Do medicine prices reflect therapeutic value? Evidence from a comparison of the United Arab Emirates and Australia

Abstract

Background

The United Arab Emirates (UAE) pharmaceutical market is estimated to reach 4.7 billion by 2025. Although several price reduction initiatives have been implemented, no prior study has systematically compared UAE medicine prices with those of a developed country. This study aimed to compare the pharmaceutical prices between UAE and Australia.

Methods

Retail medicine price data were obtained from publicly available database sources: Australian Pharmaceutical Benefits Scheme (PBS) and UAE Ministry of Health and Prevention. Medicines in the UAE that cost more than twice their Australian counterparts were further assessed for their therapeutic benefit using the France Haute Autorite de Sante Amélioration du Service Médical Rendu (ASMR) rating. Price ratios were calculated, log-transformed, and analysed using linear regression to examine associations with ASMR rating, drug class, and drug category (originator, biosimilar, generic).

Results

Price data were analyzed for 301 medicines (286 originators, 14 biosimilars, one generic). 3.7% of the drugs were cheaper, 12.0% were similarly priced or up to double, and 84.4% were more than double the cost in Australia. ASMR distribution showed 2.3% as ASMR I, 5.6% as ASMR III, 11.0% as ASMR IV, and 43.9% as ASMR V. Prices in the UAE remained substantially higher than in Australia, even after purchasing power parity adjustment. Originators drove the largest disparities, while biosimilars were over twice Australian benchmarks. Higher therapeutic benefit was not consistently associated with smaller price gaps.

Conclusions

Medicine prices in the UAE were substantially higher than in Australia, largely driven by low-benefit drugs. Findings highlight a persistent misalignment between therapeutic value and pricing, underscoring the need for stronger value-based pricing and affordability policies benefits.

Supplementary Information

The online version contains supplementary material available at 10.1186/s12962-025-00669-x.

Introduction

The global pharmaceutical industry is an integral part of the world economy, growing from USD 390.2 billion in 2001 to USD 1.42 trillion in 2021 [1]. In 2017, the market was was valued at USD 1,135 billion and employed 5.5 million people worldwide [1, 2], generating USD 532 billion in gross value, equivalent to the to the gross domestic product (GDP) of the Netherlands [2]. Continuous research and development (R&D), involving billions of dollars and extensive scientist effort, underpins innovation in new medicines, advancing healthcare and improving patient outcomes. In the Gulf Cooperation Council (GCC), the pharmaceutical market is projected to reach USD $26 billion over the next decade, driven by aging population, rising chronic diseases, and expanded healthcare coverage [3]. The pharmaceutical market in the United Arab Emirates (UAE) grew from USD 1.5 billion in 2011 to USD 3.7 billion in 2021, and is projected to reach USD 4.7 billion by 2025. Local pharmaceutical factories have increased from 4 in 2010 to 23 in 2021, producing medicines, medical devices and disinfectants. As part of its industrial strategy, the UAE aims to raise the sector’s GDP contribution from AED 133 billion to AED 300 billion by 2031 [4].

Most medicines in the UAE are imported under the supervision of the Ministry of Health and Prevention (MOHAP), which regulates the sector [5]. Recent policies encourage local production and greater use of generics [6]. Substantial reforms followed the repeal of Federal Law No. 4 of 1983 with the Federal Law No. 8 of 2019 on Medical Products, the Pharmacy Profession, and Pharmaceutical Establishments [7]. This law governs pricing, access, and quality assurance. Article 8 prohibits selling medical products above MOHAP-set prices and discounts unless permitted by regulation. Article 73 requires Ministry-approved price labels on all products, ensuring transparency. Violations of price rules may incur fines up to AED 100,000, doubled for repeated offences, to deter manipulations and safeguard consumers [7].

