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[e-lek] Fwd: [e-drug] Western countries, as well as poor ones, demand transparency in cost of drugs

E-DRUG: Western countries as well as poor ones demand transparency in cost
of drugs


Costly medicines: The global battle over high drug prices
Western countries, as well as poor ones, are demanding transparency in
the cost of drugs

Business and finance   May 21st 2019

THESE DAYS it is hard to find a government that is not struggling with
the high price of medicines. In England, the government is fighting
Vertex, a drug company, over the cost of a drug for cystic fibrosis,
Orkambi [lumacaftor/ivacaftor] .

In America, diabetics have died because of the high cost of
insulin. In the Netherlands, the government for a time stopped buying
the immuno-oncology drug, Keytruda [[pembrolizumab], because it was too
expensive - even though it had helped to develop it. The list price of
Orkambi is about $23,000 a month in America, and Keytruda is about $13,600
month (for
as long as treatment continues). It has taken such rich-world dramas
to force the unaffordability of medicines to the top of the global
health agenda, even though poorer countries have complained about it
for decades.

On May 20th governments started tackling the issue at the World Health
Assembly (WHA), an eight-day policy forum where health ministers
define the goals for the World Health Organisation for the coming
year. There is a lot for them to discuss, including the expansion of
universal health care, antimicrobial resistance, the impact of climate
change on health and the deepening crisis of Ebola in the Democratic
Republic of Congo. Yet the hottest topic is the high price of new
medicines, particularly cancer drugs.

In February the Italian health minister, Giulia Grillo, published a
draft resolution on drug pricing. It calls for international action to
improve the transparency of prices and R&D costs, as well as the costs
of production of medicines. Firms will also be asked to divulge all
the different forms of government support they receive. These may
range from venture-capital funds and start-up financing to tax
incentives and even research conducted by academics. The hope is that
greater clarity should lower drug prices. The Italian proposal is
backed by many countries, rich and poor.

Pharmaceutical companies currently publish only list prices. These are
large, somewhat fictional numbers that are subject to being bargained
down. Just how big a discount governments, insurers and other
middlemen can secure is confidential. Many have concluded that all the
secrecy is putting those who pay for the drugs at a disadvantage. Els
Torreele of Medecins Sans Frontieres, an NGO, says that different
buyers - even those in the same country - can be charged widely differing
prices. 'Prices are kept secret and buyers are asked to sign
confidential agreements,'  she says. And despite the fact that, in
theory, poor countries might be charged less than rich ones, there are
concerns that the reverse may in fact be true.

Drug firms are not pleased. The International Federation of
Pharmaceutical Manufacturers and Associations told Stat, a
medical-news website, that the draft resolution would 'divert
attention and resources from finding sustainable solutions to access' .

Britain, Germany and Denmark are trying to water down the proposal,
probably under pressure from their large pharma industries? - even though
they are all facing growing drug-pricing problems at home. Pharma
companies have long argued that the costs and risks of developing a
drug warrant high prices. They argue that greater price transparency
will mean that poor countries will no longer get good deals, because
firms will not want to undermine their ability to extract high prices
from wealthier states.

But the degree to which poor countries get favourable treatment is
usually unknown, except for some high-profile cases: vaccines,
perhaps, and antiretroviral drugs to treat HIV infections. The WHO
estimates that 100m people fall into poverty annually owing to the
prices they pay for medicines. Moreover, there is evidence that the
prices charged for some drugs are, indeed, unreasonably high.

A WHO report at the end of 2018, on cancer medicines, concluded that
companies priced their drugs largely according to their expectations
of income, rather than what the drug cost to make or how to maximise
access to patients. That a firm is making as much profit as possible
is, perhaps, unremarkable. However, drug firms are not ordinary
companies. Their products are needed to save lives, and they obtain
monopolies on their drugs through patent systems granted by
governments and, by extension, society.

The WHO also found that, even acknowledging the high cost of
developing drugs, cancer medicines are generating returns far in
excess of the R&D costs, and far more than is necessary to finance and
create incentives for future efforts. It also appears that cancer
drugs are more expensive than other medicines - seemingly because buyers
are willing to pay more to treat terminal conditions. Australian data
show that the cost per prescription for cancer drugs is at least 2.5
times higher than for other medicines.

The pharma industry generates large profits. In America, 12 of the
country's most profitable drug companies reported more than $29bn in
profits in the first quarter of this year, according to Axios, a news

Advocates argue that transparency will allow people to judge whether
governments have made good decisions about the medicines that they
buy. In countries with weak governance, more transparent pricing
should help to combat corruption.

America has made drug-pricing transparency a priority recently, and
drug-makers must now disclose their list prices even on television
advertisements. (List prices are important to patients because they
may have to pay a proportion of this sum themselves.) Whatever the
outcome this week at the WHA, pharma companies will face growing
demands to come clean about the cost of life-saving drugs.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
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