Improved transparency is essential to determine what is fair
The BMJ
Editorials
Achieving Fair Pricing of Medicines
13 January 2020
Key messages
Summarized by Joaquim Cardoso MSc.
Health Revolution Institute
Access to Medicines Unit
April 26, 2022
What is the problem?
The free market simply does not work to effectively provide affordable access to medicines for all.
- A worrying gap exists between the promise of medical innovation and affordable access for all.
- When medicines are found to be truly effective they must be made rapidly available to both health systems and the individuals who need them at an affordable price.
- Sadly, some effective medicines remain unavailable to many patients or are available with out-of-pocket costs that make access impossible.
- There are still no treatments available for many public health problems yet drug development pipelines are full for potentially profitable diseases that mainly affect high income countries.
What are the causes of the problem?
Where there are limited markets and incentives to develop drugs for neglected diseases and populations there is a pressing need for better coordination.
- Product development is a risky investment, with long lead times, uncertain scientific outcomes, and changing political environments, which all affect future sales forecasts.
- However, responding to uncertainty by restricting access through market monopolies and charging high prices is not an acceptable solution.
- We need to develop mechanisms to reduce prices and increase volumes; this could benefit all stakeholders.
What is the solution?
Where there are limited markets and incentives to develop drugs for neglected diseases and populations there is a pressing need for better coordination.
- Central to the concept of fair pricing is striking a balance between the public health needs for innovation and affordability, while recognising that quality health products are imperative and that sustainable production comes at a cost.
- Transparency is a key element to determine what is fair, but there is an absence of reliable data on development costs.
- Innovations can and should lead to financial returns for those investing in research, but this should not eclipse the societal benefits of a new medicine.
- Transparency around development costs will also shed light on the substantial role of the public sector in funding research and development.
- This will ensure the public does not pay twice and receives a public return on public investments.
What is the WHO initiative?
- To this end the World Health Organization (WHO) has recently (2020) launched an online resource to guide the development of new health products by providing a searchable database of key characteristics of desired medicines, vaccines, diagnostics, and medical equipment. 3
What is the BMJ initiative?
The BMJ has published a collection of articles that outlines evidence and further research that is needed to balance affordability and innovation ( www.bmj.com/fair-pricing).
- The BMJ believes that affordability and innovation can coexist so that patients can sustainably access medicines.
- However, the articles show that it is challenging to find agreement on a single definition of fair pricing, and health systems have struggled to achieve a balance between affordability and need.
ORIGINAL PUBLICATION (full version)
A worrying gap exists between the promise of medical innovation and affordable access for all.
When medicines are found to be truly effective they must be made rapidly available to both health systems and the individuals who need them at an affordable price.
Sadly, some effective medicines remain unavailable to many patients or are available with out-of-pocket costs that make access impossible.
In many low income countries the cost of treatment for diseases such as cancer can be devastating because it is the full financial responsibility of the patient. 1
When a potential cure for hepatitis C recently became available even high income countries found themselves rationing treatment and unable to treat all patients in need because of high prices. 2
These examples are unacceptable.
Sadly, some effective medicines remain unavailable to many patients or are available with out-of-pocket costs that make access impossible.
These examples are unacceptable.
There are still no treatments available for many public health problems yet drug development pipelines are full for potentially profitable diseases that mainly affect high income countries.
In short, the free market simply does not work to effectively provide affordable access to medicines for all.
In short, the free market simply does not work to effectively provide affordable access to medicines for all.
Where there are limited markets and incentives to develop drugs for neglected diseases and populations there is a pressing need for better coordination.
To this end the World Health Organization (WHO) has recently launched an online resource to guide the development of new health products by providing a searchable database of key characteristics of desired medicines, vaccines, diagnostics, and medical equipment. 3
Where there are limited markets and incentives to develop drugs for neglected diseases and populations there is a pressing need for better coordination.
Defining fair pricing
WHO also convenes a series of meetings to bring together stakeholders to discuss options for a fairer pricing system.
Central to the concept of fair pricing is striking a balance between the public health needs for innovation and affordability, while recognising that quality health products are imperative and that sustainable production comes at a cost.
Central to the concept of fair pricing is striking a balance between the public health needs for innovation and affordability, while recognising that quality health products are imperative and that sustainable production comes at a cost.
This week sees the publication of a collection of articles in The BMJ that outlines evidence and further research that is needed to balance affordability and innovation ( www.bmj.com/fair-pricing).
We believe that affordability and innovation can coexist so that patients can sustainably access medicines.
However, the articles show that it is challenging to find agreement on a single definition of fair pricing, and health systems have struggled to achieve a balance between affordability and need.
We believe that affordability and innovation can coexist so that patients can sustainably access medicines.
However … it is challenging to find agreement on a single definition of fair pricing, and health systems have struggled to achieve a balance between affordability and need.
Transparency is a key element to determine what is fair, but there is an absence of reliable data on development costs.
