Monitoring the impact of regulatory measures on medicine pricing in Thailand: an observation over a 16-year span

ABSTRACT

Background:

Following a 2007 report by the Thai Food and Drug Administration highlighting disparities in drug pricing across different sectors, there has been a concerted effort to establish and enforce a cohesive medicine pricing policy in Thailand. This study aims to explore the government interventions on medicine pricing in Thailand.

Methods:

Employing a mixed-methods approach, this research included a literature review and a cross-sectional survey of medicine prices using the World Health Organization/Health Action International (WHO/HAI) methodology. Data were collected from both public and private sectors across six provinces in Thailand during April–May 2023. Additionally, international price comparisons were conducted with countries including Australia, Canada, Denmark, Malaysia, and New Zealand.

Results:

The research identified a significant reduction in the median price ratios (MPRs) of medicines, closer alignment of prices with international benchmarks, and decreased variability in pricing between regions and sectors. These changes illustrated the positive effects of Thailand’s pricing policies implemented over the past 16 years.

Conclusions:

The strategic interventions implemented by the Thai government have markedly enhanced the regulation and affordability of medicine prices. However, to sustain these achievements and ensure the viability of the local pharmaceutical industry, ongoing efforts and policy adaptations are essential. This study emphasises the critical need for continuous evaluation of these policies to respond effectively to evolving healthcare and economic conditions.

Background

In 2007, the Thai Food and Drug Administration (Thai FDA) published a report on ‘Medicine Pricing, Availability, and Affordability in Thailand’, which followed the World Health Organization-Health Action International (WHO-HAI) handbook (Sooksriwong et al., 2007). The findings were reported to the WHO and presented a picture of the country’s drug price situation, which highlighted: (1) a significant difference in medicine prices between the public and private sectors; (2) price differences in hospital and drug stores by geographical area; (3) the profit margins of medicines were not monitored during each sales period; and (4) the vast majority of these prices were higher than the global benchmark International Medical Product Price Guide prices. The result also reflected the country’s lack of a medicine pricing policy (Sooksriwong et al., 2009). The release of this paper aroused interest in drug pricing among several authorities and researchers in Thailand.

It has been 16 years since the first report was published in 2007. The Thai FDA has since established many relevant committees and working groups to address the drug price situation, such as the National Drug System Development Committee (NDSDC), the Median Price Subcommittee, the National List of Essential Drug (NLEM) subcommittee, and the Drug Price Negotiation Working group under the NLEM (Jitruknatee, Usavakidviree, et al., 2020, pp. 4–49). The objective of this research was to explore the government interventions on medicine prices in Thailand.

Methods

Mixed methods, consisting of document search and cross-sectional survey, were employed.

(1) The government intervention on medicine prices according to NDSDC was explored through document search.

(2) The cross-sectional survey of medicines prices in Thailand was conducted using the standardised World Health Organization/Health Action International (WHO/HAI) methodology, in the manual ‘2ND EDITION. 2016 Measuring medicine prices, availability, affordability and price components’.

Pricing data were collected for: (1) Public sector procurement prices; (2) Public sector patient prices; and (3) Private sector patient prices.

In the WHO/HAI Medicine Price Methodology, patient price is defined as the cost of medicines that patients are required to pay in public or private health facilities, such as hospitals, health centres, and pharmacies (Todesco et al., 2022).

Data were collected between April and May 2023, and the research team later conducted site visits to verify the data in May and June 2023.

(3) The international price comparisons between Thailand and selected countries (Australia (PBS), Canada, Denmark, Malaysia, and New Zealand) were conducted referencing the following official websites:

1. The Pharmaceutical Benefit Scheme (PBS, Australia)

   https://www.pbs.gov.au/pbs/home;jsessionid=1e4909jspacbt127pjwz1c8t4u.

2. Pan-Canada Pharmaceutical Alliance (pCPA, Canada)

   https://www.pcpacanada.ca/generic-drug-framework.

3. Danish Medicines Agency (Denmark)

   https://www.medicinpriser.dk/default.aspx?lng=2.

4. Pharmaceutical Services Programme, Ministry of Health (Malaysia)

   https://pharmacy.moh.gov.my/en/apps/drug-price

5. PHARMAC (New Zealand)

   https://schedule.pharmac.govt.nz/ScheduleOnline.php.