UAE drug prices are determined through external reference pricing (ERP), which compares against other GCC and international benchmarks [8]. Final prices cannot exceed those of GCC countries, with a maximum 20% variance compared to reference markets [9]. In comparison, Australia’s pharmaceuticals market was valued at USD 25 billion in 2020, and it is expected to reach USD 28 billion in 2026 [10]. Imports rose from USD9.3 billion to USD11 billion between 2013 and 2019, while the exports grew from USD4 billion to USD4.5 billion. In 2017, the industry contributed nearly USD2.9 billion to the national economy and employed 15,000 people [11]. However, concerns about affordability remain. In 2013, the Grattan Institute reported wholesale medicine prices were eight times higher in the Australia than in New Zealand [12]. The consumer health forum, estimated that aligning Australian prices with those in the United Kingdom (UK) could save AUD 1 billion annually. Studies also showed that while cancer drug prices in Australia and NZ resembled those in Europe, overall costs remained higher than in the UK, NZ and Canada [13, 14].

Both the UAE and Australia operate strict regulatory frameworks for pricing and market access. In Australia, the Pharmaceutical Benefits Scheme (PBS) is central to controlling medicine costs. It negotiates with pharmaceutical companies to subsidize essential medications, aligning prices with therapeutic value [15]. In the UAE, MOHAP sets pricing standards to control costs and ensure equity. Both systems rely on a mix of public and private financing: Australia combines PBS subsidies with private insurance, while the UAE mandates health insurance [15]. Nationwide mandatory coverage for all private-sector employees and domestic workers will begin in 2025, extending current schemes in Abu Dhabi and Dubai [16].

The UAE has introduced several price reduction initiatives. In 2019, MOHAP issued a Ministerial Decree to reduce the prices of 410 drugs, including treatment for cardiovascular disease, hypertension and hyperlipidaemia. [18] Recently, partnerships with two multinational firms have provided affordable medicines for uninsured or low-income expatriates [17]. The ‘Reduction in Medicine Prices’ initiative aims to ensure UAE drug prices become the lowest in the Gulf [4]. Earlier surveys revealed the procurement price public sector were nearly five times international reference price, and generic exceeded them by 1.25 times [18].

Despite these efforts, to date no study has compared UAE drug prices with those in other developed nations. Australia was selected as a comparator for this study due to several reasons. First, as a high-income country with a publicly accessible and comprehensive drug pricing database (PBS), Australia provides a transparent benchmark for comparison. Second, its markedly higher GDP compared with the UAE allows analysis of affordability through through purchasing power parity (PPP). Third, Australia established pricing and reimbursement mechanisms offer valuable insights for evaluating UAE policy.

This study therefore aimed to compare pharmaceutical prices in the UAE with those in Australia, assessing disparities in affordability and therapeutic value. The findings would provide evidence for policymakers in the UAE to refine pricing frameworks, improve alignment between drug costs and clinical benefit, and strengthen access to affordable medicines.

Methods

Data collection

Retail medicine price data were collected from the Australian PBS) website (www.pbs.gov.au) and the Dubai Health Authority website (www.dha.gov.ae) as of 1st March 2022. The Dubai Health Authority (DHA) is a governmental body tasked for overseeing the regulation and governance of the healthcare sector in Dubai. Retail prices extracted from the DHA and PBS represented the official listed prices before insurance reimbursements, discounts, or subsidies. The top 301 most expensive formulations in the UAE list that matched entries in the Australian database were included. Selection was based on price per pack unit. For consistency, the same brand was compared between countries, with matching on strength and pack size, where pack sizes differed, unit costs were calculated. This criterion prioritized medications with the highest per-unit costs, regardless of sales volume or therapeutic class, to identify extreme price disparities.

Data analysis

The medicines were then categorized into three categories: (1) Medicine with lower price than Australia; (2) Similar price up to double the price; (3) More than double the price. The drug prices were compared using median price ratios. For example, a median price ratio of 1 means that the drug price in UAE is the same as in Australia. A median price ratio of more than 1 means that the drug price in UAE is higher than in Australia. A median price ratio of less than 1 means that the drug price in UAE is lower than in Australia.

Medicines in category 3 (more than double the price than Australia) were assessed for their added therapeutic benefit using the French Amelioration du Service Medical Rendu (ASMR) rating system (Table 1). The ASMR rating added therapeutic value relative to existing comparators across 5 levels: major, important, moderate, minor, or none (Table 1) [22]. Drugs were also grouped according to the WHO Anatomical Therapeutic Chemical (ATC) classification system [19].