Without data it is difficult to accept the argument that the costs of development, even accounting for failed research, make high prices for new medicines inevitable.
Innovations can and should lead to financial returns for those investing in research, but this should not eclipse the societal benefits of a new medicine.
Transparency is a key element to determine what is fair, but there is an absence of reliable data on development costs.
Without data it is difficult to accept the argument that the costs of development, even accounting for failed research, make high prices for new medicines inevitable.
Transparency around development costs will also shed light on the substantial role of the public sector in funding research and development.
This will ensure the public does not pay twice and receives a public return on public investments.
Product development is a risky investment, with long lead times, uncertain scientific outcomes, and changing political environments, which all affect future sales forecasts.
However, responding to uncertainty by restricting access through market monopolies and charging high prices is not an acceptable solution.
We need to develop mechanisms to reduce prices and increase volumes; this could benefit all stakeholders.
Product development is a risky investment…
However, responding to uncertainty by restricting access through market monopolies and charging high prices is not an acceptable solution.
We need to develop mechanisms to reduce prices and increase volumes; this could benefit all stakeholders.
Governments agreed to move towards improving the transparency of markets for health products at the 2019 World Health Assembly. 4
The resolution aims to enhance public sharing of information on actual prices paid by governments and other buyers for health products, and greater transparency on pharmaceutical patents, clinical trial results, and other determinants of pricing along the value chain from laboratory to patient.
It also requests the WHO secretariat to support efforts towards transparency and monitor the effect of transparency on affordability and availability of health products.
Governments agreed to move towards improving the transparency of markets for health products at the 2019 World Health Assembly.
Ultimately, there is no simple algorithm that will calculate a fair price for each medicine.
However, transparency could ensure that the right data are available to the right stakeholders so that practical solutions guaranteeing affordable access to medicines can be implemented.
This will require collaboration to build upon what fairness means in practice so that stakeholders can work together to achieve it.
Ultimately, there is no simple algorithm that will calculate a fair price for each medicine.
However, transparency could ensure that the right data are available to the right stakeholders so that practical solutions guaranteeing affordable access to medicines can be implemented.
This will require collaboration to build upon what fairness means in practice so that stakeholders can work together to achieve it
This will require collaboration to build upon what fairness means in practice so that stakeholders can work together to achieve it
Footnotes
- Competing interests:We have read and understood BMJ policy on declaration of interests and have no relevant interests to declare. The views expressed in this editorial do not necessarily reflect those of WHO.
- Provenance and peer review: Commissioned; not externally peer reviewed.
- This article is part of a series proposed by WHO and commissioned by The BMJ. The BMJ retained full editorial control over external peer review, editing, and publication of these articles. Open access fees are funded by WHO.
Originally published at https://www.bmj.com on January 13, 2020.
Cite this as: BMJ 2020;368:l7058 http://dx.doi.org/10.1136/bmj.l7058
SERIES
Achieving fair pricing of medicines
There are many public health problems for which there are no treatments. Drug development pipelines are full but mostly focus on potentially profitable diseases that mainly affect high-income countries. In short, the free market does not effectively provide affordable access to medicines for all.
Affordability and innovation can coexist so that patients can sustainably access medicines. However, it is challenging to find agreement on a single definition of fair pricing, and health systems have struggled to achieve a balance between affordability and need. This collection of articles outlines evidence and further research that is needed to balance affordability and innovation of medicines.
Editorial
Can affordability and innovation coexist for medicines?
Improved transparency is essential to determine what is fair writes Allison Colbert and colleagues
Analysis
Defining the concept of fair pricing for medicines
Suerie Moon and colleagues consider what makes a fair price for both buyers and sellers
Strategies to achieve fairer prices for generic and biosimilar medicines
Early market entry and rapid uptake of quality assured generic and biosimilars are key to improving access to medicines, say Alessandra Ferrario and colleagues
Pricing of pharmaceuticals is becoming a major challenge for health systems
Manufacturers using their market power to maximise profits results in prices that are unjustifiable and unaffordable, argue Steven Morgan and colleagues
For research and development to systematically deliver fairly priced medicines, new approaches to financing and organisation are needed, and affordability must be integrated into push, pull, and pooling mechanisms, say Fatima Suleman and colleagues
Price transparency is a step towards sustainable access in middle income countries
Tania Cernuschi and colleagues show how information from the Market Information for Access to Vaccines database is strengthening the ability of middle income countries to negotiate with vaccine producers
Medicines with one seller and many buyers: strategies to increase the power of the payer
Andrew Rintoul and colleagues argue that collaboration and transparency increase the market power of buyers who face a monopoly
This collection of articles was proposed by the WHO and commissioned by The BMJ. The BMJ retained full editorial control over external peer review, editing, and publication of these articles. Open access fees were funded by the World Health Organization.
SELECTED AUTHORS
Allison Colbert
Suerie Moon
Alessandra Ferrario
Steven Morgan
Tania Cernuschi
Andrew Rintoul
