[Ip-health] Nature: Activists sound alarm on tiered drug prices

Thiru Balasubramaniam thiru at keionline.org
Wed May 21 07:32:29 PDT 2014


Activists sound alarm on tiered drug prices

Plan could increase health costs in middle-income nations.

   - Erika Check

20 May 2014

Global-health campaigners and researchers are protesting against a proposal
that they say would allow drug companies to raise prices for needed
medicines in many developing countries.

On 13 May, a coalition of 220 non-governmental organizations (NGOs)
condemned a proposal from the Global Fund to Fight AIDS, Tuberculosis and
Malaria that promotes ‘tiered pricing’, in which drug companies offer the
same medicines at vastly different prices in different countries. This
approach was first used in the early 2000s to cut the cost of medications
for HIV/AIDS, malaria and tuberculosis in some of the world’s poorest
countries. Economists say that it ultimately leads to higher costs than
does allowing the manufacture of cheaper generic medicines (see ‘Cutting

The current debate centres on middle-income countries such as India, China,
South Africa and Brazil, which have expanding economies but are home to the
vast majority of the world’s ill people — many of whom are poor. As these
nations work to increase access to health care, they face rising prices for
drugs and vaccines. But their growing overall wealth puts them at risk of
losing access to prices and assistance reserved for low-income countries.

“These countries are being hit with a double whammy,” says Rohit Malpani,
director of policy and analysis for the Access Campaign of Médecins Sans
Frontières (also known as Doctors Without Borders) in Geneva, Switzerland.

The Global Fund, which is also based in Geneva and is the world’s largest
supporter of international health programmes, is trying to organize an
international group to address the problem for middle-income nations; early
plans for its Equitable Access Initiative(EAI) mention a global system of
tiered pricing as a potential solution. According to the fund’s documents,
organizations that have expressed interest in the EAI include the GAVI
Alliance, a vaccine initiative based in Geneva; the World Bank; the United
Nations Development Programme; UNICEF, the UN children’s fund; and UNITAID,
a group run by the World Health Organization that negotiates medicine
prices for poor countries.

Seth Faison, the Global Fund’s head of communications, says that the
organization aims to make drugs more affordable in needy countries. “We all
have the same ultimate goal, which is maximum access to drugs at the lowest
possible prices,” he says.

But critics say that the fund’s plan would let companies set prices that
are affordable only for the wealthiest people in these areas. They point to
examples such as the tiered pricing for sofosbuvir, a breakthrough
hepatitis C drug marketed by Gilead Sciences. Gilead, based in Foster City,
California, charges US$900 per treatment course in some low- and
middle-income nations, such as Egypt, Mozambique, Kenya and Myanmar (see
*Nature**508,* 295–296; 2014<http://www.nature.com/uidfinder/10.1038/508295a>).
This is a steep discount from the $84,000 that the company charges in the
United States — where private insurers can absorb some of the cost. But the
tiered price is more than the gross domestic product (GDP) per capita in
Mozambique, about the same as the GDP per capita in Kenya and about
one-third of that in Egypt.

“In middle-income countries with high income inequalities, companies make
more money by selling to the rich people than they do by selling to the 90%
of people who are poor,” says Brook Baker, a senior policy analyst for the
Health Global Access Project, a non-profit organization based in New York

Many would rather see the Global Fund contribute to or support existing
access initiatives. This week’s annual meeting of the World Health
Organization in Geneva, for instance, includes discussions of four projects
that aim to test new ways to develop affordable medicines.

The message may be getting through. The latest drafts of the Global Fund’s
proposal have backtracked: a version released to the fund’s board on 15 May
says that mentions of tiered pricing were made “in error”. Yet its list of
solutions to rising drug costs puts “economic classification of countries”
first — leaving open the possibility that prices might be set according to
a country’s wealth. Middle-income countries could still be made to pay
prices that are unaffordable for many of their citizens.

This alarms global-health researchers such as Suerie Moon at the Harvard
School of Public Health in Boston, Massachusetts. “We have ten years of
experience that shows that tiered pricing is going to lead to higher
pricing,” she says.

One study found that the US President’s Emergency Plan for AIDS Relief, the
world’s largest single-country medical-aid programme, saved $323 million
between 2005 and 2008 by buying generic HIV medicines instead of
tiered-priced drugs (C. B. Holmes *et al*. *J. Am. Med. Assoc.** 304,* 313–320;
2010 <http://dx.doi.org/10.1001/jama.2010.993>).

Moon is also worried about the EAI’s potentially far-reaching impacts.
Currently, companies negotiate tiered prices with individual countries and
other buyers, but a systematic global pricing scheme might force more
countries to pay higher prices.

“When you have multiple agencies coming together to put in place a system
of rules and policies that have not worked well in the past ten years, I
think that’s a real cause for concern,” says Moon.
Nature 509, 412 (22 May 2014) doi:10.1038/509412a

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