1. Differential Pricing: Concepts and Issues ---- Affordable Medicines for Developing Countries
Ellen ‘t Hoen
Médecins sans Frontières
Access to Essential Medicines Campaign
Oslo 8-11April WHO-WTO Workshop Differential Pricing

2. Factors Affecting Access to Essential Medicines
R&D
Production
Approval
Quality
Distribution
Drug information, rationale use
Diagnosis/prescription/monitoring
Price
Compliance
Pharmacovigilance
Oslo 8-11April WHO-WTO Workshop Differential Pricing

3. Global Pharmaceutical Market 2002 $406 billion5%
1.3%
Market projected to grow 7.8% annually
Oslo 8-11April WHO-WTO Workshop Differential Pricing
Source

4. Strategies for Lowering Drug Prices
Differential/tiered pricing (market segmentation) by big pharma
Local production under voluntary licensing agreements
Global procurement and distribution system
Increased competitiveness in the pharmaceutical market
Oslo 8-11April WHO-WTO Workshop Differential Pricing

5. Differential/tiered Pricing
Relies on spontaneous and voluntary lowering of prices
Drug firms prefer low volume –high price strategy
Requires separation of markets
Comes with strings attached or hidden agendas
Does not encourage sustainability or self reliance
Might hamper other, more sustainable approaches
Oslo 8-11April WHO-WTO Workshop Differential Pricing

6. Local Production Under Voluntary Licensing
Based on voluntary agreements (will??)
Requires manufacturing capacity  agreements should allow for export
Encourages technology transfer and pharmaceutical industrial development in the South
Companies: TT requires strong IP protection
Practice: Voluntary licenses more likely when strong CL system exists
Oslo 8-11April WHO-WTO Workshop Differential Pricing

7. Global Procurement and Distribution System
Experience and expertise with vaccine procurement exists (UNICEF)
Might work for specific diseases/ products
Requires a long term commitment
Does not solve structural problems
Might negatively affect local manufacturing capacity
Regulatory barriers (pre-qualification) and patent barriers in certain countries (exceptions)
Oslo 8-11April WHO-WTO Workshop Differential Pricing

8. Increased competitiveness
Proven effective
Encourages sustainable solutions and industrial development
Requires flexibility in implementation and a pro public health interpretation of the TRIPS Agreement
Does TRIPS offer enough flexibility?
Oslo 8-11April WHO-WTO Workshop Differential Pricing

9. Competition Is Highly Effective in Reducing Prices
No competition
Competition (2 to 6 producers per product)
Source = UNAIDS, B. Samb, 2000, quoted in WHO-Health Technology and Pharmaceuticals, Revised Drug Strategy, April 2000
Oslo 8-11April WHO-WTO Workshop Differential Pricing

10. Generic Competition Sample AIDS triple-combination: lowest world prices (stavudine (d4T) + lamivudine (3TC) + nevirapine)
Oslo 8-11April WHO-WTO Workshop Differential Pricing

11. …? …? Brand: $10439 Brazil: $2767 Brand: $931 Brand: $712 Cipla: $800
Hetero: $347
Oslo 8-11April WHO-WTO Workshop Differential Pricing

12. Price Development of Hepatitis B Vaccine
Oslo 8-11April WHO-WTO Workshop Differential Pricing

13. Recommendations 1/3
Not one single solution – mix of strategies that are mutually supportive
Enforceable regulation to encourage equity pricing and prevent parallel re-importation in the EU, north America and Japan
Example: EU directive on equity pricing that ensures that equitable priced drugs cannot be put on the EU market
Oslo 8-11April WHO-WTO Workshop Differential Pricing

14. Recommendations 2/3 Global procurement strategies for selected drugs
Designed to encourage and improve generic production
Overcome regulatory barriers: need for international pre-qualification activities
Overcome IP barriers: exceptions for globally procured goods
Oslo 8-11April WHO-WTO Workshop Differential Pricing

15. Recommendations 3/3 Actively encourage competition
Recognise the role of generic manufacturing
Support to expand and upgrade generic production in developing countries
Take away barriers in the regulatory systems
Encourage technology transfer – targeted at countries that have production capacity
Encourage voluntary licensing agreements
Fast track compulsory licensing
Launch debate on how to reconcile TRIPS requirements with health needs
Oslo 8-11April WHO-WTO Workshop Differential Pricing

16. Visit Our Web- Site for additional information
Médecins sans Frontières Access to Essential Medicines Campaign
Visit Our Web- Site for additional information
(and to sign the
“DROP THE CASE” petition)

17. Oslo 8-11April WHO-WTO Workshop Differential Pricing