Economic Evaluation: Advantages of Implementing Drug Track and Trace beyond Health Benefits

Traceability is a valuable strategy to prevent the administration of counterfeit and substandard medicines, but despite being an efficient risk management strategy, it has high implementation and operational costs. An economic evaluation, taken with the identification of risks to be mitigated, potential benefits, related costs, and ways to fund the project implementation and operationalization, can determine the feasibility of a traceability model. This evaluation admits different perspectives depending on the stakeholder. Several countries are working on different traceability and financing models according to identified risks, expected gains, and economic impacts. This opinion paper describes the problem, track and trace models mostly adopted, most used economic evaluation methods in healthcare, and defines the hypothesis that investment return can enable the decision-making for a drug track system implementation.

Traceability consists of accessing any or all related information of an object under consideration through its life cycle by recognized identifications [1]. Traceability systems, for example, can help prevent the insertion and circulation of counterfeit, smuggled, or stolen medical products in regulated supply chains, and is a valuable tool for regulators that could act quickly and reasonably to any incidents that may occur with monitored products [2].

According to World Health Organization (WHO), falsified medical products misrepresent their composition or source through intentional mislabeling [3]. WHO also defines substandard medicines as authorized medical products which fail on either quality standards or specifications [3], alerting about their administration.

Falsified and substandard medicines and their related costs are global concerns that traceability can face, and economic evaluation methods are relevant tools that can enable track and trace implementation strategies.

The main classes subject to deviations concerning counterfeit or substandard drugs are antimalarials (19.1%) and antibiotics (12.4%) [4]. World Health Organization estimates between 72,000 and 169,000 children may die from pneumonia every year, after receiving counterfeit drugs; and fake antimalarials may be responsible for additional 116,000 deaths [5].

Tuberculosis was responsible for 1.6 million deaths in 2021 [6] and a burden of drug-resistant tuberculosis was also estimated to have increased between 2020 and 2021, with 450 000 new cases of rifampicin resistant [6]. Although there are no estimates of how many of these deaths are related to counterfeit antimalarials, it is common knowledge that their usage increases mortality and contributes economically to the persistence of the disease [7]. Falsified and substandard antibiotics and antimalarials are also concerns regarding drug resistance, which can lead to a higher number of deaths in the upcoming years.

WHO also estimates that approximately 10% of medicines used in low-and-middle-income countries are counterfeit or substandard [5]. Another study identified that about 13.6% of drugs marketed in low- and middle-income countries are counterfeit [4].

Despite drug counterfeiting being an issue with greater incidence in low-and-middle-income countries, it is also relevant in countries of all economic levels, not limited to countries with poor regulatory controls or weak pharmaceutical governance [8].

In a systematic review [9] with worldwide data from 2013 to 2018, with median prevalence, 25% of medicines tested were substandard or falsified. By stratifying data by income level classification, Low-Income-Countries (LIC), Lower-Middle-Income-Countries (LMIC) and Upper-Middle-Income-Countries (UMIC), the median prevalence was respectively 26%, 30% and 19%. If considering only falsified medicines, the median global prevalence was 18%.

In another systematic review [4], which evaluated studies conducted in LIC and LMIC, substandard medicines had a median prevalence of 13.6%, in which 19.1% were antimalarials, and 12.5% received the classification as antibiotics.

As can be seen, although data differs in estimated prevalence, it ratifies that counterfeit or substandard drugs are relevant public health concerns. In this sense, a big alert came through with the COVID-19 pandemic and the need for massive use of medicines, health products, faster development of vaccines, and effective drugs for the disease recently discovered.

Covid vaccines consist of a market of US$ 150 billion [10], which granted Pfizer, for example, a profit of US$ 37 billion in 2021. Due to the intense demand for the vaccine, parallel markets grew by 400%, according to estimates [11,12], and led to several registers regarding the administration of fake vaccines at least in India, Mexico, and Poland [10,11].

