Economics of essential drugs schemes: the perspectives of the developing countries

Essential drug schemes in the Third World countries face many problems. These include dependency on imported drugs in the face of chronic shortages of foreign exchange, inadequate manpower and technical capability for selection and procurement of drugs, competition between generic and brand drugs, weak local drug procurement and distribution systems and inability to commence local manufacturing even in situations where there may exist comparative advantage. Many of these problems relate to each other and are compounded by the domination of the pharmaceutical industry by multinational firms. Third World countries are in a very weak position in the international pharmaceutical industry. It is suggested that the essential drug situation would improve in Third World countries if certain strategies and policies were adopted. These include: intensification of personnel training in pharmaceuticals, deliberate use of generic drugs rather than brand name drugs, the involvement of the public sector in the procurement and distribution of drugs, buying drugs in bulk, changing drug prescription and consumption practices through continuous education, changing or instituting regulations to guard against unfavourable patents and commencing domestic production of essential drugs where this is not in conflict with the principle of comparative advantage.