[Ip-health] UACT position on external reference pricing and parallel trade for drugs, vaccines and other medical technologies
manon.ress at cancerunion.org
Fri Jul 20 08:39:32 PDT 2018
UACT position on external reference pricing and parallel trade for drugs,
vaccines and other medical technologies
The Union for Affordable Cancer Treatment (UACT) supports deep reforms in
the way that medical R&D is funded, including the delinking of R&D
incentives from prices of products or services. In the present, however, it
is necessary to take measures to reduce prices of medicines that are
unaffordable or excessive.
Among the measures that governments take to reduce drug prices are
so-called “external reference pricing” (ERP) and parallel trade. Both ERP
and parallel trade can play a role in lowering drug prices, although the
context is important, there are alternatives that can be more appropriate
ERP, or “international reference pricing”, is a term used to describe the
practice of considering prices in different countries, when setting prices
or ceilings on prices for the domestic market. According to reports by the
European Union and various scholars and research institutes, ERP is used in
many countries, although the details of implementation vary.
UACT’s position on ERP is as follows:
1. When ERP is used, governments should understand that the list prices in
many cases do not reflect discounts, and thus overstate prices actually
paid in reference markets.
2. For drugs protected by patents, governments should not reference prices
in countries with significantly lower per capita incomes, as measured by
the World Bank Atlas method. For example, high income countries could limit
parallel imports from countries that have per capita income that is less
than half of theirs.
3. Limited exceptions to (2) can be made for cases where the purpose of the
reference price is to curb an excessive price.
Parallel trade is the term given to the practice of importing a product
from another country, when manufactured by or with the consent of a holder
of a patent, trademark, or copyright who also sells the product at a
different price, in the domestic market. Parallel traders buy products in
countries where prices are lower, and import to countries where prices are
higher. Parallel trade has the effect of moving prices in both markets
closer to each other, and can in some cases create shortages in the country
where the exports are obtained. Parallel trade is most common in the
European Union, where medicines and medical devices are subject to the
rules of the European single market. Parallel trade is also used in some
countries where domestic prices are high relative to other countries, due
to unfavorable price discrimination, inefficiencies in distribution
systems, or domestic shortages of products.
UACT’s position on parallel trade is as follows:
1. Parallel trade can be an effective tool to curb high prices in a country
that faces unfavorable price discrimination, inefficiencies in distribution
systems, or experiences domestic shortages of products, whether or not the
products are under patent protection.
2. Governments can and should regulate parallel traders to ensure that
products are safe and effective.
3. When products are under patent protection, governments should normally
not permit parallel imports from countries of significantly lower per
capita incomes, as measured by the World Bank Atlas method.
4. Governments may make exceptions to (3) in cases where the parallel trade
is designed to curb an excessive price or address a shortage.
5. Restrictions on commercial parallel trade should not apply to personal
July 19, 2018
The Union for Affordable Cancer Treatment (UACT) is an international
network of people who share the conviction that cancer treatment and care
should be available everywhere for everyone regardless of gender, age,
nationality, or financial resources. More about our organization at
Manon Ress, Ph.D.
Union for Affordable Cancer Treatment (UACT)
Cell Phone +1 571 331 6879
Email: info at uact.org
1621 Connecticut Avenue NW
Washington, DC 20009
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