Table 1.

Level of ASMR ratings in France

Level of ASMR	Criteria
I	Major therapeutic advancement
II	Important advancement in terms of therapeutic efficacy and/or adverse effect reduction
III	Moderate advancement in terms of therapeutic efficacy and/or adverse effect reduction
IV	Minor advancement in terms of therapeutic efficacy and/or reducing side effects
V	No therapeutic progress over existing options

As price ratios were highly skewed, natural logarithm transformation (log-price ratio) was applied prior to regression analysis. Independent variables included ASMR rating, drug class (by ATC) and drug category, collapsed into two categories: originator vs. biosimilar/generic. Multivariable linear regression was used to estimate associations between log-price ratios and explanatory variables.

Sensitivity analysis

To assess the robustness of our findings, sensitivity analyses was performed using PPP conversion factors. The primary values applied were 1.45 for Australia and 2.00 for the UAE, based on World Bank PPP conversion factor. Prices were converted to US dollars using PPP conversion factor. [21] All analyses were conducted in R (version 4.3).

Results

A total of 301 formulations were included in this study. Category 1 (medicine with lower price than Australia) accounted for 3.7% of the drugs, Category 2 (i.e., similar price up to double the price than Australia) at 12.0% and 84.4% of the drugs are in category 3 (more than double the price than Australia) (Table 2, Appendix Table S1). The median price ratio is 4.40 (CI 2.91, 5.98), and the mean is 5.64 (SD 5.86).

Table 2.

Descriptive summary of medicine prices, categories, and therapeutic value

Variable	Level	Overall
n		301
Price ratio, median [IQR]		4.40 [2.91, 5.98]
Price ratio, mean (SD)		5.64 (5.86)
Price Ratio Category, n (%)	1, Lower price than Australia	11 (3.7)
	2, Similar price up to double the price	36 (12.0)
	3, More than double the price	254 (84.4)
ASMR, n (%)	I, Major Improvement	7 (2.3)
	III, Modest Improvement	17 (5.6)
	IV, Minor Improvement	33 (11.0)
	V, No Improvement	132 (43.9)
	NA	112 (37.2)
Category	Biosimilar	14 (4.7)
	Generic	1 (0.3)
	Originator	286 (95.0)

Abbreviations: NA, Not available

The drugs in Category 3 and above were subsequently assessed for their ASMR ratings (Fig. 1). Of these, 254 drugs were identified in the ASMR database. Only 2 drugs were rated ASMR I, indicating major therapeutic advancement. A further 6.7% received ASMR III rating, and 13.0% an ASMR IV rating. Nearly half (47.6%) were rated ASMR V, reflecting no therapeutic improvement over existing options, while the remaining drugs had no ASMR rating. Most of these drugs were originator products, with a few biosimilars appearing in both the improvement categories and the no-rating group. When stratified by therapeutic benefit, the median price ratio was highest for ASMR I drugs (11.7), despite their major therapeutic value (Fig. 2, Appendix Table S2, Appendix Table S3). By comparison, ASMR III, IV, and V drugs had median price ratios of 4.3, 4.6, and 5.4, respectively.

Fig. 1.

Bar chart illustrating the number of high-priced drugs by medical benefit level (ASMR). Abbreviation: NA, Not available

Fig. 2.

Bar chart showing the median price ratio by medical benefit level (ASMR)

The most common ATC in Category 3 were antineoplastic agents, immunosuppressants and antihypertensives (Fig. 3). Among Category 3 drugs with ASMR V, the top three classes were antineoplastic agents, immunosuppressants, and antihypertensives. The heatmap further showed that lipid-modifying agents, endocrine therapies, and antiemetics had the highest price ratios. The drug classes often comprised multiple drugs concentrated in ASMR IV, V, or the “No rating” group. Overall, many classes had most of their medicines rated ASMR V or “No rating,” indicating limited therapeutic advancement. High-frequency classes, such as antineoplastic agents and immunosuppressants, included large numbers of drugs in higher ASMR ratings or “No rating,” whereas smaller classes, such as antiemetics and lipid-modifying agents, exhibited extremely high median price ratios despite containing only one or two medicines. Notably, the “No rating” group spanned several classes and contributed substantially to the high median price ratios.

