Big Pharma Resist Calls for Medicine Prices’ Transparency

The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) says health activists’ call last week for greater transparency on medicine prices could backfire, and drive up drug costs in low and middle-income countries.

Activists stepped up their campaign ahead of the Fair Pricing Forum convened by the World Health Organisation (WHO) in Johannesburg last week, which sought to determine how to balance the competing demands of affordability with the need to incentivise the industry to continue to invest in developing new medicines. The meeting was co-hosted with the SA government, and drew delegates from civil society, the government, and the pharmaceutical industry.

“Price transparency potentially risks price convergence, which would mean some countries would pay rather more [than they do at present]”,

said IFPMA director-general Thomas Cueni in a phone interview with Business Day this week.

His remarks illustrate the gulf between the pharmaceutical manufacturing industry and activists intent on ending the secrecy surrounding drug prices in many countries. Activists are also campaigning for greater disclosure on the true costs of research and development (R&D) involved in discovering new medicines. Many drug companies argue that the high price of innovative new products is largely due to the costs they incur in the high-risk business of drug discovery, but activists counter that these figures are frequently inflated by hidden marketing costs.

Cueni said the industry clearly needs to reflect on these calls for transparency, but the costs of R&D are difficult to tease out on a product-by-product basis. “Industry always has a portfolio approach: 97% of Alzheimer’s drugs failed — how do you account for that?”

Determining the true R&D cost of drug discovery was further complicated by the fact that the process could span decades, he said.

Cueni added that he was struck by activists’ “single-minded focus on price” and the meeting’s hostile tone towards the pharmaceutical industry.

“The approach in Johannesburg was ‘how can we gang up on the private sector’. It was seen as an easy scapegoat. I regret it. If we want to make progress we need to join forces. We need to maintain a balance, which on the one hand makes medicines more affordable for people in resource-poor settings, and [on the other] maintains the incentives for research,”

he said.

Cueni said the pharmaceutical industry is sensitive to the debate about pricing and acknowledged that it needs to do more to find ways to make its medicines more affordable in many more countries. But he also drew attention to the industry’s concerns about other barriers to access to medicines, such as weak supply chains, corruption, counterfeit medicines, and the mark-ups levied between factory gate and pharmacy shelf.

Said Cueni:

“Even medicines that are incredibly cheap don’t reach the majority of patients in Africa.”