Médecins Sans Frontières On Drug Prices – You Can’t Negotiate Blindfolded

Katy Athersuch, Médecins Sans Frontières (MSF) Senior Policy Advisor – Medical Innovation & Access, spoke to Health Policy Watch about the recent proposal by Italy’s Minister of Health, Giulia Grillo, for a World Health Assembly resolution on transparency in drug pricing (Health Policy Watch 18 February). The far-reaching proposal asks countries to require disclosure by pharmaceutical companies of their R&D and, manufacturing costs, and public subsidies received, at the time a drug is registered. The resolution would also strengthen WHO’s role in global monitoring and assessment of available data on the costs and pricing of essential medicines. This is the first in a series of Q&As on the issue, looking towards April’s Fair Pricing Forum, where WHO member states will convene in South Africa, followed by the annual World Health Assembly in May.

Katy Athersuch

Health Policy Watch (HPW): What was your reaction to the Italian proposal?

Katy Athersuch (KA): We are very happy to see this resolution come forward. It is quite significant to see this coming from Italy, a country in Europe and not in the developing world. I think this reflects the fact that almost every country in the world is struggling with the high price of medicines. It’s an acknowledgment that transparency is a necessary precondition for getting fairer medicine prices.

HPW: Why is this happening now?

KA: There have been a series of discussions that have aimed to define the concept of a fair price. This started with the 2017, Fair Pricing Forum that WHO convened with member states in the Netherlands. Now, in April, there will be another such meeting of WHO member states in South Africa. This time it will be a three-day meeting involving health ministers and director generals of health. The fact that these meetings are taking place shows us that all these countries are facing the same problems with unaffordable medicines, and they want to work together to do something about it. From our perspective ‘a fair price’ needs to start with a fair price negotiation, and that can only take place if there is transparency.

HPW: What do you mean exactly by “transparency” in the medicines pricing context?

KA: If you’re negotiating medicine prices with a company that has a monopoly on a particular drug, you as the purchaser are already at a significant disadvantage – particularly if you, or the people on behalf of whom you are negotiating, happen to really need that medicine. The only way to level the power imbalance is by having as much information about the medicine as possible. If you are a government, you will want to know what other countries of similar income levels are paying. You also want to know how much the medicine costs to produce and what is the mark-up. Then there are the costs that went into the research and development of the medicine. You will want to know who has paid what for the R&D – how much of the investment was really covered by the company, and how much was underwritten by taxpayers or through non-profit groups.

HPW: How do you justify asking companies to disclose proprietary information about drug development and manufacturing costs?

KA: The whole discussion about fair pricing makes no sense if one party to the negotiation is blindfolded. The companies hold all the information; they know exactly what price they are charging for each medicine in every single country. They know their costs of development, their costs of production and the returns they stand to make. On the other side of the table you have countries who are trying to negotiate the best price for their population, and they have no idea about any of the above. They are effectively blindfolded. They don’t know what countries like them are paying, they don’t know what countries with a higher income level are paying.

Just to give you a concrete example: we are very interested in increasing the number of children who are covered by the pneumococcal vaccine, PCV13. It is a critical vaccine for protecting babies and children from pneumonia, the leading cause of death in children. It is produced by Pfizer. The vaccine is a really important tool, especially for vulnerable children – the sorts of children for whom MSF provides medical care in refugee camps and informal settlements, who are at high risk of becoming ill.

Yet outside of the discount price that Pfizer offers to countries covered by Gavi, the Vaccine Alliance, all other countries and humanitarian organisations, such as MSF, must individually negotiate the price of this vaccine with Pfizer. And prices are often unaffordably high. When we dug into the available pricing data [for PCV13] in 2015, we found that countries in North Africa were paying more for this vaccine than the government of France. Tunisia was paying $67.30, Morocco was paying $63.70, while in France the vaccine was $58.40, as we noted in an article published in 2016 in The Atlantic. This makes no sense and doesn’t seem fair, yet such practices are enabled by the lack of transparency. Those negotiating in the dark have no power, and the companies exploit this to maximize their profits at the expense of access.

HPW: But when a country buys a drug, isn’t the price it paid publicly available, so that such comparison can be made? Or at least there are some sources for this data, such as the ones you cited?

