Deep Dive Overview
Since 2017, two complementary medicines pricing policies have been implemented by Ghana's Ministry of Health: VAT exemptions for selected Active Pharmaceutical Ingredients, manufacturing inputs, and imported finished pharmaceutical products under Legislative Instrument L.I 2255; and Framework Contracting (FC), a centralised procurement mechanism to bulk-purchase high-demand essential medicines at negotiated lower prices.
Despite operating one of sub-Saharan Africa's more advanced national health insurance systems, Ghana faces persistent challenges in making medicines affordable. The pharmaceutical market has been largely unregulated in terms of prices, and out-of-pocket costs remain prohibitively high for many households. A rigorous qualitative study examined the implementation of both policies, guided by the health policy triangle framework exploring the role of policy content, actors, context, and process.
Policy Recommendations
Having clearly defined medicines pricing policy objectives is equally important as having legal and organisational structures to implement them. The MoH should ensure that all future pricing instruments include explicit, measurable targets and simple standard operating procedures that implementing agencies can navigate without specialist legal guidance
A clear legitimacy and mandate to regulate medicines pricing are critical, but there is also a need to balance the multiple agendas of different policy actors towards the expected policy outcomes. A standing multi-sectoral medicines pricing oversight committee with transparent decision rules and clear mandate boundaries should be established to manage stakeholder engagement systematically
Appropriate sequencing of tasks performed by independent agencies and stakeholders during medicines pricing policy implementation demands close attention, especially in participatory decision-making. The MoH should develop clear implementation roadmaps with assigned responsibilities, timelines, and escalation procedures for each cycle of the FC and VAT exemption processes
A clear and structured process is a useful facilitator of policy implementation but needs to be simple enough for all actors to navigate. The per-product ICUMS application process for VAT exemptions should be reviewed to allow batch or category-level submissions, and FC price-adjustment formulae should be standardised and linked to verifiable economic indicators from the outset of each contract cycle
The administrative capacity of health facilities to manage drug revolving funds, settle supplier debts on time, and accurately forecast medicine quantities must be strengthened. Investment in financial management training at the facility level is essential to prevent indebtedness that leads to supply shortfalls and undermines the FC policy
Policymakers should recognise that achieving negotiated price reductions is only the first step; sustaining them in the face of economic volatility requires real-time price monitoring dashboards, early warning mechanisms, and pre-agreed responses that do not require ad hoc ministerial approvals to activate
Key Numbers
NHIS medicines reduced by at least 30%
essential medicines procured via Framework Contracting
minimum price reduction achieved
multi-stakeholder consultative meetings held
Deep Dive Summary
Analysing Ghana's VAT exemption and Framework Contracting policies, illustrating how centralised procurement achieved significant medicine price reductions despite macroeconomic challenges like currency depreciation.
Content Type
Case Study
Region
Western Africa
Author
Research Team
Read Time
10 min
Key Findings
Ghana's VAT exemptions led to price reductions of at least 30% on 533 of 600 NHIS-listed essential medicines, with 11 reduced by more than 30%.
Centralised Framework Contracting procured 54 essential medicines at lower negotiated prices in the first cycle, rising to 65 medicines in subsequent cycles.
The VAT exemption policy was implemented within approximately two weeks per application, while Framework Contracting required up to twelve months per cycle.
Currency depreciation led vendors to request upward price adjustments of 8% and 20% in successive FC cycles, threatening sustained price reductions.