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The price of hepatitis C medicine marked a turning point in the discussion on access to medicines, with developed countries suddenly confronted to prices they could not afford. This week, a symposium jointly organised by the World Health Organization, the World Trade Organization, and the World Intellectual Property Organization explored the question of the pricing of medicines. A number of suggestions were made to alleviate the issue, such as ensuring wide use of generic medicines, encouraging competition, and alerting countries about the cost of medicine production so they negotiate better with pharmaceutical companies.

This year’s trilateral symposium took place on 26 February at the World Health Organization and was aimed at examining how innovative technologies can promote health-related United Nations Sustainable Development Goals. One of the panels of the programme focused on global health data, disease burden, and challenges ahead.

At the opening of the symposium, the heads of the three organisations were asked about the price of innovative health technologies.

WHO Director General Tedros Adhanom Ghebreyesus (Dr Tedros) said he discussed the issue of pricing with the private sector, and “they are open for discussion,” even if they “have some concerns on how it is being handled.” Industry wants to be engaged and to be part of the solution, he said, insisting on the fact that they should be part of the discussion, in an inclusive process, he added.

Francis Gurry, WIPO director general, said prices are at the centre of the balance between encouraging investment and innovation, and fostering social benefits, adding that in the question of access, prices is a fundamental question that needs to be addressed.

There is a need to find a pricing level within a globalised world in which there are large differences in purchasing power, he said. He mentioned differential pricing as an avenue to be explored to increase access.

WTO Director General Roberto Azevêdo noted that some traditional pharmaceutical companies that develop new products and new technologies are purchasing generic producers, “because those are making money.” This concentration has to be watched, but this is a trend, he said.

He also remarked on situations where patents have expired and the technology is available but there is a lack of expertise and capacities to absorb the technology.

The issue of accessibility is going to be bigger and bigger, he said, because technologies are going to be more expensive. “We have to be mindful of a situation where these treatments will only be available to rich countries or rich individuals.”

WHO: Competition is Good for Health

Mariângela Simão, WHO assistant director-general for Drug Access, Vaccines and Pharmaceuticals, underlined the “extremely high prices” of new health technologies, and said the case of hepatitis C medicine sofosbuvir marked a turning point, as for the first time, the cost of research and development (R&D) became an issue of concern for developed countries.

There is no question that the world needs innovation, she said, but the questions are how to balance profit and public health, how to regulate the market, and how to conjugate innovation and access. She cited a WHO report produced for the WHO January Executive Board meeting, on shortages and access to medicines and vaccines. She said the document listed 50 resolutions taken at the WHO over 15 years which touched on access issues, but that billions of people still cannot access health technologies they need.

One of the issues is the management of intellectual property, and the appropriate use of the flexibilities in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), such as compulsory licences.

She also underlined the importance of competition, saying, “Competition is good for health.”

Enormous Difference Between Production Cost and End Price

Andrew Hill, senior visiting research fellow at the University of Liverpool, United Kingdom, gave a presentation on prices versus costs of medicines in the WHO Essential Medicines List.

Every year millions of people die worldwide because they cannot get treated with essential medicines, he said, and there are many reasons why this happens including that prices are too high.

The difference between end prices and costs of production can be “enormous, hundreds, thousands times higher” he said, adding that some of these drugs can be generics.

He mentioned an online database on active pharmaceutical ingredients hosted by India (Infodrive) which shows the cost for a kilogramme of any drug and shows exports of those drugs as raw material from India to other countries.

To illustrate how cheap a medicine can be manufactured, Hill took the example of cost-based generic price of sofosbuvir. Starting with a cost per kilogram of sofosbuvir active pharmaceutical ingredient (API) of US$1,050, which amounts to US$35 for a 12-week course of treatment, then adding US$0,01 per tablet for formulation, US$0.35 per month for packaging, and 13 percent profit margin and tax, he said the final generic price for the 12 week course should be US$42.

Comparing the price of a combination drug of sofosbuvir and daclatasvir in several countries, he showed in a graph that the price of a 12-week course of treatment in the United States is US$142,710, followed by Denmark at US$104,723, further along the scale comes the United Kingdom at US$76,757, France at US$50,059, Argentina at US$47,972, Brazil at US$29,361, Australia at US$5,540, and India at US$78.

In the last four years, the franchise on this combination drug has sold US$70 billion in hepatitis C treatment, which far outweighs R&D costs, but the prices are not getting lower, he said.

According to Hill, the situation is the same for cancer drugs. He illustrated this with a drug treating multiple myeloma. A one year supply of Imnovid costs £115,809 (US$160,550) in the UK, while the cost of production of the medicine is £100 (US$138) per year.