The data were retrieved in November 2023.

Selection of medicines to be surveyed

Among a total of 99 medicines included in the survey, 14 belonged to the Core List medicines suggested by WHO/HAI for international comparison. The rest were requested by the Thai FDA. For each substance, two products were monitored, namely the innovator brand (IB) and the lowest price generic equivalent (LPG). Each medicine was strength and dosage-form specific. Procurement prices and prices charged to patients were recorded.

Selection of medicine outlets

The sampling method described in the WHO/HAI manual for selecting a representative number of public health facilities and pharmacies was employed. Six provinces were randomly selected around Thailand, and for each province, 10 medicine outlets would be chosen for the survey: 1 central or provincial hospital, 4 community hospitals (not more than 3-h driving distance from the central or provincial hospital), and 5 private pharmacies (not more than 5 km from the hospitals), all total of 60 outlets.

Data collection

A standardised data collection form was used to retrieve the data from the outlet databases. Provincial managers and data collectors were trained twice to ensure the reliability and reproducibility of the survey. The provincial managers, referring to pharmacists from the provincial health office and directors of pharmacy departments at government hospitals in selected provinces, were invited to attend the first online training session. This session aimed to allow participants to get to know one another and to provide information about the research objectives, benefits, data collection process, and analysis methods. They were also instructed to identify data collection sites in line with the WHO protocol and to assemble the data collection team.

The second training session, held onsite, was provided to the data collection teams. This session focused on training the teams in data collection and data entry techniques, as well as explaining the meaning of each attribute. A question-and-answer session was included in both training sessions. Additionally, the research team visited all data collection sites to verify and validate the collected data. Data collection was completed in six weeks by May 2023.

Data entry

Price data were entered into the pre-programmed MS Excel workbook provided as part of the WHO/HAI methodology. Data entry was checked using the ‘double entry’ and ‘data checker’ functions of the workbook. Erroneous entries and potential outliers were verified and corrected as necessary.

Data analysis

The price survey

Medicines were needed to be found in at least four outlets for their price data to be included. Medicine prices were expressed as ratios relative to a standard set of international reference prices called Median Price Ratio (MPR). The formula for calculating MPR is:

$$\mathrm{MPR}={\displaystyle \frac{\mathrm{Median}\mathrm{Local}\mathrm{Unit}\mathrm{Price}}{\mathrm{International}\mathrm{Reference}\mathrm{Unit}\mathrm{Price}}}$$

Local Unit Price refers to the median price for a single unit (e.g. tablet or capsule) of a specific medicine in the local market or country.

International Reference Unit Price refers to the standardised price for the same unit of medicine, based on a reliable international benchmark or reference (Indicator Metadata Registry Details, n.d.). An MPR of 2 would mean that the medicine price is twice than that of the international reference price. The reference prices used were the 2015 Management Sciences for Health (MSH) reference prices, taken from the International Drug Price Indicator Guide. These reference prices were the medians of recent procurement or tender prices offered by for-profit and not-for-profit suppliers to international not-for-profit agencies for generic products. The 2015 MSH prices were converted to the year 2023 by multiplying with Thailand Consumer Price Index (BTEI, 2023). (http://www.price.moc.go.th/price/cpi/index_new_all.asp)

For interpretation of MPRs, local prices were generally considered acceptable when:

• MPR ≤ 1 in case of public sector procurement and public sector patient prices.

• MPR ≤ 2.5 in case of retail pharmacy prices.

The international price comparison

The international prices were compared to Thai prices as the ratio Thai: international. The value of the ratio over ‘1’ means Thai price is more expensive than the international one.

All prices were converted to local currency using the exchange rate (KasikornBank, 2023) on 2023, at a rate of 36.29 Baht per one US dollar.

