Transparency and the Price of Medicines

By Catherine Saez*

The COVID-19 crisis has revealed weaknesses in health systems and fueled fears of a lack of access to treatments and vaccines around the world. Once only a concern for developing countries, today, high-income countries are also feeling the sting of expensive medical products. Just last year, the World Health Assembly adopted a ground-breaking resolution seeking to improve the transparency of markets for medicines, vaccines, and other health products. On 21 May, a year later, the Graduate Institute’s Global Health Center and the Observatoire de la transparence dans les politiques du medicaments (OTMeds) gathered experts in a webinar to assess the current situation. It is fairly bleak: France and Italy are the only two countries to have acted upon the resolution’s recommendations thus far, and not one country has passed the recommendations into law.

"The lack of transparency in pharmaceutical markets directly impacts the costs and accessibility of medicines."

Caroline Fiat, French Member of Parliament (France Insoumise) and co-author of the amendments on transparency in medicines policies, stressed the difficulty of negotiating with pharmaceutical companies while in the dark as to what other countries pay for medicines, what volumes are sold, the markup, and the origin and price of API.

Fiat also told The Geneva Observer after the webinar that Olivier Véran, General Rapporteur who supported the amendment at the time of its adoption and now French Health Minister, could now push the amendment through a decree. If not, she would resubmit the amendment at the next parliamentary session.

In France, according to Pauline Londeix, Co-Founder of OTMeds, several amendments have been proposed to Parliament. One of them, requesting the disclosure of the public funding of research and development (R&D) for new medicines, was adopted by the Parliament before being rejected by the French Constitutional Court—a move that some observers thought was meant to protect pharmaceutical companies.

The lack of transparency in pharmaceutical markets directly impacts the costs and accessibility of medicines, says Londeix, leading to adverse effects, such as companies taking patents on older drugs following slight modifications. Case in point, Sanofi was granted patents on a combination of two tuberculosis drugs that had been off patents for years, actually pushing cheap access to this treatment back until 2034.

Italy is on board

In Italy—which spearheaded efforts to reach the adoption of the WHA resolution—a decree was drafted soon after the WHA. The decree was meant to update procedures for the National Medicine Agency to follow when negotiating prices and subsidies for new pharmaceuticals, according to Luca Li Bassi, former Director General of the Italian Medicines Agency and co-Chair of the WHA transparency resolution negotiations. The decree included the need for pharmaceutical companies to disclose public funding received for R&D for each new product and give clear information on the patent status of medicines. In addition, companies were to specify the price and volume expected or achieved in other markets for that product. Signed by the Minister of Health and the Minister of Finance, the decree had gone through all bureaucratic channels by December 2019 but has not yet been implemented.

Sand might be shifting on pharmaceutical pricing

A number of other initiatives or draft regulations have been tabled in recent years/months to address accessibility and affordability issues, including requests for more transparency in price negotiations.
In Europe, several cross-border collaborations have been set up, such as the Beneluxa Initiative on Pharmaceutical Policy, a voluntary collaboration system of price negotiations for specific pharmaceuticals. The initiative includes Austria, Belgium, Ireland, Luxembourg, and the Netherlands.  

In October 2019, the Initiative, along with four other European countries, launched the International Horizon Scanning Initiative (IHSI), with the aim of developing a database of medicines. The initiative is open to further participation beyond the nine initial members: Belgium, Denmark, Ireland, Luxembourg, Norway, Portugal, the Netherlands, Sweden, and Switzerland.

Another cross-border initiative is the Valetta Declaration, which includes Croatia, Cyprus, Greece, Ireland, Italy, Malta, Portugal, Romania, Slovenia, and Spain. It also aims at running joint price negotiations and sharing information on specific medicines with significant therapeutic value to help members in the negotiating phase or to renegotiate contractual arrangements. After the webinar, Li Bassi told The Geneva Observer that “all country members of the Valletta group fully supported the Resolution, helping to move it through to adoption, and many officially sponsored the Resolution.”In February, the Belgium Chamber unanimously adopted a law allowing public consultation of negotiating terms between the government and pharmaceutical companies on new and particularly expensive medicines, according to Medi-Sphere.

