Drug Price Transparency: Calls Move from South Africa to WHA

Katrina Perehudoff and Jennifer Sellin

Over 30 states and 40 business and civil society groups debated strategies for affordable and sustainable medicines prices at last month’s second WHO Fair Pricing Forum—co-sponsored by the government of South Africa.

In our last blog post, we asked whether this Forum would achieve a shared commitment and promote (regulatory) actions that dissuade the pharmaceutical industry from seeking excessively high medicine prices. Did the second WHO Fair Pricing Forum make good on its promise? And how can the next global health policy meeting—the upcoming 72nd World Health Assembly—advance the Forum’s work?

One of the Forum’s key messages, echoed by some of the national governments and civil society groups in attendance, was a call for greater transparency around the cost of research, development and production of (new) medicines to facilitate effective negotiations for more affordable prices. South Africa’s Minister of Health Aaron Motsoaledi’s opening address specifically included “transparency on a global level of the pricing of medicines” referencing the recommendations made by the UN High Level Panel on Access to Medicines.

Transparency is key to promoting access to affordable medicines for all. The current system rewards investment in pharmaceutical R&D and innovation with 20+ year monopoly positions (through intellectual property rights such as patents) that allow the pharmaceutical industry to demand sometimes excessively high medicine prices. Indeed, as Andrew Hill’s presentation demonstrated, massive overcharging for medicines is common and many essential medicines can be produced for only a fraction of their price. The pharmaceutical industry cites the highly contested claim that these high prices are justified in order to recoup R&D costs. Even though high medicine prices have been a matter of international concern for more than two decades, the actual costs for developing new medicines remain ambiguous, as do the factors that determine price setting. Without this information, how do public health systems objectively assess whether a price for a certain medicine is fair?

This tension was highlighted at the Foum in debates on expensive cancer medicines. The WHO 2018 report Pricing of cancer medicines and its impacts did not tread lightly, affirming that prices are set by the industry with ‘a focus on extracting the maximum amount that a buyer is willing to pay for a medicine.’ The report explains that ‘confidential rebates and discounts [have] had a negative impact on price transparency, potentially leading to outcomes that are inefficient or not conducive to good governance.’ The pharmaceutical industry, however, denounced the report as flawed.

The industry used its well-rehearsed arguments against this evidence citing the risk of increased transparency backfiring, undermining access to medicines in poorer countries. The International Federation for Pharmaceutical Manufactures and Associations (IFPMA) suggested that price transparency would lead to price convergence and prevent any differential pricing in favour of LMICs, because of the fear that high-income countries would insist on paying prices offered to poorer populations. Consequently, the pharmaceutical industry favours other mechanisms instead of transparency to overcome access barriers.

Transparency is more than a buzz word lauded at the second WHO Fair Pricing Forum; it is a fundamental human rights principle, corresponding to the right to freedom of expression, including to seek, receive, and impart information enshrined in international human rights law. As such, transparency is also a human rights responsibility of the pharmaceutical industry. The 2008 Human Rights Guidelines for Pharmaceutical Companies in relation to Access to Medicines simply but effectively states that companies should be as transparent as possible. Specifically, ‘[t]he company should disclose: (i) as much information as possible about its pricing and discounting arrangements.’ The Guidelines further highlight the importance of transparency for evaluating the performance of companies and the industry’s lobbying and marketing activities. Medicine prices are only one of the industry’s human rights responsibilities regarding transparency.

States, however, have the primary human rights obligation to regulate industry’s behaviour, including to promote transparency. Cost-effective spending on medicines is part of the right to health, and universal health coverage, a Sustainable Development Goal target (3.8), cannot be achieved without transparency about containing the costs of medicines. Indeed, Brazil’s legislation requiring large public hospitals to publish the prices they paid for medical supplies empowered other hospital managers to negotiate prices down. Transparency is also a common pillar of ‘good governance’ for development, as defined by the UN Development Programme, Office for the High Commissioner of Human Rights, former UN Commission on Human Rights and other international agencies.

Now is the time to push for transparent medicines pricing. A pivotal policy window is imminent. From 20-28 May 2019 the 72nd World Health Assembly (WHA) convenes delegates from all WHO Member States. The agenda includes a much-anticipated draft WHA Resolution titled “Improving the transparency of markets for drugs, vaccines and other health-related technologies” (Feb 2019 version) proposed by the Italian government. The draft Resolution text requests the WHO Director General to collect and analyse the development and manufacturing costs of medicines, to create tools for information sharing between governments and third parties, and to create fora for standardising reporting and evaluating progress towards transparency. However, recent informal negotiations show that several European governments and other high-income countries seek to dilute provisions for meaningful transparency about R&D costs, prices, and patent landscapes.

The WHA is the ideal forum for Member States to reinforce medicines price transparency as a global tool to advance human rights, good governance, and sustainable development objectives. If adopted, in its original spirit, this WHA Resolution would symbolise a global consensus for medicines price transparency and further legitimise actions to achieve it.

Katrina Perehudoff is a post doctoral research fellow at the Dalla Lana School of Public Health, University of Toronto, and a post doctoral researcher at the International Centre for Reproductive Health, Department of Public Health & Primary Care, Ghent University in Belgium. She is a board member of the Pharmaceutical Accountability Foundation and is affiliated with Medicines Law & Policy. Email: katrina.perehudoff @ gmail.com  Twitter: @KatPerehudoff

Jennifer Sellin is an assistant professor at the Faculty of Law, Maastricht University, a member of the Maastricht Centre for Human Rights in the Netherlands, and momentarily a visiting professor at the Dalla Lana School of Public Health, University of Toronto. She is a member of the advisory council of the Pharmaceutical Accountability Foundation. Email: jennifer.sellin@maastrichtuniversity.