Results

The first report on Thailand’s drug price situation in 2007 revealed the fact that drug prices in Thailand were higher than the international reference price (Sooksriwong et al., 2007). Overall, the public sector procured generics and innovator brands at 1.46 and 3.3 times the international reference price, respectively. In the public sector, patients paid 2.55 and 4.36 times the reference prices for the generics and innovator brands, respectively. Patients paid very high prices for some medicines, particularly innovator brands. The private pharmacies procured lowest price generics at 1.48 times the international reference prices, and innovator brands at 9.67 times the reference price. Lowest priced generics and innovator brands were sold to patients at 3.31 and 11.6 times the reference prices, respectively.

The same generic products were procured and sold to patients at different prices between public and private sectors, among different public hospitals, and among different private pharmacies (Sooksriwong et al., 2009).

The government intervention on medicine price control

The Ministry of Public Health has established and reinforced a number of measures to deal with the drug price. The present National Drug Policy (NDP) has the mission to ‘Establish a medicine price monitoring system to ensure fair price, access to medicines and national medicine security (Jitruknatee, Martro, et al., 2020; Limwattananon et al., 2012; Waleekhachonloet et al., 2012). Roles of organisations and measures for drug price control under are:

1. Thai Food and Drug Administration (Thai FDA), Ministry of Public Health (MOPH) is the main regulatory body controlling pre-marketing and post-marketing regulations of drugs, biologics, and medical devices. The major groups dealing with drug prices are:

   • The Subcommittee for Development of the National List of Essential Medicine (NLEM) is composed of clinicians and health economists such as the Medical Council of Thailand, the Royal College, Health Intervention and Technology Assessment Program (HiTAP), to screen drug applications submitted by drug companies, review clinical and economic evidence, conduct price negotiation, and select the appropriate drugs for NLEM inclusion.
   • The Subcommittee for Reference Pharmaceutical Prices, introduced in 2008 by the NDSDC, is responsible for setting Reference Prices (RPs) of NLEM for public procure­ment. It is mandated that public hospitals cannot procure drugs at higher prices than the Reference Prices. So, the Reference Prices are the maximum procurement prices and were generally set at the 50th percentile of previous procured prices.

2. Drug And Medical Supply Information Center (DMSIC), Health Administration Division, Ministry of Public Health (MOPH) is the department who gathers information about procured prices from each public hospital.

3. National Health Security Office (NHSO) involves on price negotiation of high-cost drug for central procurement.

Other measures which impacted on drug price include the introduction of e-bidding system for public procurement, pooled procurement at the provincial level for high-consumption drugs, and central procurements and price negotiation by NHSO (Limwattananon et al., 2012; Rungpry & Kelly, 2008; Suchonwanich et al., 2020; Waleekhachonloet et al., 2012; WHO, 2022).

Impacts of each measure

1. The reference prices for public procurement

   A study by Thai FDA showed that the saving of government budget for pharmaceuticals was estimated to be around 13,000 million Baht between 2014 and 2018 from procurement of 959 drugs in 10 therapeutic groups (Suchonwanich et al., 2020).

2. Pooled procurement of MOPH hospitals

   This measure resulted in initial budget saving on drug procurement of 171.47 million Baht. This was increased to 507.28 million Baht in 2001 (Suchonwanich et al., 2020).

3. Central procurements and price negotiation by NHSO

   The NHSO holds negotiating power from the high-volume central drug purchasing of expensive patented drugs. Between 2010 and 2018 the NHSO saved 90 million Baht through central and strategic purchasing of expensive drugs (Sakulbumrungsil et al., 2020).

4. The National List of Essential Medicine

   Price negotiation working group of the NLEM Subcommitee succeeded in decreasing prices by approximately 34.28%, thus save around 2400 million Baht per year (Jitruknatee, Tosanguan, et al., 2020; Sakulbumrungsil et al., 2020).

Medicine pricing situation

Public sector procurement prices

The procurement price in the public sector (Table 1) of innovator brands in 2023 (MPR = 1.99) was less than in 2007 (MPR = 3.30) by 39.70%. The MPR gap between the 25th percentile (P25) and 75th percentile (P75) in 2023 was also narrower (from 1.65–7.68 in 2007 to 1.48–2.49 in 2023) which means that the variations of procurement prices among public hospitals were less.

Table 1.

Comparison of procurement prices (MPR) in the public sector between 2007 and 2023.