Fig. 3.

Heatmap displaying median price ratios across drug classes and ASMR ratings The heatmap shows median international price ratios of drug classes relative to Australia, with the Y-axis representing drug classes (sorted from lowest to highest median price ratio) and the X-axis representing ASMR ratings [1–5] plus a “No rating” category. Tile color indicates median price ratio, with darker red representing higher prices, and numbers inside tiles indicate the number of drugs in each class for that ASMR rating

Multivariable model

The linear regression model estimated associations between log-transformed price ratios (UAE vs. Australia) and explanatory variables (ASMR rating, drug class, and drug class) (Appendix Table S4). Compared with ASMR I (major improvement), ASMR III (2.11 (1.09–4.08), p = 0.02682), ASMR IV (1.91 (1.05–3.46), p = 0.03389) and ASMR V (1.79 (1.04–3.11), p = 0.03702) were significantly associated with higher price ratios. None of the drug classes or the biosimilars/generics were statistically significant predictors of price ratios.

Sensitivity analysis

The sensitivity analysis using World Bank PPP conversion factors yielded a similar distribution of pharmaceutical price categories (Appendix Table S5), with over 75% of drugs falling into category 3 (prices more than double those in Australia). The median price ratio was reduced to 3.19, demonstrating consistency with the primary analysis.

Discussion

Pharmaceutical pricing is a critical determinant of healthcare accessibility and affordability. Countries worldwide have adopted different models to regulate medicine prices, including external reference pricing, comprehensive health technology assessments (HTAs) and value-based pricing systems. This paper compared drug prices in the UAE with those in Australia, drawing lessons from international frameworks, particularly Australia’s PBS and France’s ASMR system. Despite several initiatives to regulate prices [20–22], UAE continued to face high pharmaceuticals costs. Prior research also highlighted regional disparities: a 2018 study found that vaccine prices in the UAE were significantly higher than in Saudi Arabia and marginally higher than in Kuwait [23]. Comparative analysis between Qatar’s public sector were cheaper than international reference prices, but private sector prices were higher than those in Lebanon [24]. Similarly, community pharmacy prices in Qatar exceeded those in Saudi Arabia [25] and Iran [26]. Such findings underscore that substantial price variation exists even within the same region.

The present study extended this evidence by demonstrating that drug prices in the UAE were significantly higher than in Australia, with pack-level gaps in some cases exceeding thirty-fold (e.g. Alunbrig, brigatinib, USD 9,912 vs. USD 297; Tracleer, bosentan, USD 9,831 vs. USD 297; Adtralza, tralokinumab, USD 3,268 vs. USD 108). A weak correlation was observed between therapeutic benefit and price ratios. High-cost medicines often fell into ASMR V or had no rating, indicating no demonstrable advantage compared with established therapies. Multivariable regression reinforced this misalignment: drugs rated ASMR III and IV, representing modest or minor improvements, were significantly more expensive than ASMR I drugs. Contrary to expectations, higher therapeutic benefit was not consistently associated with higher prices, instead, lower-benefit drugs disproportionately drove disparities.

High price ratios were concentrated in a few therapeutic categories, particularly antineoplastic agents, immunosuppressants and lipid-modifying agents, yet the relationship between therapeutic benefit and pricing appeared weak. A large proportion of the most expensive medicines were classified as ASMR V or received no rating, highlighting a misalignment between clinical value and relative pricing. A comparative study of cancer drug prices in Australia, New Zealand, and Europe revealed that Australia’s prices are consistent with European norms. Therefore, the elevated costs of cancer medicines in the UAE not only exceed those in Australia but also in Europe [14].

Price disparities were driven primarily by originator products, whose launch prices were often disconnected from incremental therapeutic value. Biosimilars were limited in number, mostly appearing in ASMR V or no-rating categories, and even when available, were priced at more than twice the Australian benchmark, undermining anticipated affordability gains. Regression analysis confirmed that biosimilars and generics did not differ significantly from originators once ASMR and therapeutic category were controlled for. This reflected both the small number of non-originators in the market and pricing practices that sustain high relative costs across product types.