Another relevant impact in relation to COVID-19 pandemic was the increase in internet product sales. Internet is a potential channel for the commercialization of counterfeit products, including medicines, as it turns difficult origin verifications [13,14].

In 2017, medicines corresponded to 7% of all the goods purchased on-line [14], and it’s estimated that 93% to 96% of the vendors are operating illegally, with 1 in every 2 medicines being counterfeit [12]. It is estimated that before the COVID-19 pandemic, ll-intentioned vendors negotiate between US$ 1 million and US$ 2.5 million per month in illegal medicines [12].

Considering that counterfeit and substandard medicines are growing concerns related to both public health and the economy, and that counterfeits are not restricted to a specific class of drugs, actions must be taken to, at least, mitigate this problem. Medicines track and trace is considered an effective control strategy, which has progressively being adopted by several countries.

There are three regulatory models to classify drug track and trace: full track and trace, point-of-dispense verification and in-between systems [15].

In the full track and trace model, it is determined a detailed follow-up during the supply chain, with all transactions being registered between stakeholders, from production to the final consumer. Due to the greater control, all chain entities need to adapt processes and deploy technology, and that is why this model has the highest implementation costs associated.

In the point-of-dispense verification model, the checks occur only at the introduction of the product in the supply chain (production or importation) and at the end (retailers, clinics, and hospitals).

In the in-between systems, there are, in addition to the checks carried out in point-of-dispense verification, verifications at selected points in the supply chain or related to specific types of products, according to risk management needs.

Countries that have chosen the full track and trace model include Argentina, the Republic of Korea, the Russian Federation, Turkey and the United States of America. The European Union has enacted regulation using the point of dispense verification approach [2].

Each country must assess the potential risks and related costs to determine the need and feasibility the traceability model and its funding. WHO recommends a risk-benefit assessment before implementing a drug track and trace system [2], as potential risks, benefits, and related costs must be identified.

An economic evaluation measures the efficiency and resource allocation for interventions that could improve health services and outcomes. Health economic evaluations are not limited to decisions concerning interventions or services that affect patients directly but also include implementation strategies, to inform the best available evidence, contributing to the improvement of health policies [16].

There are several methods to guide economic evaluation, and the most common are the following: cost minimization, cost-effectiveness, cost-utility and, cost-benefit studies [16-18].

Cost minimization assessment consists of a simple and direct comparison method that identifies the costs of different interventions and ascertains the lowest cost. This evaluation considers that obtained results of the interventions are the same [16,17].

Cost-effectiveness studies evaluate the costs and benefits from two or more interventions and the incremental costs and incremental effects related to them. The values compose an incremental Cost-Effectiveness Ratio (ICER). The method has wide acceptance in health technology assessment, and one known disadvantage is that the evaluated technologies must have the same outcome [17,18].

Cost-utility analysis proposes measuring a patient's preference for one determining a health status. It is gauged by cost per Quality-Adjusted Life Year (QALY), obtained by applying validated questionnaires [17,18].

Finally, Cost-Benefit Analysis (CBA) is the most comprehensive method based on welfare economics theory. It proposes the analysis of intervention consequences in monetary terms, including all variables, inputs (costs) and results (benefits) of health care. It is considered the best method to support decision-making concerning resource allocation, as the results are reported in monetary units. The biggest challenge regarding this analysis is converting health outcomes into monetary values [16,17].

Besides the definition of the method, it is necessary to set a perspective for the economic evaluation. The analysis of drug track and trace system implementations admits several perspectives: government, the regulatory agency, public health, the regulated sector (including the producer, the distributor, and the retailer), patient, etc. Each of those comprehends different aspects and costs to be considered and measured.

From the government perspective, a preliminary and non-exhaustive analysis consider the following costs: system development/acquisition; system maintenance; data storage; regulatory management; processes change; and implementation of technology in chain entities belonging to public authorities.

