[Ip-health] IP-Watch: What Is Fair Pricing For Medicines? WHO-Netherlands Forum Aims To Find Out

Thiru Balasubramaniam thiru at keionline.org
Wed Mar 1 08:21:04 PST 2017


What Is Fair Pricing For Medicines? WHO-Netherlands Forum Aims To Find Out


Public health stakeholders – and just about everyone else – may take notice
of a meeting planned for May in the Netherlands, as it could offer the
beginning of a new approach to pharmaceutical costs. High drug prices have
become a ‘kitchen table’ issue in countries of all economic sizes recently,
and the World Health Organization is teaming up with the Dutch government
to address it in a new and practical way.

A Fair Pricing Forum is planned for 10-11 May in Amsterdam, the
Netherlands. The first day will begin late and be more introductory, while
the second day is expected a full agenda of panel discussions, according to

“The idea is to basically examine the pricing of pharmaceuticals and this
concept of fair pricing,” said Andrew Rintoul, a health economist who
joined the WHO Essential Medicines and Health Products Department in
January this year.

But what is fair pricing? “We can define what’s unfair but we can’t really
define what’s fair,” Rintoul said in an interview with Intellectual
Property Watch, “so we’re looking at over-priced medicines, high-cost
medicines, as well as looking at shortages of medicines, low-priced
medicines where there aren’t the proper incentives in the market to produce
these medicines.”

New generations of medicines are coming out and are unaffordable not only
for low income countries but also medium and high income countries. The
prices of some of these medicines are leading to rationing of the
medicines, and that is not going towards governments’ objective of
universal health coverage.

Antimicrobial resistance – the rise in resistance to existing antibiotics
with few new antibiotics in the pipeline due to a lack of financial
incentives to produce them – is not a focus of this meeting but would be
one example of such shortages, he said.

They are hoping to have the Dutch health minister at the forum, and are
looking to have representatives from member states, industry,
nongovernmental organisations, health insurance, and patient groups.

In addition to over-pricing and shortages, they are hoping to also look at
new mechanisms for separating R&D from pricing, the cost of research, where
research is coming from such public funding, and cost of production.

They have a paper on cost of production of some of the medicines on the
Essential Medicines List kept by WHO, which will be able to provide clear
guidance to member states on prices that could be paid for generic

For this, they are looking at factors such as cost of APIs, cost per kilo
of products, and costing on what it takes to run a factory, to get some
estimates of what it costs to make a tablet. And then countries can do with
that information what they want, but it provides a guideline as to what
could be paid. It could also be a guide for countries in negotiating.

There is also a more comprehensive pricing report in the works that WHO is
hoping to launch on the day of the forum, officials said.

An advisory group on the subject met in November, and a number of expert
papers on relevant issues were collected at that time. No further
information on the advisory group meeting was available at press time. The
forum fits within the WHO mandate, organisers noted.

No Pharma-Bashing

The meeting in the Netherlands is intended to be inclusive and
constructive, say the organisers. “This is not a pharma-bashing exercise,”
Rintoul emphasised.

Private-sector pharmaceutical companies closely guard how they come up with
product prices and insist that prices are tied to investments in research
and development.

“We will have that balance between the need for innovation and bringing
those products to market,” he said. “So it’s looking at the incentives as

They would also like to look at what the costs of R&D are. There is nowhere
that the R&D costs are clearer than in the merger and acquisition costs of

“That basically defines what the research is,” he said, if the cost of the
research is included.

For example, if a company is bought out for a certain price, the purchase
includes their research, so there will be examples of that available in the
public domain.

“It sets an upper limit, and it’s transparent,” Rintoul added.

A recent case in the news involved the price of nearly $85,000 per regimen
– or $1,000 per pill – of the hepatitis C medicine Sovaldi, produced by

Gilead bought out another company for $11 billion and developed Sovaldi
from that. And they have reportedly generated some $35 billion in revenues
from the drug so far. Gilead is considered to have already recouped the
cost of its investment three times over, even taking into account expenses
such as marketing.

It has been argued that the price set by Gilead is so high in the United
States that it would be of greater value for the US government to simply
buy the company out for nearly $160 million and still see a cost savings.

Before joining the World Health Organisation Rintoul worked for the
Australian Government Department of Health on the Pharmaceutical Benefits
Scheme for 12 years. From 2011 until end 2016, he was Director of
Pharmaceutical Pricing, where he was responsible for pharmaceutical pricing
and pricing negotiations for the Australian Government, and has experience
negotiating with many companies.

The hope for the forum is to get senior policymakers with decision-making
ability in pricing and selection for use in their countries, he said.

The focus of the forum will not be on intellectual property, though it is
“inextricably linked” to the issues, an organiser said. The event will not
focus on compulsory licensing or the flexibilities in the World Trade
Organization Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS).

Helping countries to be aware of the price they can pay for generic
medicines and other medicines, looking at what impact can be had in the
Essential Medicines List is one of the objects of the event.

“It’s the beginning of a process,” said Daniela Bagozzi, senior information
officer, Essential Medicines and Health Products at WHO.

“We’re going to have to come out with ways forward from this forum,” added

Industry Encouraged

The International Federation for Pharmaceutical Manufacturers and
Associations (IFPMA) offered an initial reaction to the fair pricing forum

“The pharmaceutical industry is committed to working with stakeholders to
ensure health systems provide medicines to patients now and in the future,”
said Brendan Shaw, IFPMA assistant director general. “It is important to
ensure that health systems encourage the development of new medicines and
vaccines for future generations. A viable, successful pharmaceutical
industry is a key success factor in achieving the UN Sustainable
Development Goals concerning universal health coverage and we want to work
with stakeholders to ensure a balanced, pragmatic discussion that
recognises the value of medicines and innovation to future human health.”

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