Spotlight on pharmaceutical pricing regulation in Kenya: how much does it really contribute to access?

Abstract

Ensuring access to essential medicines by low income consumers is a challenge to many countries. Pharmaceutical expenditure is rising in Kenya, as is the health expenditure. However, our research found that on average, public sector facilities interviewed had only 50% availability of essential medicines (up to 60% in hospitals and as low as 46% at the dispensary level). Private sector health facilities, wholesale and retail outlets set their pharmaceutical prices independently on a full cost recovery basis.The common mwananchi is highly dependent on the private health sector for essential medicines. Industrial policy has a huge influence on the behaviour of firms, particularly in extending and deepening technological capabilities. A long term perspective is key to better access to medicines. The Government does not impose any tariffs (duty and VAT) on finished pharmaceutical products, whether locally manufactured or imported. Public sector procurement of pharmaceutical products, which is governed by the Public Procurement and Disposal Act (2005), is based on the principle of lowest bidding price. Arguably, this targets value for money aimed at ensuring accessibility of pharmaceuticals in public health facilities for low income earners. Nevertheless, challenges in availability of pharmaceuticals in public health facilities mean that the common mwananchi is highly dependent on pharmaceuticals from the private sector. This brief considers the main regulatory frameworks and the scope for achieving better access to medicines. The regulatory frameworks addressed here are: the Public Procurement and Disposal Act (2005) and the Competition Act No. 12 (2010). A number of key issues are identified. This work is part of the ‘Industrial Productivity, Health Sector Performance and Policy Synergies for Inclusive Growth: A Study in Tanzania and Kenya’ Project