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Differential Pricing: Concepts and Issues ---- Affordable Medicines for Developing Countries

Differential Pricing: Concepts and Issues ---- Affordable Medicines for Developing Countries. Ellen ‘t Hoen Médecins sans Frontières A ccess to E ssential M edicines C ampaign w ww.accessmed-msf.org. Factors Affecting Access to Essential Medicines. R&D Production Approval Quality

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Differential Pricing: Concepts and Issues ---- Affordable Medicines for Developing Countries

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  1. Differential Pricing: Concepts and Issues----Affordable Medicines for Developing Countries Ellen ‘t Hoen Médecins sans Frontières Access to Essential Medicines Campaign www.accessmed-msf.org Oslo 8-11April WHO-WTO Workshop Differential Pricing

  2. Factors Affecting Access to Essential Medicines R&D Production Approval Quality Distribution Drug information, rationale use Diagnosis/prescription/monitoring Price Compliance Pharmacovigilance Oslo 8-11April WHO-WTO Workshop Differential Pricing

  3. Global Pharmaceutical Market 2002 $406 billion 5% 1.3% Market projected to grow 7.8% annually Oslo 8-11April WHO-WTO Workshop Differential Pricing Source www.ims-global.com/insight/report/global/report.htm

  4. Strategies for Lowering Drug Prices • Differential/tiered pricing (market segmentation) by big pharma • Local production under voluntary licensing agreements • Global procurement and distribution system • Increased competitiveness in the pharmaceutical market Oslo 8-11April WHO-WTO Workshop Differential Pricing

  5. Differential/tiered Pricing • Relies on spontaneous and voluntary lowering of prices • Drug firms prefer low volume –high price strategy • Requires separation of markets • Comes with strings attached or hidden agendas • Does not encourage sustainability or self reliance • Might hamper other, more sustainable approaches Oslo 8-11April WHO-WTO Workshop Differential Pricing

  6. Local Production Under Voluntary Licensing • Based on voluntary agreements (will??) • Requires manufacturing capacity  agreements should allow for export • Encourages technology transfer and pharmaceutical industrial development in the South • Companies: TT requires strong IP protection • Practice: Voluntary licenses more likely when strong CL system exists Oslo 8-11April WHO-WTO Workshop Differential Pricing

  7. Global Procurement and Distribution System • Experience and expertise with vaccine procurement exists (UNICEF) • Might work for specific diseases/ products • Requires a long term commitment • Does not solve structural problems • Might negatively affect local manufacturing capacity • Regulatory barriers (pre-qualification) and patent barriers in certain countries (exceptions) Oslo 8-11April WHO-WTO Workshop Differential Pricing

  8. Increased competitiveness • Proven effective • Encourages sustainable solutions and industrial development • Requires flexibility in implementation and a pro public health interpretation of the TRIPS Agreement • Does TRIPS offer enough flexibility? Oslo 8-11April WHO-WTO Workshop Differential Pricing

  9. Competition Is Highly Effective in Reducing Prices No competition Competition (2 to 6 producers per product) Source = UNAIDS, B. Samb, 2000, quoted in WHO-Health Technology and Pharmaceuticals, Revised Drug Strategy, April 2000 Oslo 8-11April WHO-WTO Workshop Differential Pricing

  10. Generic CompetitionSample AIDS triple-combination: lowest world prices (stavudine (d4T) + lamivudine (3TC) + nevirapine) Oslo 8-11April WHO-WTO Workshop Differential Pricing

  11. Brand: $10439 Brazil: $2767 Brand: $931 Brand: $712 …? Cipla: $800 Cipla: $350 …? Hetero: $347 Oslo 8-11April WHO-WTO Workshop Differential Pricing

  12. Price Development of Hepatitis B Vaccine Oslo 8-11April WHO-WTO Workshop Differential Pricing

  13. Recommendations 1/3 • Not one single solution – mix of strategies that are mutually supportive • Enforceable regulation to encourage equity pricing and prevent parallel re-importation in the EU, north America and Japan • Example: EU directive on equity pricing that ensures that equitable priced drugs cannot be put on the EU market Oslo 8-11April WHO-WTO Workshop Differential Pricing

  14. Recommendations 2/3 • Global procurement strategies for selected drugs • Designed to encourage and improve generic production • Overcome regulatory barriers: need for international pre-qualification activities • Overcome IP barriers:exceptions for globally procured goods Oslo 8-11April WHO-WTO Workshop Differential Pricing

  15. Recommendations 3/3 • Actively encourage competition • Recognise the role of generic manufacturing • Support to expand and upgrade generic production in developing countries • Take away barriers in the regulatory systems • Encourage technology transfer – targeted at countries that have production capacity • Encourage voluntary licensing agreements • Fast track compulsory licensing • Launch debate on how to reconcile TRIPS requirements with health needs Oslo 8-11April WHO-WTO Workshop Differential Pricing

  16. Médecins sans Frontières Access to Essential Medicines CampaignWWW.ACCESSMED-MSF.ORG Visit Our Web- Site for additional information (and to sign the “DROP THE CASE” petition)

  17. Oslo 8-11April WHO-WTO Workshop Differential Pricing

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