KA: Unfortunately, there’s a lot less of this information than you would think. Countries often agree to keep the prices they pay for medicines a secret – they are told that they can only be offered that price if they agree not to disclose it. The companies hate the idea of reference pricing as they know it will lead to pressure for lower prices. Opacity is their enabler and so they take great steps to convince countries not to disclose the prices they have been offered.

Not all prices are a secret, and there have been important efforts in the past by WHO and by MSF and others to obtain and publish pricing information for medicines in order to allow countries to get the lowest available prices. The problem is that these initiatives often take a huge amount of effort and they are only as good as the data that is made available to them. Such an important role shouldn’t be left to NGOs, or medical humanitarian providers – that is why this resolution is important. It is putting the onus back on governments and WHO to bring about this transparency.

MSF relief worker administers a pneumonia vaccine to a child in Greece as part of a 2016 campaign targeting refugees arriving in Europe – Photo: MSF/ Sophia Apostolia

HPW: So would the resolution giving WHO a stronger global role in tracking this kind of data reduce the burden on NGOs or other healthcare providers?

KA: Yes, the resolution requests the WHO to collect and analyse data on health technologies of public health importance including the costs of R&D and manufacturing costs. It also asks WHO to create a Web-based tool for national governments to be able to share information on drug prices, revenues, R&D costs, public sector investments and subsidies as well as to convene a biennial forum to evaluate progress towards the progressive expansion of transparency. The other element of the resolution is the commitments asked of member states to ensure that R&D costs, public subsidies and other key costing information is disclosed at the time of national drug registration. This means that concrete actions would be undertaken both at international and national level to shed more light on this otherwise opaque space.

HPW: But how do you respond to Industry’s arguments that it’s unfair to force companies to reveal their proprietary data?

KA: We’re talking about people’s health and lives here, not just any area of commerce. When abusive pricing means that people are denied the treatments they need, then something has to change. As a society we grant these companies monopolies on life-saving medicines. That is a policy choice, and one that was made based on an argument that these companies undertake expensive and risky R&D in order to bring these medicines to us. The argument runs like this: if we don’t reward them through the granting of monopolies which enable them to charge whatever price they like, then we are undermining their profitability and thereby undermining the means by which new medicines will be developed. Within this argument there is not only an implicit acceptance of high medicine prices, but also an assumption that the companies have shouldered the main burden of researching and developing these medicines. It seems to me then that it is only fair that we ask them to be transparent about these costs and risks. You are asking a lot of people if you expect them to have medicines rationed due to high prices without even questioning whether the assumptions underpinning the inevitability of this rationing are even correct.

HPW: In its comment on the Italian initiative to Health Policy Watch, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) suggested that if all these costs are disclosed, then developing countries might not benefit from preferential pricing on some drugs in the way that they do now. What is your response to that?

This is a terrible argument, and it’s clearly not based in reality. As we have seen with the pneumococcal vaccine, it is a lack of transparency that led to the situation where Morocco and Tunisia were paying more for the same vaccine than France. The current opacity of the market hinders developing countries the most. In supporting this resolution, countries have nothing to lose but their blindfolds.

HPW: Along with the costs of R&D, there is also the value of the drug that needs to be considered in its pricing, according to Industry advocates. What is your take on that?

KA: I find it interesting to see this argument coming up. It’s an indication that the industry is starting to feel quite uncomfortable. They can see the inevitability of measures to increase transparency, and when they are forced to reveal their real costs, the justification for maintaining such high medicine prices will fall away. In this context they are looking for a new narrative to justify sky-high prices. As MSF has reported, Gilead pushed this narrative when they were trying to justify charging US$ 84,000 per treatment course (US$ 1000 per pill) for a new hepatitis C medicine. They asked us to consider this excessive price in the context of downstream savings to the health system, arguing they should be rewarded for costs averted because patients would otherwise require costly liver transplants. All I can say is that I am pleased midwives do not try to employ the same logic to their lifesaving work in complex deliveries. As Pierre Chirac, President of Prescrire, has pointed out, we don’t see them demanding to be paid according to the monetized value of the additional years a newborn can expect to live, thanks to their intervention. Medicine pricing should not follow the logic of luxury goods, and this is especially so given the collective investment of both the public and private sectors that has gone into their development.


Image Credits: MSF Access Campaign, MSF/ Sophia Apostolia.

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