Tiered pricing: what pharmaceutical companies can do to improve access to medicines and vaccines

While making medicines and vaccines more affordable won’t on its own solve the problem of access to medicines – many of the medicines and vaccines that children need already have  high-quality, inexpensive generic versions – when it comes to making sure children benefit from the newest and most innovative medicines and vaccines, affordability is critical.

As a new paper by Save the Children investigates, one way that pharmaceutical companies can help address this problem is by setting the prices of medicines and vaccines transparently, equitably and fairly.

What can pharmaceutical companies do?

Ethical pricing policies, such as tiered pricing ­– charging different prices to different countries, generally based on wealth – are playing a role in increasing access to medicines. However, in order to ensure public health needs and human rights are adequately served, companies must make their prices and pricing methods more transparent, take into account in-country equity, and ensure the participation of affected stakeholders in developing their policies.

Transparency: Greater transparency on prices would allow developing countries to negotiate better with companies and more accurately forecast procurement and budgets. It would also allow independent observers to determine whether the lowest possible prices are being charged.

Equity: Considering that approximately 75% of the world’s poor now live in large middle-income countries, any pricing system that intends to ensure access for those who are most vulnerable and marginalised must be able to ensure prices that are affordable for these populations.

Participation: Affected stakeholders, communities, purchasers and governments should have some influence over whether prices are fair and which medicines are included, so that companies are not making unilateral decisions on matters of public health.

Not the only solution

While tiered pricing can be a way to improve access, it cannot be the only global solution to the problem of affordability. In the long-term, sustainable reductions in price will ultimately require increased competition, which will in turn require governments to make use of tools that they have. This may mean making use of global intellectual property flexibilities, which are internationally agreed protections for countries to ensure access to medicines.

Save the Children and other NGOs must ensure that governments have the space to make use of all of the tools at their disposal to reduce prices and to make sure that research into new medicines and formulations prioritises vulnerable groups and diseases common in developing countries – even if there are not many profits to be made. But we also must make sure that governments take steps to address all the problems of access that don’t involve affordability, such as:

• increasing trained health care workers
• more government spending on health
• improving supply chains.

Ensuring access to medicines for the most vulnerable and marginalised children will require addressing all of these problems.