The informal advisory committee met in a closed –door session at WHO. A fair pricing forum co-organized by the WHO and the Netherland government has been planned. The advisory group focused on the problem with medicines pricing, including high prices and shortages. National health budgets are buckling under the strain of paying new treatments. Breakthrough therapies are so expensive that they have created serious budget problems, even in the wealthiest countries leading to situation where access is restricted on account cost.
“The time is ripe,” it says, “to rethink how medicines are priced and what tools governments have to make sure that essential medicines are affordable to patients and the health system.” At the same time, it adds, shortages of “in-principle” cheap generic essential medicines are increasing, but it raises concern about “unsustainably low prices which can drive high-quality manufacturers out of the market in the long run, jeopardizing the continuity of supply.”
Fair pricing forum 2017-objectives
- To start process with all relevant stakeholders to exchange their experience with current prices setting and price system.
- To have an insight into the wanted and unwanted results of the current business model.
- To identify price related factors that contribute to the shortage of essential medicine
- To provide platform for these discussions and provide relevant background search.
- To expand current network of payers to include other relevant players and countries to facilitate better exchange of experience.
- To identity action with current pricing system, including the need for transparency of prices paid etc.
- “The ultimate aim,” it said, “should be a price that assures new medicines are affordable to all patients and health systems, allows for a reasonable profit margin (also allowing for investment in innovation), and assures a stable supply of generic medicines.”
Generic, shortages, low prices
It discussed the cost of generic medicine production, where the major cost is manufacturing primarily synthesizing the active pharmaceutical ingredient, as well as registration and distribution. The group discussed preliminary results of a study on generic manufacturing cost on the WHO essential medicine list, most of which are not under patent. These results were compared with publicly available databases of medicine prices from India, South Africa, and the United Kingdom. This shows government often pays many times more than the generic price. The group analyzed data on shortages, low price and low profit margin.
The report acknowledges that major cost of new medicine is the research and development, and that for patented medicines- medicine price must be sufficient to cover R&D investment, including the cost of R&D into medicines that fail to secure final approval. The report says in absence of better information from the pharmaceutical industry, which keeps R&D costs mostly secret, WHO’s most recent figures based on an in house study,” may offer a starting point”.
The group looked skeptically into the argument that rising price reflects greater investment in R&D, not only made by industry but also government, academic institutions and non-profit organizations.
There are many other issues addressed in further depth in the 21-page report, including price transparency, country experiences, value-based pricing (price set to therapeutic value not market), and orphan drugs, for rare diseases, for which manufacturers “can command exceptionally high prices.”It also addresses voluntary and compulsory licensing, viewing voluntary having many benefits but with no guarantee that the medicine the license covers will go to market.
It talks about how countries are allowed to issue compulsory licenses, and may do it because of unaffordable medicines. It states that to date, compulsory licenses for medicines have been used only by a small number of countries, a point which is sometimes disputed. The group discussed reasons why such licenses have not been used more often, including pressure from other governments. In conclusion, the report said, “The Advisory Group’s discussions confirmed that the prices of essential medicines have appropriately become a matter of global concern.” But “fairness” is still a subjective term and needs further defining.