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 to have full agenda of panel discussions, according to organisers.

[Update:] The agenda is available here.

“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 shortage, 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 medicines.

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 well.”

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 companies.

“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.

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 Organization, 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 Rintoul.

Industry Encouraged

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

“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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