‘Fair pricing’ of medicines – calls for transparency
The rising cost of medicines has been a matter of concern for all economies. In a survey that started in 2011 and included 1,500 patient groups in 78 countries, only 9% believed that pharmaceutical companies were “excellent or good” at having “fair pricing policies” and this figure has hovered between 11% and 15% since then.
Although there is no standard definition of a fair price for medicines the WHO defines a “fair price” as “one that is affordable for health systems and patients and, at the same time, provides sufficient market incentive for the industry to invest in innovation and the production of medicines.” While the price of a medicine should allow for meeting the societal need for that product, sellers often have strong price-setting power. For new medicines, monopoly power strengthens a seller’s position. These characteristics mean that government intervention is often needed to ensure a fair price.
Participation by pharma companies:
Fair pricing-related activities are very limited at the moment and usually tend to occur after government pressure.
Limited activities have been observed by companies in terms of transparency and fair pricing disclosures where Originator companies appear to be more “transparent” vs. generics companies and seem to be facing higher pressure from governments on drug pricing. However, not all originator companies resemble in terms of “transparency” level.
eg: Janssen, Novartis, Pfizer and MSD have robust transparency policies
- Janssen improved on the content of its transparency report throughout the years by disclosing R&D, discounts/rebates and patient insurance
- Novartis has a comprehensive transparency report which includes price changes, rebates, R&D and patient insurance support. The company had voluntarily frozen prices of its drugs in 2018 by following the US environment in a bid to promote Fair Pricing and maintain good relations in the US
- Pfizer has a strong presence in drug pricing-related activities at global and regional levels. The company has a quarterly disclosure of research grants allocated to HCPs
- MSD is compliant with local transparency policies and has a robust fair pricing and transparency strategy targeting the US
Companies tend to, voluntarily, provide/disclose more information in the US in comparison to ex-US.
In the EU, companies tend to comply with the EFPIA transparency framework on transfers of value toward HCPs and patient organizations and commonly mention this in their reports
The challenge:
A recent set of five article series published in the BMJ, supported in part by the WHO, highlights the increased priority drug price transparency is receiving on the WHO’s agenda. They discuss the barriers to information-sharing between private and public sectors about R&D costs, as well as between health systems in different countries, which typically keep data on real drug purchase prices confidential. This has become a central theme on the transparency agenda over the past years.
Call for transparency:
There has been a strong call for transparency on medicine prices, cost of R&D at the WHO Fair Pricing Forum held in 2019. The Forum brought together over 200 delegates from government, non-governmental organizations, academia and industry to discuss how to design a fairer pharmaceutical system where medicines are affordable to those in need and the development of effective new treatments is financed appropriately. In total, 64 civil society organizations published a statement before the meeting calling for greater medicines pricing and R&D cost transparency. A few proposed measures are provided below:
- By implementing models that de-link the cost of R&D from the price of medical products to finance drug development, high prices are no longer required to recoup R&D expenditures. Proposed a progressive implementation of de-linkage awards to gradually replace market exclusivities.
- One successful example of an innovation initiative that works with a delinked model is the Drugs for Neglected Diseases Initiative (DNDi). The DNDi is open about its R&D outlays
- The Medicines Patent Pool (MPP) is another example of an organization committed to transparency. The MPP publishes all its agreements in full on its website.
Is there a solution?
There is no simple algorithm that will calculate a fair price for each medicine but transparency and collaboration are likely to ensure that the “right data” are available to the “right stakeholders” to help warrant affordable access to essential medicines. In the BMJ five article series, a framework that combines both buyers’ and sellers’ concerns in defining a range of fair prices for medications is proposed, suggesting that price ceilings for medicines could be set by consideration of consumers’ concerns while price floors could be set by manufacturers’ priorities. Public intervention should occur in cases where prices fall outside of this range.
To take the discussions on fair pricing forward, the WHO announced it would set up working groups to further develop proposals put forward at the meeting before the next Fair Pricing Forum takes place in 2021. Finally, the WHO has also launched an online public consultation in 2019 to collect suggestions for a definition of what constitutes a ‘fair price’.
#fairpricing #drugpricing #drugprices
Sources