Another example is the patient's perspective. The cost is related to a potential increase in the price of medicines, as a result of the implementation of the new controls, which can impact product accessibility.

However, potential gains obtained with traceable processes must also be measured and evaluated. In other words, it is necessary to analyze the benefits that result from the withdraw of counterfeit products from the market.

It is also necessary to evaluate the benefits that result from the non-prolongation of pathologies due to the ineffectiveness of counterfeit medicines. This avoids unnecessary expenditure/consumption of medicines, consultations, hospitalizations, and even the worsening of the diseases in some cases, leading to chronic health conditions, and worsening of health conditions to disabling conditions and even death [2].

The evaluation can also consider the cost reduction regarding efficiency gains in recall and alerts processes, medicines distribution and allocation, and the possibility of planning purchases according to more accurate administration data, which contributes to reduce losses due to purchased and unused drugs, as well as to improve inventory management.

The Organization for Economic Cooperation and Development (OECD) points out that the following economic aspects shall be taken into consideration when evaluating traceability systems implementation: loss of sales or loss of reputation of pharmaceutical industries, loss of tax revenue for countries, costs related to consequences with the use of these drugs including patient’s treatment, environmental pollution resulting from the medicine inappropriate production. Social costs such as increased organized crime and job losses are also related [19].

Despite that, some benefits are difficult to measure, as those related to risk assessment aiming at more efficient products, better efficiency in risk management processes and risk-based decision-making, and better data for pharmacovigilance evaluation and more suitable promotion of public policies considering the populational drug consumption profile [20].

In Nigeria, a LMIC country, the adoption of authentication technologies through product verification revealed a significant reduction of counterfeit medicines from 40% in 2001 to 16.7% in 2015 [7]. This estimate indicates that implementing traceability technologies can promote economic benefits to LIC and LMIC countries.

In Turkey, where the traceability system is running for more than 10 years, the savings from reimbursement costs from counterfeit drugs are estimated in about US$ 1 billion per year [21]. In 2017, WHO forecasted US$ 30.5 billion in global losses regarding substandard and falsified medicines [5].

In the European Union, in 2020, counterfeit medicines were responsible for a damage in the order of €1.7 billion. They also inferred that around 80,000 jobs were closed in the pharmaceutical industry due to illegal trade in medicines [19]. A systematic review [4] estimated that the economic impact generated by the insertion of counterfeit or non-standard medicines in the pharmaceutical chain, leads to losses that can vary from US$ 10 billion to US$ 200 billion, according to the market size of each country.

The implementation and operationalization can be supported financially by fees based on the volume or annual licenses charged from manufacturers [14]. Furthermore, the regulated sector can subsidize the system directly, in the same way that resulted in the creation of the European Medicine Verification Organization (EMVO) in the European Union. EMVO consists of an organization founded and maintained by several companies in the pharmaceutical sector, including associations and federations of pharmaceutical industries, distributors and hospitals [22].

The initial approach presented so far indicates how economic evaluation can be a valuable tool to support decision-make. Medicines traceability has been adopted in several countries around the world. International health and regulatory authorities recommend its adoption, including World Health Organization (WHO), International Coalition of Medicines Regulatory Agencies (IMCRA) and International Council of Harmonization (ICH).

Each country has a different reality and the definition of a systematized method that crosses data from different sources can show the economic benefits achieved by the adoption of traceability in the pharmaceutical chain.

However, the implementation of this type of system is costly and demands political and regulatory costs. Therefore, economic assessment methods can be a useful tool for assessing the best track and trace model to be chosen and the cost recovery, reflecting the country’s economic, epidemiological and technological issues. It can also allow decision-making in an economical way and not only based on the sanitary bias.

Further studies will consider the most suitable economic evaluation model to be applied for some scenarios. This could be useful to evaluate existing and future implementations of traceability systems, as well as the most advantageous model to be adopted.

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