These findings suggested that international price differentials were driven less by therapeutic advancement and more by market-specific pricing policies. High-cost medicines were disproportionately concentrated in categories with limited therapeutic benefit, and biosimilars did not deliver the anticipated affordability gains. Importantly, these results highlight a persistent misalignment between therapeutic value and pharmaceutical pricing, with lower-benefit medicines disproportionately sustaining large cross-national price gaps. As drug prices can be affected by differences in purchasing power, we adjusted for PPP to ensure fairer cross-country comparison. The use of PPP was recommended by international agencies such as WHO and HAI when comparing medicine prices across countries, as it accounts for differences in living costs and income levels [27]. Even after PPP adjustment, the UAE prices remained substantially higher exceeding Australian benchmarks suggesting that structural pricing mechanisms, rather than macroeconomic differences, were the main drivers of the disparities.

Structural market characteristics further explained these disparities. The UAE has a much smaller population (9.9 million) than Australia (25.7 million), reducing its ability to leverage economies of scale. Australia’ PBS uses its larger consumer base to negotiate bulk purchasing agreements and secure lower prices. Importantly, these differences persisted even after adjusting for PPP, suggesting that high UAE prices could not be justified purely on economic grounds. Regulatory frameworks also played a critical role. Australia, PBS employed a rigorous value-driven approach, requiring evaluation by the Pharmaceutical Benefits Advisory Committee (PBAC) before listing a medicine for subsidy [15, 28–30]. PBAC considers clinical effectiveness, safety, cost-effectiveness, and budget impact, and post-market reviews allowed renegotiation of pricing. This ensures that prices remain aligned with therapeutic benefit. In contrast, the UAE’s relied primarily on ERP, benchmarking against prices in up to 30 countries [8, 31]. While ERP introduces some degree of international comparison, it does not systematically evaluate therapeutic value, meaning that inflated international prices for marginal-benefit medicines can be imported into the UAE market. Market exclusivity policies further magnified pricing inequities. The UAE granted eight years of data protection, compared to five years in Australia, delaying generic entry and prolonging monopolies [32]. This sustained high prices and fostered the benefits of competition. France’s ASMR offered another model, which assessed added clinical benefit compared to existing therapies on a five-point scales based on quality of evidence, efficacy, tolerance and the severity of the disease [33]. ASMR rating was used to guide price negotiations. Drugs rated ASMR V must be priced below comparators, while ASMR ratings (I-III) allowed for higher pricing, sometimes requiring economic evidence such as quality-adjusted life-year (QALY) gain and the incremental cost-utility ratio (ICUR) [34]. ASMR IV may justify higher pricing only for specific populations [35].

Drug pricing in the UAE

Despite these challenges, the UAE undertook meaningful steps to reform pharmaceutical pricing and regulation. Since 2006, the Ministry of Health’s Drug Price Management Division oversaw ERP-based pricing [5], while Ministerial Resolution No. 834 (2008) and the Pharmaceutical Law imposed strict profit margin controls and regulated distribution practices [36]. More recently, Health Technology Assessment (HTA) was introduced, beginning with Abu Dhabi’s Department of Health (DoH) [37]. Although promising, HTA adoption remained limited due to fragmentation healthcare system, lack of expertise, data and governance challenges [38]. Parallel reforms also sought to expand value-based pricing. In 2023, Abu Dhabi introduced a directive on managed entry agreements (MEAs), allowing outcome-based reimbursement models that linked payment to clinical performance, such as survival gains [39, 40]. The creation of the Emirates Drug Establishment (EDE) further signaled a commitment to establishing a new pricing system [41].

New laws related to generics and procurement in the UAE

Efforts to encourage generic adoption had also gained momentum. Policies introduced between 2015 and 2019 increased off-patent utilization by more than 10%, raising generic market share 31% [4, 9]. Measures such as mandatory generic substitution, local manufacturing incentives, and requirements for patients to pay the difference if choosing branded medicines reinforced this trend. Centralized procurement initiatives, including the Rafed group purchasing model in Abu Dhabi and the new national procurement body established in 2023, were designed to increase bargaining power and optimize resources [42, 43]. However, challenges remained. Health insurance frameworks differed across emirates, and some ambiguities persisted around promotional practices and bonus schemes [44–46]. Moreover, despite progress in local manufacturing and procurement, generic and biosimilar uptake remained lower than international benchmarks.

