[Ip-health] WTO TRIPS Council: Submission of South Africa on R&D Costs and Pricing of Medicines and Health Technologies

Thiru Balasubramaniam thiru at keionline.org
Fri Oct 4 23:54:55 PDT 2019


WTO TRIPS Council: Submission of South Africa on R&D Costs and Pricing of
Medicines and Health Technologies

Posted on October 5, 2019 by Thiru

On Friday, 4 October 2019, the World Trade Organization (WTO) published a
submission by the Republic of South Africa on “R&D Costs and Pricing of
Medicines and Health Technologies” (IP/C/W/659). In this paper, South
Africa requested the WTO TRIPS Council (which meets on 17 October 2019 and
18 October 2019) to address the transparency of R&D costs and pricing of
medicines and health technologies. Following the trail blazed by Italy
<https://www.keionline.org/transparency/wha72> at the World Health
Organization (WHO) in 2019, trade delegates covering intellectual property
will now discuss transparency R&D costs and pricing of medicines and health
technologies guided by the following questions posed by South Africa.

Guiding questions:

   - What are the TRIPS flexibilities adopted by Members in their Patent
   laws to ensure availability of patented medicines at reasonable prices?

   What are Members experiences with escalating prices of patented
   medicines and what are the policy responses implemented to address this
   trend through the use of TRIPS flexibilities?
   - What approaches have Members implemented regarding price regulation of
   patented medicines such as a combination of cost-based pricing, value-based
   pricing, reference pricing, and/or through tendering and negotiation, and
   regulating mark-up levels? If any of these approaches have been used, what
   are the results and challenges that Members face to ensure compliance and
   disclosure of necessary information or their effect on the prices of
   - What measures have Members implemented to enhance the publicly
   available information on the costs of manufacturing of medicines, vaccines
   and health technologies, in particular information on grants, tax credits
   or any other public sector subsidies and incentives relating to the initial
   regulatory approval and annually on the subsequent development of a product
   or procedure?
   - Can Members share their experiences to improve the transparency of the
   patent landscape of medical technologies to ensure that no barriers are
   created to generic competition through sharing complete and up to date

In its submission, South Africa quoted the report of the UN Secretary
General’s High-level Panel on Access to Medicines:

The UN Secretary General’s High-level Panel on Access to Medicines observed
the following: “The rules governing human rights, trade and public health
exist in separate but overlapping spheres; their implementation rests at
different levels. An important factor behind the incoherence between trade,
intellectual property laws, human rights and public health lies in the
different accountability mechanisms and uneven levels of transparency.”It
further observes that transparency is a core component of good governance,
especially where civil society and patient groups rely on transparency of
information. Transparency, as further stated, can also ensure fairness
during negotiations that take place between biomedical companies and
procurement organizations.

In relation to the current model of medical innovation, South Africa

The current model of medical innovation is ill-equipped to respond to the
increasing emergence of infectious diseases, the unprecedented explosion of
NCDs and neglected tropical diseases. For developing and least developed
countries (increasingly developed countries raise similar concerns)
affected by inadequate funding for R&D and access to health technologies
and medicines continue to struggle to ensure access to affordable medicine
for their citizens. Prevailing high prices of medical technologies and
medicines have been subject of much debate in the recent past.

In relation to R&D costs and the role of public funding, South Africa noted:

Pricing strategies are based on determinants such as, inter alia the cost
of R&D, costs of production or financial returns to incentivize future R&D
programmes. The true costs of R&D for pharmaceuticals are often unknown and
highly variable, while the contribution made by public and
non-profit-making sectors towards the R&D of medicines is not always
accounted for. The marginal production costs of medicines are relatively
small compared to their market prices while a significant proportion of
this expenditure might be for marketing and promotional activities, which
are costs not related to the development of the product.

For the full content of South Africa’s transparency submission to the WTO
TRIPS Council please see the following link:


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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