Year	Product type	MPR	P25	P75
2023	Innovator brand (n = 2)	1.99	1.48	2.49
2007	Innovator brand (n = 8)	3.30	1.65	7.68
2023	Lowest price generic equivalent (n = 57)	0.93	0.56	1.47
2007	Lowest price generic equivalent (n = 31)	1.46	0.80	2.26

Note: MPR = Median Price Ratio; P25 = 25th Percentile; P75 = 75th Percentile.

The procurement price of generic brands in 2023 was also less (MPR = 0.93) than in 2007 (MPR = 1.46) by 33.13%. The MPR gap between P25 and P75 in 2023 was also narrower (from 0.80–2.26 in 2007 to 0.0.56–1.47 in 2023).

The availability of innovator brands was also less. In 2007, 8 innovator brands were found from 35 surveyed items or 22.8%, and in 2023, 2 were found from 59 surveyed items or 3.4%.

Public sector patient prices

The patient prices in the public sector (Table 2) of innovator brands in 2023 was less (MPR = 2.45) than in 2007 (MPR = 4.36) by 42.67%. The MPR gap between P25 and P75 in 2023 was also narrower (from 2.03–9.86 in 2007 to 1.85–3.04 in 2023) which meant that the differences of patient prices among public hospitals were less.

Table 2.

Comparison of patient prices (MPR) in the public sector between 2007 and 2023.

Year	Product type	MPR	P25	P75
2023	Innovator brand (n = 2)	2.45	1.85	3.04
2007	Innovator brand (n = 8)	4.36	2.03	9.86
2023	Lowest price generic equivalent (n = 57)	1.52	0.93	2.97
2007	Lowest price generic equivalent (n = 31)	2.55	1.45	3.32

Note: MPR = Median Price Ratio; P25 = 25th Percentile; P75 = 75th Percentile.

The patient price in the public sector of generic brands in 2023 (MPR = 1.52) was also less than in 2007 (MPR = 2.55) by 67.76%. The MPR gap between P25 and P75 in 2023 was also narrower (from 1.45–3.32 in 2007 to 0.93–2.97 in 2023).

Private sector patient prices

The patient prices in the private sector (Table 3) of innovator brands in 2023 were less (MPR = 6.40) than in 2007 (MPR = 11.60) by 53.45%. The MPR gap between P25 and P75 in 2023 was also narrower (from 5.37–23.90 in 2007 to 4.97–14.59 in 2023) which meant that the differences of patient prices among private drug stores were less.

Table 3.

Comparison of patient prices (MPR) in the private sector between 2007 and 2023.

Year		MPR	P25	P75
2023	Innovator brand (n = 15)	6.40	4.97	14.59
2007	Innovator brand (n = 8)	11.60	5.37	23.90
2023	Lowest price generic equivalent (n = 45)	4.71	2.42	6.65
2007	Lowest price generic equivalent (n = 31)	3.31	2.34	5.46

Note: MPR = Median Price Ratio; P25 = 25th Percentile; P75 = 75th Percentile.

The patient prices in the private sector of generic brands in 2023 (MPR = 4.71) were more than in 2007 (MPR = 3.31) by 42.30%. The MPR gap between P25 and P75 in 2023 was also broader (from 2.34–5.46 in 2007 to 2.42–6.65 in 2023).

The availability of innovator brands found in 2023 was 15 items from 46 items surveyed (32.61%) compared to 8 items from 35 items surveyed in 2007 (22.86%).

International price comparison

Table 4 shows the average price ratio of 16 sampled innovator drugs in Thailand compared to other countries. Unfortunately, price data for these 16 drugs were not available at all in Canada. In Australia, price data was available for 11 drugs, 3 of which had higher prices and 8 were lower, with the price ratio of 1.24 and 0.37 respectively. In Malaysia, price data was available for one drug which had lower and the price ratio was 0.61. In New Zealand, price data was available for four drugs, two of which had higher prices and two were lower, with the price ratio of 1.11 and 0.56, respectively. Lastly, in Denmark, price data was available for five drugs which were lower than in Thailand, with the price ratio of 0.44.

Table 4.

Comparison of innovator drugs (patient price) in Thailand to Australia, Canada, Denmark, Malaysia and Canada.

