Expensive medicines, few generics, fragmented procurement – World Bank on problems in Armenia's health sector
YEREVAN, November 10. /ARKA/. Health services in Armenia remain hospital-centric, which is inefficient, said Armine Manukyan, senior economist at World Bank Office in Armenia, when presenting Thursday a World Bank report titled ‘Armenia Public Expenditure Review; Improving Spending Efficiency.’.
She said while Armenians enjoy excellent physical access to Primary Health Care (PHC) facilities, PHC usage remains low, driven by concerns over quality and additional costs. This results in unnecessary hospital and emergency care use,
‘Addressing this requires service delivery reforms to improve PHC quality and financing reforms. From a financing perspective, this report recommends that Armenia implement payment reforms to reward quality of PHC services.
This entails establishing a mechanism for periodically reviewing the levels of reimbursement to ensure that they reflect the cost of providing services.
According to the report, pharmaceutical spending is high and about 30 percent of total health spending in Armenia is on medicines and medical supplies, which is high compared to other Upper Middle-Income Countries (UMICs),
This is driven by several factors. Firstly, retail prices are relatively high due in part to high import prices and high wholesale and retail markups. This reflects weak regulation and oversight over medicine prices and weak competition in the import, wholesale, and retail pharmaceutical markets.
Secondly, physician prescribing practices tend to favor more expensive brand-name medicines rather than generic alternatives.
Thirdly, inefficient procurement practices such as fragmented procurement across facilities drive higher prices, with significant variance across inpatient and outpatient facilities.
The report recommends that Armenia consider: centralizing the procurement of
commonly purchased medicines and medical supplies, using external reference pricing, revisiting the VAT rate for medicines, and implementing prescribing budgets. -0-
