmaceutical sector. Utrecht University, WHO CC for Pharmacoepidemiology & Pharmaceutical Policy Analysis, 2010.
Introduction: The global financial crisis which started in 2008 may have considerable impact on governments’ budgets and the available funding for health services. Past economic recessions (especially the ‘97 Asian financial crisis) have shown that the impact on public health can be severe. At a high level meeting in January 2009 WHO was requested to investigate the impact of the current economic recession on global health. As part of this investigation a programme was established which focused on the impact of the global economic crisis on the pharmaceutical sector. The goal of this study was to assess the impact of global recession on consumption of medicines and pharmaceutical expenditures and prices. A secondary objective was to investigate which medicines were affected the most and the least by the recession in those countries that showed a clear decline in medicines consumption.
Methods: IMS Health provided indexed data for pharmaceutical consumption, expenditures and prices in 84 countries from the first quarter of 2007 (Q1 07) until the last quarter of 2009 (Q4 09). Changes in medicines consumption, pharmaceutical expenditure and prices over time (compared to the first quarter of 2008 (Q1 08); the last quarter before the recession) were assessed per WHO region (AFR, AMR, EMR, EUR, SEAR and WPR) and World Bank income category (high, upper middle, lower middle and low income countries). Linear regression analysis was used to establish a potential relationship between a decline in GDP and pharmaceutical consumption in the European region. The consumption of medicines was subdivided into medicines for acute and chronic indications to examine if there was a difference in development of consumption between these two categories. To investigate a shift from original & licensed brands to other brands & unbranded medicines the consumption patterns of both categories were compared. A potential relationship between a decline in GDP and an increase in pharmaceutical prices was assessed by linear regression as well. A shift in pharmaceutical consumption from the private sector to the public sector was investigated in four countries where data for both private and public sector were available. Four countries were selected for further analysis based on the observed decline in medicines consumption: Estonia, Latvia, Lithuania, and Romania. Poland was hardly affected by the global recession and was thus selected as a comparator. For these five countries data was retrieved on the volume of different medicine groups (EphMRA ATC 2 level). First a Pareto analysis was performed to identify 30% of medicine groups which accounted for 80% of total consumption. The periods Q4 07 + Q1 08 and Q4 08 + Q1 09 were compared as a period before and period during the economic recession, respectively, to detect medicine groups which declined the most. Medicine groups which declined in three of the four selected countries and not in Poland were considered to be of interest. Of these medicine groups data was gathered at therapeutic groups (EphMRA ATC 3 level). The same analyses were used to select categories which declined the most and had a possible negative effect on public health. Of these categories data on consumption volume on product level (EphMRA ATC 4) was used for more detailed analyses of changes in volume of consumption. Impact of the economic recession on the pharmaceutical sector Executive summary 4
Results and discussion: Although the economic recession affected many countries only a few showed a substantial decline in pharmaceutical consumption. The European region was the WHO region with the most severe decline (-6%, Q3 09 compared to Q1 08). The South East Asian region had the biggest increase in pharmaceutical consumption (+28% in Q4 09) and the American region had the smallest increase (+12% in Q4 09). Only the high income countries showed a small decrease in pharmaceutical consumption of -3% (Q3 09 compared to Q1 08), in the other income categories the pharmaceutical consumption increased ranging from +7% in the upper middle income countries to +17% in the low income countries (Q4 09 compared to Q1 08). The countries with the most severe decline in pharmaceutical consumption were Estonia (-18%), Latvia (-14%) and Lithuania (-17%) (Q3 09 compared to Q1 08). The correlation between a decline in GDP and decline in pharmaceutical consumption of a country in the European region was moderate and differed from quarter to quarter (r2 ranged from 0,39 to 0,65). It is not yet clear when these Baltic States will return to their pre-recession levels of consumption, although the numbers of Q4 09 showed a lesser decline in consumption. The expectation that the decline of consumption of medicines for acute indications would be more severe than for chronic indications was not seen in this study. Only the European region did show this difference in decline of the two groups, although the differences were minimal. To reduce pharmaceutical expenditure it was expected that there would be a shift from the use of patent protected and licensed products to branded and other non patent protected products would occur, but this shift was not seen in this study. Almost all countries showed a price increase but there was no correlation between the level of increase in pharmaceutical prices and a more severe recession in a country. The shift from private to public sector was not common in the four countries, where this data was available. In Brazil, Uruguay and South Africa the consumption in both private and public sector grew although not at the same pace. Mexico did show a shift from private to public sector. The consumption of original & licensed brands increased in Mexico in the public sector and declined in the private sector. These changes may have been due to health section reform that occurred at the same time as the economic recession. Most of the declining EphMRA ATC 2 categories were not considered to have a negative impact on public health if used less (i.e. vitamins declined by -22% to -15%, mineral supplements by -23% to -5%, nasal by -24% to -8% and cold preparations by -20% to -4%). Categories of interest for further analysis were systemic antirheumatics, opthalmologicals, psycholeptics and psychoanaleptics. The decline of the systemic antirheumatics was probably caused by a decline in the use of NSAIDs. EphMRA ATC 3 categories anti-infectives and artificial tears were probably the cause of the decline in the ATC 2 category ophthamologicals. The ATC 3 categories N5A antipsychotics and N6A antidepressants and moodstabilizers were considered of interest because these categories declined in at least three of the four recession struck countries and could have a negative impact on public health if used less. Further analyses of the most frequently used products in these categories did not show a consistent change in consumption with the economic recession. No individual marker products were found which could be used by governments to track their pharmaceutical consumption and the functioning of their health systems to provide early warning signs. Impact of the economic recession on the pharmaceutical sector Executive summary 5 The time span of this study was limited to one year before and two years after the recession. Many countries were already beginning to recover from the economic recession in 2010 and the value of this study for those recovered countries as a measure of the impact of the economic crisis on the pharmaceutical sector is thus limited. However there may be more to learn from this recession which could guide future policy responses to future recessions. For example some countries experienced severe declines in GDP but did not show any decline in pharmaceutical consumption.
Conclusions: The economic recession which began in 2008 has had a mixed effect on pharmaceutical consumption, expenditures and prices. The largest changes have occurred in high income countries and in Europe. On country level, particulary the Baltic States showed large changes in their pharmaceutical consumption, expenditure and prices. No consistent pattern in the decline of consumption of particulair classes or individual medicines were seen. This recession provides an opportunity to identify which policy approaches most effectively prevented or contributed to declines in pharmaceutical consumption.