Country	Number of innovator drugs (N = 16)			average price ratio of Thai vs. other country
	No data	Higher	Lower	Higher	Lower
Australia (PBS)	5/16	3/16	8/16	1.24	0.37
	% valid	27.27%	72.73%	–	–
Canada	16/16	–	–	–	–
	% valid	–	–	–	–
Malaysia	15/16	0/16	1/16	–	0.61
	% valid	–	100%	–	–
New Zealand	12/16	2/16	2/16	1.11	0.56
	% valid	50%	50%	–	–
Denmark	11/16	0/16	5/16	–	0.44
	% valid	–	–	–	–

Table 5 shows the average price ratio of Thailand’s lowest generic drugs compared to other countries. There were 80 generic drugs listed as sample. In Australia, price data for generic drugs was available for 55 drugs, 7 of which had higher prices and 48 were lower, with a price ratio of 1.73 and 0.21, respectively. In Canada, price data was available for 22 drugs, 8 of which had higher prices and 14 were lower, with the price ratio of 1.91 and 0.34 respectively. In Malaysia, price data was available for 46 drugs, 7 of which had higher prices and 39 were lower, with the price ratio of 1.98 and 0.42 respectively. In New Zealand, price data was available for 56 drugs, 26 of which had higher prices and 30 were lower, with a price ratio of 3.49 and 0.45, respectively. Lastly, in Denmark, price data was available for 49 drugs, 8 of which had higher prices and 41 were lower, with the price ratio of 2.96 and 0.35 respectively.

Table 5.

Comparison of lowest generic drugs (patient price) in Thailand to Australia, Canada, Denmark, Malaysia and Canada.

Country	Number of lowest generic drugs (N = 80)			Average price ratio Thai to other country
	No data	Higher	Lower	Higher	Lower
Australia (PBS)	25/80	7/80	48/80	1.73	0.21
	% valid	(12.73%)	(87.27%)
Canada	58/80	8/80	14/80	1.91	0.34
	% valid	(36.36%)	(63.64%)
Malaysia	34/80	7/80	39/80	1.98	0.42
	% valid	(15.22%)	(84.78%)
New Zealand	24/80	26/80	30/80	3.49	0.45
	% valid	(46.43%)	(53.57%)
Denmark	31/80	8/80	41/80	2.96	0.35
	% valid	(16.33%)	(83.67%)

Discussion

Four major measures have been implemented by the Ministry of Public Health, which were the reference prices for public procurement, the National List of Essential Medicine, the pooled procurement of MOPH hospitals, and the central procurements and price negotiation by NHSO. These policies appeared to have an impact on drug prices in Thailand both on the innovator and generic drugs. It would be impossible to quantify the magnitude of each measure, though it could be assumed that the reference prices for public procurement played a major role. The reason was the reference price covered all the medicines which public hospitals procured, whether low or high price and whether innovators or generics. It is mandated that the procurement price must be equal or lower than the reference price, so each year the procurement prices were lower than the year before (Yooyong, 2023).

The rational and technical price negotiation by the NLEM Subcommittee before the inclusion new drugs into the NLEM was also important because it was shown to be able to decrease the prices of innovator drugs by approximately 30% (Jitruknatee, Tosanguan, et al., 2020; Sakulbumrungsil et al., 2020).

Other measures on public procurement systems were the pooled procurement of MOPH hospitals, and the central procurements by NHSO which allowed the price to reduce through high volume procurement.

The results of public interventions have been clearly demonstrated on Tables 1 and 2. The public sector procurement and the patient prices in 2023 were lower than in 2007 despite the fact that the consumer price index increased every year (BTEI, 2023). When looking at the gaps between 25th and 75th percentiles in 2023, they are narrower than in 2007. This meant that the difference in prices sold among places are less. This meant that it became fairer to the consumers as they should buy drugs at the same or similar prices.

Table 4 also confirms that the prices of innovator and generic drugs were lowered compared to some other countries, but the differences in public health systems and other contexts in those countries, such as Canada, New Zealand, and Malaysia, may contribute to these pricing variations.

In New Zealand, the Pharmaceutical Management Agency (Pharmac) oversees the pricing of medicines that are state-subsidized, using the incremental cost-effectiveness ratio (ICER) as a tool for price setting (Te, 2022; Government, n.d., Cost-Utility Analysis (CUA) Explained, n.d.).

