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Ed Schoonveld is a Managing Principal at ZS Associates.
Ed Schoonveld reviews the key topics discussed at the World Health Organization's second Fair Pricing Forum, held in Johannesburg, South Africa last month.
The second Fair Pricing Forum, organized by the World Health Organization (WHO), took place in Johannesburg, South Africa on April 11-13, 2019. It was an invitation-only meeting between government representatives, non-governmental organizations (NGOs), academics, experts and the pharmaceutical industry to address concerns regarding fair pricing and patient access to pharmaceuticals, particularly related to middle- and low-income countries.
The meeting followed a similar meeting two years ago in Amsterdam. Based on discussions at the first meeting, fair pricing was defined as: “A fair price is 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.”
Patient affordability was the central theme of the discussions. “What does all the industry’s innovation help us if it stays on the shelf as a large proportion of patients cannot afford to buy it?” Universal right to healthcare was a strong underlying principle of the discussion. High drug prices are experienced as abusive, particularly fed by feelings that the industry is hiding behind need for innovation and intransparency of prices and R&D development costs.
As in the US, many governments and NGOs are calling for transparency in prices across countries, as well as transparency in the development cost for each individual drug. The Italian government has called for a WHO resolution regarding transparency.
Government demands for transparency of prices (in other countries) are naturally linked to their wish to lower their cost through international price referencing. Particularly higher income countries tend to define “economically similar” countries through a basket that is biased towards an average Organization for Economic Co-operation and Development (OECD) level. Examples include the recent International Price Index in the United States and the proposed changes in the Canadian Patented Medicine Prices Review Board (PMPRB) referencing country basket.
It is understandable that the industry is hesitant to provide detailed information on R&D investments for drugs and the part that public sector investments form in this. One reason is that it does not account for development investments in many failures and as such looks like a return on investment calculation for a winning lottery ticket. However, there is a clear need to address the public concerns. Perhaps the industry should further show that the drug development process is very competitive and that early expectations of price are driving the willingness to invest in each therapy area.
NGOs called for a separation of research and development initiatives and the manufacturing and distribution of drugs. Perhaps motivated by seeing the daily needs of individual patients, NGOs don’t value innovation very high and envisage a model of very modest premiums over the bare cost of manufacturing in a wish to prioritize today’s needs over the need to address the many remaining health care challenges. Some proposed a grant-based approach to trigger interest for research. Academic presentations on the estimated cost of manufacturing of drugs have been the basis for calls for much lower prices.
A significant amount of time at the meeting was spent to reflect on the move to engage in compulsory licensing for HIV/AIDS drugs twenty years ago. Widespread calls were made to engage in compulsory licensing for cancer drugs, as well as legal challenges for high priced drugs, whether single source generics with excessive price hikes or newly developed orphan drugs.
The missing topic on the formal meeting agenda was differential pricing. At the time of the WHO/World Trade Organization (WTO) dialog in Hosbjor, Norway almost 20 years ago, differential pricing was the focus and ultimately a large contributor towards access to HIV/AIDS drugs in middle- and low-income countries. The ability to lower prices for lower income countries, without being punished through product diversion and price referencing by higher income countries is instrumental in providing access to drugs at affordable prices. NGOs and patient advocacy groups tend to favor differential pricing, although some would prefer the blunter compulsory licensing option.
In contrast to the first Fair Pricing Forum in Amsterdam (May 2017), most of the meeting was more divisive and polarized rather than collaborative. Monolog was more pervasive than dialog. On the third day that fortunately changed as a substantial amount of time was devoted to exchanging comments across the audience. It demonstrated that the largest missing element in the collaboration between all involved is a basis of trust in each other and belief that a joint resolution of the challenges is feasible.
WHO will issue a report on the discussions and suggestions. Various action items are identified, including a few specific small working groups for some key topics that will be clarified shortly.
Ed Schoonveld is Managing Principal and leader of the Value and Access practice at ZS Associates.