Register from the latest on the progression of the pandemic and the future that lies ahead of us from our Vice Pres… https://t.co/GiqhM1V318
Where there isn't a will, there isn't a way – Obstacles to differential pricing
The value, in theory, of differential pricing of pharmaceuticals is pretty clear: it ensures patients can gain access to medicines that would otherwise be entirely out of reach for certain countries due to their high cost. By taking into account differences in income across different countries (or indeed potentially within them), pharma companies can more closely approximate equitable and fair pharmaceutical pricing approaches. In practice, there are major, well-known issues that prevent its implementation, and at the ongoing 19th annual European Congress of ISPOR here in Vienna, these were discussed in some detail at the second plenary session this morning.
Foremost among these obstacles are parallel exports and international reference pricing: a pharmaceutical company has no fiscal incentive to launch a treatment at a differentiated price in a lower income country, if that price is going to be referenced by higher income countries, or if the treatment will end up in the hands of patients in higher income countries. Hence, at the policy level, it is almost impossible to discuss differential pricing without first taking into account the context of parallel trade and IRP.
At the plenary session, there was significant focus on the possibilities of differential pricing in the context of a changing regulatory environment: in recent years, there have indeed been instances where there have been bans on parallel exports, and there have been recent articles highlighting the "death" of IRP. As such, doors could be opening to differential pricing.
The reality, however, is very different. The "death" of IRP is very much wishful thinking at this stage (well, at least wishful for those of us who prefer rational, value-based assessments to determine pharmaceutical prices) - IRP is a daily, highly damaging and unpredictable reality for most pharmaceutical companies. And whilst there have been bans on parallel exports, they have generally been temporary, limited to a very small range of products, and linked to extreme circumstances of product shortages. As such, these bans have zero impact on the broader discussion of differential pricing.
At the policy level, the plenary largely concluded that there currently is no political will or even a joint understanding on differential pricing - at least in Europe, where there is no alignment between the 28 member states on this issue to date.
That does not mean that differential pricing, or creative tiered pricing models based on new intelligence, cannot be implemented in any context. For certain treatments and certain countries, there are optimal conditions to implement such strategies in order to optimize global launches of new products. And pharmaceutical companies can be ahead of the game by implementing these strategies - despite all these obstacles - as a means of putting pressure on other policy areas and protecting their high value assets.
But until governments deal with the existing issues of IRP and parallel trade, it's hard to see how broader, global progress can be made at the policy level to ensure equitable access, around the world, for high value medicines targeting unmet clinical needs - there is no will, and hence no way.
Gustav Ando is the head of the Life Sciences practice at IHS Markit
Posted 1 November 2016
- Mixed news on COVID19 vaccines: COVID-19 R&D tracker
- Innovation in Japan’s regenerative sector
- US drug prices could be drastically impacted by Most Favored Nation executive order
- Global healthcare spend to remain stable
- The pandemic pricing dilemma: A COVID-19 vaccine at-cost or for profit?
- US school re-opening decisions in a pandemic environment are complex – data can help
- Trump resurrects International Reference Pricing (IRP) proposal on pharmaceuticals with executive order
- Climate Change: Potential impact on cardiovascular health of older adults
We are expecting major clinical readouts from several key COVID-19 vaccine and therapeutics candidates- our weekly… https://t.co/aIcNOmccrx
Amid global COVID-19 chaos, Japan quietly fosters innovation in its regenerative sector https://t.co/FnMKdX6hQ6