In Malaysia, drug pricing in the private sector is unregulated, meaning that prices are entirely determined by market forces. For the public sector, when it comes to new patented drugs, Malaysia employs External Reference Pricing (ERP) to benchmark drug prices against those in seven to eight selected countries. The average of the three countries with the lowest reference prices is adopted as the ceiling price for drugs sold through public dispensing channels in Malaysia. Price controls are applied at both wholesale and retail levels (including clinics, hospitals, and pharmacies), along with public procurement through a national concession agreement. The Ministry of Health negotiates drug prices with a designated company (Ashraf & Ong, 2021; Executive Insights, n.d.; Hamzah et al., 2020).

In Canada, prices for new drugs cannot exceed the median drug price of referenced countries. Price increases are limited to the change in the Consumer Price Index, as calculated by Statistics Canada. The Patented Medicine Prices Review Board (PMPRB) has the authority to investigate prices that appear excessive. If a price is deemed excessive, the Board may order the manufacturer to reduce it or take other steps to ensure compliance through a Voluntary Compliance Undertaking (VCU), which is a written commitment by the manufacturer to adjust the drug’s price to a non-excessive level and offset any excess revenue gained by selling the drug at an excessive price (About PCPA | PCPA, n.d.).

For generic drugs in Canada, an agreement between the pan-Canadian Pharmaceutical Alliance (pCPA) and the Canadian Generic Pharmaceutical Association (CGPA) helps control prices effectively (Generic Drugs | PCPA, n.d.; Bonnett et al., 2022).

Although New Zealand, Malaysia, and Canada use different pricing control measures, they all have mechanisms to control drug prices at the reimbursement level. This approach differs from Thailand, where price control is primarily achieved through procurement mechanisms.

The successes in applying these policies appeared to have some positive impact in lowering the drug prices and narrowing the price variations as shown in this study. The aim of managing drug prices with health policies is to make sure everyone can afford and access the medicines they need, which helps people stay healthier (Babar et al., 2024). However, there are worries whether this approach can support the local manufacturers in keeping the manufacturing of new medicines, ensure these medicines are good quality, and allow them to survive and prosper (Vogler et al., 2024).

Conclusions

It can be clearly seen that Thailand successes in implementing drug price control measures led to saving in the national budget and increased accessibility.

Even though cheaper prices can lead to improved access to medicines but we have to balance between the sustainability of the local pharmaceutical industry and the research & development for innovation too.

In conclusion, continued efforts to maintain and improve drug pricing control are needed. The statement of drug pricing policy should be clear and executable. Some other measures in price regulation should be employed such as implementing of tiered pricing models to balance affordability with the need to fund pharmaceutical innovation, strengthening regulatory frameworks and quality control mechanisms. These are to ensure the quality of low-cost generics, encouraging public–private partnerships to support sustainable pharmaceutical manufacturing, and increasing transparency in the pharmaceutical sector to build trust among stakeholders and ensure fair pricing practices.

Limitations and strengths

A limitation of this study is the unique context of Thailand’s healthcare system, which differs from that of other countries. In Thailand, the point of sale for medicines is mainly public hospitals, while in other countries, it is typically pharmacy stores. Therefore, this difference should be considered when interpreting and applying the study’s findings. A key strength of this study is its long-term design, which allows it to effectively capture the impact of government interventions on drug procurement prices.

Funding Statement

Research reported in this publication was supported by the Health System Research Institute of Thailand under award number 65-145.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Authors’ contributions

Chaoncin Sooksriwong designed the protocol and was a major contributor to writing the manuscript. Kusawadee Maluangnon, Thirapich Chuachantra, Krissana Kuchaisit and Niti Osirisakul collected data. Siriwat Suwattanapreeda analysed and interpreted the data. Sanita Hirunrassamee interpreted the data and was a major contributor in writing the manuscript. Zaheer-Ud-Din Babar technical support for data analysis and interpretation. All authors read and approved the final manuscript.

Data availability statement

Data sets and materials for information in this manuscript can be provided by the first author upon reasonable request.