[Ip-health] WHO: Proposed work program on “fair price” undermines affordability of medicines

K.M. Gopakumar kumargopakm at gmail.com
Wed May 30 02:39:27 PDT 2018


*WHO: Proposed work program on “fair price” undermines** affordability of

Geneva, 21 May (K M Gopakumar) – The proposed work program on fair price
raises concerns on affordability of medicines.

The document was prepared by the Secretariat of the World Health
Organization (WHO)for the consideration of the 71st World Health Assembly
(WHA) proposes the activity under the agenda item addressing the global
shortage of and access to medicines and vaccines (A 71/12).


The 71stWHA is taking place from 21 to 26 May at the WHO headquarters in

Paragraph 56 of the document states: “There is a need to establish a
fair-pricing model that ensures sustainability for health systems and
access for patients as well as sufficient profit for industry to sustain
the production of quality products”.

The document defines “fair price” as “one that is affordable for health
systems and patients and that at the same time provides sufficient market
incentive for industry to invest in innovation and the production of
medicines. In this context, fairness implies positive incentives/benefits
for all stakeholders, including purchasers and those involved in the
research and development and manufacture of medicines”.

As per the definition, fair price is different from affordable price and it
is a price reached taking into consideration the market incentive for
industry to invest in innovation and the production of medicines. Thus the
definition in effect means that prices of the medicines should not be as
low as are currently available due to generic competition;instead it should
compensate those involved in the research and development and manufacture
of medicines.

There is ample evidence that generic competition brings down the prices of
medicines drastically. For instance, though the price of Gilead Sciences’
sofosubuvir price for 12 weeks of hepatitis C treatment is USD 84000 in the
United States,the company offered the medicine to a few developing
countries for USD 900, almost 90% less than the USmarket price. However,
generic competition could bring down the price to below USD 100.  The fair
price initiative thus underminesgeneric competition that can be increased
though the use of flexibilities in the Trade-related Aspects of
Intellectual Property Rights Agreement (TRIPS) such as compulsory license
and government use license. The fair price initiative could legitimise high

Most importantly, it raises the question of fairness for whom? To date
there is no transparency with regard to the actual cost of research and
development (R&D). The cost of R&D is not open for public scrutiny and
verification. The opaqueness around R&D cost has been long used to justify
high, even exorbitant, prices for patented medicines. The fair price to
provide incentives for innovation would then legitimise the high prices for
medicines and compromise access to medicines in many WHO Member States.

Paragraph53 of the report states: “The Secretariat has started collecting
evidence for a fair pricing model that could be adapted by countries
according to the national context”. However, there is no governing body
decision to start a work program on fair price.

Third World Network has learnt that the WHO Secretariat initiated the work
in 2016 through a staff of the Swiss Patent Office to work from the WHO
headquarters. Further, the Secretariat also commissioned nearly 13 to 14
papers on various aspects of pricing of medicines, including a concept
paper on fair pricing. The paper deals with various elements of fair
pricing, such as cost of manufacturing, cost of R&D, fair profit,
registration costs, financial strain on the buyer etc., and concludes:
“None of these provides adequate guidance on establishing a fair price of a
particular medicine, but by setting boundaries on what could be considered
affordable they may offer food for thought on what is *not *a fair price
for a society to bear”.

The Secretariat also held a one-day fair pricing forum on 11 May 2017. The
report of the fair pricing forum states: “There is a need for further
discussion, in order to find solutions to the many different facets of the
prices/access issue, to develop a constructive and concrete action plan
that can be implemented”. (

The attempt to introduce the concept of fair pricing and a work program on
fair pricing resembles the attempt to introduce differential pricing in the
early years of the last decade to curb generic competition through the use
of TRIPS flexibilities.

The WHA is expected to adopt the following decision points agreed at the 142
nd meeting of the Executive Board in January 2018:

·         To elaborate a roadmap report, in consultation with Member
States, outlining the programming of WHO’s work on access to medicines and
vaccines, including activities, actions and deliverables for the period

·         To submit this roadmap report to the Seventy-second World Health
Assembly for its consideration in 2019, through the Executive Board at its
144th session.

(For details see http://apps.who.int/gb/ebwha/pdf_files/EB142/B142(3)-en.pdf

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