Paying for pharmaceutical registration in developing countries.

Abstract

Fees charged by drug regulatory authorities (DRAs) may be used as a policy instrument to speed up regulatory approval, to encourage retention of quality staff and to stimulate introduction of generics versus new chemical entities. Often, the cost recovery function of these registration fees is not related to the true cost of the pharmaceutical regulatory process. In this paper, we scaled new drug registration fees of various DRAs to indices of economic development - the GNP per capita and the total government health expenditure per capita. Based on our analyses of 34 countries, most DRA registration fees for new drug applications for developing/non-OECD countries are less than the current GNP/capita of that country or are about US dollars 5000 for each US dollars 1000 spent per capita on healthcare. At present, each US dollars 1000 new drug registration fee for the developing/non-OECD countries analyzed corresponds to a total pharmaceutical market share of about US dollars 85 million. Our analyses further suggest little relationship between DRA registration fees and drug approval times in developing countries. The situation is complex, however, as policy tradeoffs are important to consider. Differential registration fees, presumably designed to encourage locally produced versus imported products, may violate international trade regulations. Moreover, certain DRA registration fees may provide perverse incentives for the pharmaceutical industry. Developing countries should require that DRA registration fees be based on accurate accounting of the cost of services provided. At present levels, these fees could be increased without disincentive to the pharmaceutical industry. For new drug registration fees, our analyses suggest that developing countries could charge between 1-5 times their GNP per capita or between US dollars 17000 and US dollars 80000 for each US dollars 1000 spent per capita on healthcare.