Affordably priced new drugs for poor populations: Approaches for a global solution

Article type: Research Article

Authors: Mossialos, Elias^; | Dukes, Graham

Affiliations: Brian Abel‐Smith Reader in Health Policy, London School of Economics, London, UK | Emeritus Professor of Drug Policy Studies, University of Groningen, The Netherlands, and Adviser on Drug Policy Studies, Department of Pharmacotherapy, University of Oslo, Norway

Note: [] Address for correspondence: Dr E. Mossialos, London School of Economics, Houghton Street, London WC2A 2AE, UK.

Abstract: A very large proportion of the world's population, particularly the poor in developing countries, still have insufficient access or none at all to treatment with essential drugs. This situation can arise with any drug and for various reasons, but it exists in extreme form where the drug is irreplaceable yet entirely unaffordable. That is the case with new or relatively recent drugs which could save lives or eradicate endemic disease, but which (particularly during their period of patent protection) are usually sold at prices higher than patients or their community can afford to pay. The consequences of this situation in terms of persistent illness, suffering and large‐scale mortality are felt most immediately in the developing world, but because today disease travels so rapidly it represents a threat to the world as a whole. As of late 2001, only a number of limited ad hoc solutions to these problems have emerged. They have provided relief in a number of specific situations but they offer no guarantee of permanence, are applied mainly at the discretion of multinational companies or aid agencies and leave the bulk of the global problem unchanged. The problem must be capable of a broad and lasting solution since the basic costs of manufacturing and distributing most of the drugs in question are not in themselves prohibitive. High prices are primarily a consequence of the need to provide an adequate return on investment, to finance research and development, and to pay the very high costs of promotion in intensively competitive markets. At present, however, these secondary costs are almost entirely covered by the sales income from industrialized countries, and that is unlikely to change. In the developing world, where the sales of such drugs has been negligible, it must be possible to supply them in more adequate quantities, at a fair and affordable prices which are very close to the basic manufacturing and distribution costs. This will require an innovative commercial approach but it may not demand a sacrifice; in many instances it will be the key to opening new emergent markets where low profit margins can be outweighed by high unit sales. The feasibility of sharply differential pricing for drugs has indeed been demonstrated already in various countries and regions where specific agreements for low‐cost supply have operated successfully, for example, for vaccines and contraceptives but also for some therapeutic drugs still protected by patent. If this type of approach can be extended so that important new drugs are as a matter of routine made available to developing countries at highly preferential prices it would contribute greatly to the solution of major health problems. Naturally a number of safeguards are necessary. The most important of these is that drugs sold at “minimal” prices to a developing country must not leak across its borders to be re‐sold at a profit elsewhere. Experience with vaccine and contraceptive agreements shows that this risk can be virtually eliminated, although the parallels with therapeutic drugs are not exact and the possibility of theft and “leakage” might be greater with such items, especially where they have a high potential market value. Nor must a drug, which enters a developing country at a preferential price then be burdened by taxes, customs duties or excessive wholesale or retail profit margins that might again put it out of reach of those who need it. Again, one would not wish to discourage the further evolution of good‐quality drug manufacturing in developing countries, which is already making an important contribution to health and to the national economy. Safeguards on these and other matters could well be incorporated into a global working agreement between all parties, seeking to define and promote the use of minimum‐level pricing for vital new drugs. That agreement would be implemented through specific arrangements and unilateral initiatives of an already familiar type; these would be centrally registered and monitored, as would situations of ongoing need. In this way, activities could be better attuned to need, progress assessed and the entire situation rendered transparent.

Journal: International Journal of Risk and Safety in Medicine, vol. 14, no. 1-2, pp. 1-29, 2001