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[e-drug] Proposed work program on 'fair price' undermines affordability of medicines

E-DRUG: WHO: Proposed work program on 'fair price' undermines affordability of 
medicines
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http://www.twn.my/title2/health.info/2018/hi180505.htm

WHO: Proposed work program on 'fair price' undermines affordability of medicines

Geneva, 21 May (K M Gopakumar) - The proposed work program on fair price raises 
concerns on affordability of medicines.

The document was prepared by the Secretariat of the World Health Organization 
(WHO)for the consideration of the 71st World Health Assembly
(WHA) proposes the activity under the agenda item addressing the global 
shortage of and access to medicines and vaccines (A 71/12).

(http://apps.who.int/gb/ebwha/pdf_files/WHA71/A71_12-en.pdf)

The 71st WHA took place from 21 to 26 May at the WHO headquarters in Geneva.

Paragraph 56 of the document states: 'There is a need to establish a 
fair-pricing model that ensures sustainability for health systems and access 
for patients as well as sufficient profit for industry to sustain the 
production of quality products'.

The document defines 'fair price' as '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. In this 
context, fairness implies positive incentives/benefits for all stakeholders, 
including purchasers and those involved in the research and development and 
manufacture of medicines'.

As per the definition, fair price is different from affordable price and it is 
a price reached taking into consideration the market incentive for industry to 
invest in innovation and the production of medicines. Thus the definition in 
effect means that prices of the medicines should not be as low as are currently 
available due to generic competition; instead it should compensate those 
involved in the research and development and manufacture of medicines.

There is ample evidence that generic competition brings down the prices of 
medicines drastically. For instance, though the price of Gilead Sciences'
sofosbuvir price for 12 weeks of hepatitis C treatment is USD 84000 in the 
United States, the company offered the medicine to a few developing countries 
for USD 900, almost 90% less than the US market price. However, generic 
competition could bring down the price to below USD 100.  The fair price 
initiative thus undermines generic competition that can be increased though the 
use of flexibilities in the Trade-related Aspects of Intellectual Property 
Rights Agreement (TRIPS) such as compulsory license and government use license. 
The fair price initiative could legitimise high prices.

Most importantly, it raises the question of fairness for whom? To date there is 
no transparency with regard to the actual cost of research and development 
(R&D). The cost of R&D is not open for public scrutiny and verification. The 
opaqueness around R&D cost has been long used to justify high, even exorbitant, 
prices for patented medicines. The fair price to provide incentives for 
innovation would then legitimise the high prices for medicines and compromise 
access to medicines in many WHO Member States.

Paragraph 53 of the report states: 'The Secretariat has started collecting 
evidence for a fair pricing model that could be adapted by countries according 
to the national context'  However, there is no governing body decision to start 
a work program on fair price.

Third World Network has learnt that the WHO Secretariat initiated the work in 
2016 through a staff of the Swiss Patent Office to work from the WHO 
headquarters. Further, the Secretariat also commissioned nearly 13 to 14 papers 
on various aspects of pricing of medicines, including a concept paper on fair 
pricing. The paper deals with various elements of fair pricing, such as cost of 
manufacturing, cost of R&D, fair profit, registration costs, financial strain 
on the buyer etc., and concludes: “None of these provides adequate guidance on 
establishing a fair price of a particular medicine, but by setting boundaries 
on what could be considered affordable they may offer food for thought on what 
is *not *a fair price for a society to bear”.

The Secretariat also held a one-day fair pricing forum on 11 May 2017. The 
report of the fair pricing forum states: 'There is a need for further 
discussion, in order to find solutions to the many different facets of the 
prices/access issue, to develop a constructive and concrete action plan that 
can be implemented' 

http://apps.who.int/medicinedocs/documents/s23269en/s23269en.pdf

The attempt to introduce the concept of fair pricing and a work program on fair 
pricing resembles the attempt to introduce differential pricing in the early 
years of the last decade to curb generic competition through the use of TRIPS 
flexibilities.

The WHA is expected to adopt the following decision points agreed at the 142 nd 
meeting of the Executive Board in January 2018:

·   To elaborate a roadmap report, in consultation with Member
States, outlining the programming of WHO's work on access to medicines and 
vaccines, including activities, actions and deliverables for the period 
2019-2023;

·   To submit this roadmap report to the Seventy-second World Health Assembly 
for its consideration in 2019, through the Executive Board at its 144th session.

For details see 
http://apps.who.int/gb/ebwha/pdf_files/EB142/B142(3)-en.pdf

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