Lessons for UAE

The experiences of Australia and France provided valuable lessons for improving pharmaceutical pricing in the UAE. First, developing a structured HTA is essential. In Australia, the PBAC conducts rigorous pre- and post-market evaluations of new medicines. Expanding and strengthening existing HTA units beyond Abu Dhabi to a nationwide scale would enable systematic evaluation of both new and existing medicines, supporting evidence-based pricing and reimbursement decisions. Secondly, adopting a value-based pricing approach can enhance cost-effectiveness. As practiced under Australia’s PBS, linking drug prices to their economic and therapeutic value. The UAE could implement a similar system, negotiating prices based on clinical effectiveness, cost-effectiveness, and budget impact. Third, evaluating clinical efficacy using a framework like France’s ASMR system, which categorizes drugs based on their added therapeutic value, would help policymakers prioritize and appropriately price medications. High-cost drugs with no additional clinical benefit could be priced lower, ensuring resources are allocated efficiently. Fourth, centralizing procurement or bulk purchasing, building on initiatives such as the Rafed group purchasing model, could increase bargaining power and reduce drug costs. Fifth, revising data exclusivity laws, as seen in Australia, could facilitate faster generic entry and reduce monopolistic pricing. Sixth, implementing post-market review mechanisms similar to Australia’s PBAC and France’s CEPS would allow price adjustments after drug launch based on real-world outcomes and market dynamics. This would require robust post-marketing surveillance and real-world evidence studies to ensure prices remain aligned with therapeutic value. Lastly, UAE could adopt differential pricing strategies as seen in France, charging higher prices for drugs with high ASMR ratings (I–III) to prioritize budget allocation for high-value medicines while controlling spending on low-value drugs.

Limitations

This study had several limitations. First, it did not address the underlying drivers of price discrepancies, which would require a comprehensive examination of the entire supply chain. Second, the study relied on English-language sources, excluding potentially relevant information published in Arabic. Third, the study did not include qualitative input from stakeholders perspectives such as policymakers, regulators, or industry representatives, which could have enriched understanding of pricing dynamics. Fourth, while the study incorporated originators, biosimilars, and a small number of generics, the limited representation of non-originator products reduced the ability to draw robust conclusions about price variation across these categories. Finally, this study did not analyze whether the medications compared were included in the UAE Essential Medicines List or were under patent protection. As a result, it was not possible to assess whether high prices disproportionately affected essential therapies, patented drugs, or non-essential medications. Future research should expand the analysis to include essential versus non-essential and patented versus off-patent drugs, incorporate both English and Arabic sources, and gather insights from relevant stakeholders through interviews to better understand the structural drivers of pricing disparities and their implications for healthcare affordability.

Conclusions

This study found that the medicine price in UAE was substantially higher than in Australia. Although UAE has a pricing policy in place, this was not translated into lower drug prices. These disparities persisted even after PPP adjustment and were disproportionately driven by lower-benefit drugs, particularly in oncology, immunosuppression, and cardiovascular disease. Originator medicines dominated pricing gaps, while biosimilars failed to deliver affordability gains. Hence, UAE may consider revising its policy and improving its current pricing system to ensure constant ability in providing high-quality healthcare to her citizen.

Electronic supplementary material

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Author contributions

AA proposed study concept and design, acquisition of data, performed analysis and interpretation of data, drafted the manuscript and carried out statistical analysis. RS performed analysis and interpretation of data. SCO conducted critical revision of the paper for important intellectual content, provided administrative, technical, or logistic support and supervised the study. All authors read and approved the final manuscript.

Funding

The authors received no financial support for this research.

Data availability

The datasets used and/or analysed during the current study are available from the corresponding author on reasonable request.

Declarations

Ethics approval and consent to participate

Not applicable.

Consent for publication

Not applicable.

Competing interests

The authors declare no competing interests.