Health Ministers Need to Understand “What is Going On”

Most medicines are very cheap to manufacture, Hill said. “Finance ministers, health ministers need to understand what is going on here. They need to understand how much they are being overcharged,” he said. “We are talking about billions of euros, billions of dollars at country level.”

“If people understood these numbers, they would be able to negotiate much lower prices,” he said, underlining the need for transparent lists of drug cost prices, especially for generics so countries can pay the right prices.

When the patent expires, drugs should be available anywhere at close to the cost of production, he said. Savings could reach above US$100 billion a year in the US and “at least” US$5 billion a year in the UK, he said.

There are many examples where drug companies get a monopoly status on a generic drug and prices start rising, he said.

“People do not understand how profitable” pharmaceutical companies are, he said, noting that it is more profitable than the car industry, the oil industry, the media, and is equal to banking.

According to Hill, pharmaceutical companies are avoiding taxes. One of the slides of his presentation showed for example that Pfizer has US$69 billion profits held offshore, and is avoiding US$20 billion in US taxes. Merck has US$57 billion profits held offshore, which amounts to US$16 billion US tax avoidance. The list included Johnson & Johnson, Amgen, Abbott, and Bristol-Myers Squibb.

Those countries use Bermuda, Cayman Islands, British Virgin Islands, Bahamas, Luxembourg, and Ireland as main tax havens, according to Hill. Gilead has avoided US$10 billion in taxes by putting its intellectual property in Ireland, he said, adding that the amount is enough to treat everyone with hepatitis C worldwide at cost price.

Hill underlined the importance of maximising the use of generics at close to cost price, identifying high quality generic suppliers, and re-evaluating the cost effectiveness of all patented medicines versus cheap generic alternatives, which he said should lead to a cascade of price reductions.

If resistance is met by companies on lowering prices, TRIPS flexibilities should be used, including compulsory licences, and through patent challenges.

Volume of Medicine Spending Diminishing Worldwide

Sarah Rickwood, vice president of IQVIA (formerly Quintiles IMS Holdings, Inc.) in the UK, said the company audits prescription medicines “spend” and volumes across countries, and provides contract research services. She described IQVIA as a company observing the pharmaceutical industry.

Access issues, particularly acute in lower income countries, have many reasons, which are complex and multifactorial, she said, adding that approaches should be equally multifactorial.

She said her comments are based on list prices, which are either publicly available or estimated from public sources, adding that discounts or rebates on those prices, which can be substantial and differ by countries, are not publicly available.

The fact that those discounts and rebates are non-transparent come from several reasons, including confidentiality agreements between the purchaser and the supplier, she explained.

The price list does not include margins by wholesalers, pharmacies or other elements of the distribution chain, nor tariffs or taxes, she said.

Even if companies set lower prices consciously for example in sub-Saharan countries, the price for patients is not reasonable because of different elements which add to the price in the distribution chain, according to Rickwood.

She said there is currently both volume and value deceleration in spending on prescription medicines globally. In her presentation, she explained that many developing country markets where the majority of volume and value is off patent are substantially behind the high-income markets in terms of use per head of modern medicines, and she added that current growth rates will not close the gap.

She underlined the inefficient use of existing medicines, which generates avoidable costs, and said non-compliance with the prescription represents the biggest cost.

There is a decline in the volume of antibiotics use, which is a good sign of more rational use of antibiotics, but the challenge is to encourage more innovation to curb antimicrobial resistance, Rickwood said. She noted that European Union orphan drugs legislation and regulation has resulted in a vibrant orphan drug launch environment with up to 20 new products approved each year.

Egypt Tackling Hep C Burden

Sherine Helmy, CEO of Pharco pharmaceuticals in Egypt, noted that one person dies every 80 seconds of hepatitis C, mostly in low and middle-income countries.

He said Egypt, with the highest prevalence of hepatitis C infection worldwide, was also the first country to treat all patients on waiting lists.

To improve accessibility of medicines worldwide, he suggested fast-tracking prequalification, addressing entry barriers erected in the name of quality, extending the coverage of the Medicines Patent Pool, wider use of the TRIPS flexibilities, strengthening regulatory systems to avoid substandard produces, and improving the relationship between R&D cost and pricing. He also suggested that governments contribute to R&D costs.

Helmy also recommended that under the umbrella of WHO a central patent search office be created to help generic companies on patent status in different countries. He further proposed that the Drug for Neglected Diseases initiatives widens its scope to cover “unaffordable diseases,” and that the Medicines Patent Pool broaden its scope to cover non-communicable diseases and cancer.