Here’s a question. How can the global community meet the health policy goal of optimising health outcomes and at the same time achieve the industrial policy objective of a thriving pharmaceutical industry?
That was the challenge at the World Health Organization’s (WHO) fair pricing forum, which brought together pharmaceutical experts in Johannesburg last month.
Governments and health systems across the world are facing the challenge of excessively high prices of new medicines and vaccines. At the same time, shortages, stockouts and quality concerns are becoming commonplace for lower cost, generic essential medicines. Some claim that, for these older, lower-cost generic medicines low prices are driving manufacturers out of the market – and ultimately hindering continuity of supply.
Fair pricing is defined by WHO as a price that is affordable to the health system and patients and at the same time provides sufficient market incentives for industry to invest in innovation and production of medicines. That’s the ideal pricing scenario.
But there’s a big flaw. The two prerequisites needed to determine what is fair – R&D cost transparency and price transparency – are both missing from the picture. By attributing pharmaceutical R&D to the industry alone, the fair pricing definition fails to acknowledge the significant contribution of public funds. This may be a symptom of a lack of transparency in pharmaceutical R&D costs.
Pharmaceutical prices are ultimately kept secret through a gag clause that governments and health systems are ‘encouraged’ to sign following price negotiations. These are known as confidential discounts, which is the actual price paid relative to the public list price. To make matters worse, we have no idea of how much it costs to develop a drug, – getting it from a scientist’s bench to a patient’s bedside. The pharmaceutical industry argues that disclosure of final negotiated prices will compromise the preferential prices offered to countries with a lower ability to pay. However, the public is not in a position to validate that claim. And anecdotal evidence suggests the claim doesn’t always hold true.
Amid all this obscurity, how can health systems, governments and the public make informed decisions and negotiate affordable prices? Globally, public concern over pharmaceutical pricing – whether it’s insulin prices in the USA or the UK’s price negotiation deadlock for the £100,000 plus cystic fibrosis drug – is reaching boiling point. Issues surrounding a lack of access to pharmaceutical products and unaffordable prices continue to disproportionately affect the world’s poorest populations living in low- and middle-income countries. This is perpetuated by underdeveloped health systems and regressive out-of-pocket mechanisms of paying for healthcare that push vulnerable populations further into crushing poverty. And recently, the introduction of high-cost oncology agents has meant that constraints surrounding access and affordability are no longer confined to low- and middle-income countries
To date, efforts to increase transparency in pharmaceutical pricing have been piecemeal and cover pharmaceutical products procured through international global procurement mechanisms, such as the Global Fund and UNICEF. That said, could we be witnessing a public awakening, with many more policy-makers taking a stand on pharmaceutical price transparency?
Italy’s Health Minister has put forward a draft resolution for this year’s World Health Assembly (WHA), calling for a WHO mandate to improve transparency of markets for drugs, vaccines and other health products. The Fair Pricing Forum and Member states’ backing of the transparency resolution in May’s WHA could be pivotal in the campaign to lift the veil of secrecy over the cost of R&D, clinical trial data and pharmaceutical prices. This lack of transparency is fundamentally an issue of governance, which compromises individuals human right to health. Rectifying the lack of transparency and achieving ultimate equity of access will require concerted action bringing together all stakeholders in the pharmaceutical value chain.