The European Health Forum Gastein, founded in 1998 as an independent, non-partisan European health policy conference, will hold its 2020 session virtually from 30 September to 2 October. The main theme of the conference will be “Dancing with elephants—New partnerships for health, democracy, business.”Several states in the United States are also implementing drug price transparency laws, according to the National Law Review, including Vermont, California, New York, Colorado, Texas, and Washington. A number of laws request manufacturers to disclose information about drug price increases. Some laws apply only to certain types of drugs, such as insulin or asthma treatment.

Negotiating room convergence and persistent divergences

The lengthy and arduous negotiations leading to the WHA resolution were an illustration of persistent divergences between countries and interests. Lenias Hwenda, Founder and CEO of Medicines for Africa, who co-chaired those negotiations with Li Bassi, said the COVID-19 crisis demonstrated the fundamental importance of strong health systems and the availability of diagnostics, pharmaceutical products, and technology. Greater transparency on R&D and cost of production would facilitate effective negotiations for more affordable prices, she said. During the negotiations, some warned about the unintended effects of transparency on differential prices, through which pharmaceutical companies charge prices according to countries’ income levels, according to Hwenda. Pharmaceutical companies have cautioned that increased transparency could lead to price convergence and be counter-productive for low-income countries, as high-income countries might seek to align what they pay to the price given to low and middle-income countries. Mechanisms could be put into place to address this situation, such as forbidding comparison with countries that are not in the same income group, she said. Li Bassi concurred and said that the current situation was quite the opposite, with developed countries getting the best deal on certain products.

The asymmetry of information in the pharmaceutical value chain and the need for rebalancing this asymmetry was recognized by all in the negotiating room, said Li Bassi, adding that the resolution was never intended to disrupt the current framework around the life cycle of medicines, disrupt the market, or undermine the intellectual property system. “I must be crystal clear on this point. I am convinced that we all need in global health is a competitive, innovative, healthy, and profitable industry. Otherwise, we will not be able to care for the patients who need treatment,” he said.

Transparency not the sole responsibility of pharma

Access to medicines is the ultimate goal of the traditional pharmaceutical industry, insisted Paul Fehlner, President and CEO of reVision Therapeutics during the webinar. Clinical development data and regulatory filings are usually kept secret by companies because they have “tremendous value.” However, from the patient, the system, and the funder's perspective, it is non-sensical because it is slowing the process of delivering treatments to patients by months or years, perhaps permanently. Sharing clinical development data would serve the dual purpose of speeding up the delivery of treatments and keeping companies from pursuing a development path that had already been tested and proved a failure. It would also give companies input from different markets, enrich the development path, and would spur access as concerns of those different markets would have already been addressed. The recruitment of patients for clinical trials would also be facilitated.

The lack of transparency cannot be imputed to the pharmaceutical companies alone, Felhner said. “There is a great deal of incentive to the pharmaceutical industry to keep quiet about their actual prices” by countries that are negotiating against each other for the best position, knowing full well that even rich countries might demand the same price as least-developed countries. “The President of the United States might very well push for that even though it is in a sense unfair and counter-productive from a global perspective,” he added. Furthermore, Felhner remarked that some pharmaceutical companies benefit from protection within governments, which are not necessarily doing their job, although they are the payers. “I find it appalling that the larger purchasers of pharmaceuticals in our country [US], CMS, is not allowed to discuss drug prices. This does not look like a market solution to me, this seems like corrupt capitalism and makes no sense at all.” He called for stronger competitive situations and incentives to repurpose medicines instead of focusing incentives on new molecular entities, which will be very highly-priced; and for putting conditions up front when financing R&D, insisting on transparency and openness.

-*Catherine Saez is a freelance journalist specializing in health issues