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11 April 2001

Experts: affordable medicines for poor countries are feasible

WHO/WTO workshop on pricing and financing of essential drugs

HØSBJØR, NORWAY — Making life-saving medicines more affordable for poor countries is vital for improving public health. More importantly, it is realistic, experts said in a three-day workshop that ended today (11 April 2001).

In particular, “differential pricing” — companies charging different prices in different markets according to purchasing power — is a feasible means of achieving this, provided certain conditions are met.

That was a widely held view among a diverse group of 80 experts from 21 countries and a wide range of professional backgrounds, participating in a workshop organized jointly by the World Health Organization, World Trade Organization, Norwegian Foreign Ministry and Global Health Council, a broad-based US organization in the healthcare field.

The workshop examined in detail ways to reduce pharmaceutical prices in low-income countries and how to increase financing so that the world’s poorest people can obtain necessary medicines and healthcare. HIV/AIDS, malaria and tuberculosis featured prominently, but a wide range of other diseases that affect poor people were also discussed.

WHO Director-General Gro Harlem Brundtland said the meeting had been constructive and helpful.

“It is clear that the price of medicines does matter — especially for people in poor countries,” she said.

“We heard from the experts that much lower prices can be achieved for the poorest countries. Equally important is strengthening health systems, and, for the poorest countries, securing additional international financing,” Dr Brundtland said.

Participants attended as experts in their own right. They came from: developed and developing country governments; international research-based companies; generic pharmaceutical companies from Asia, Africa and Latin America; non-governmental organizations; consumer and treatment groups; universities; and international organizations.

“Although participants clearly approached the issues from different points of view, there was broad recognition that differential pricing could play an important role in ensuring access to existing drugs at affordable prices, particularly in the poorest countries, while the patent system would be allowed to continue to play its role in providing incentives for research and development into new drugs,” said Adrian Otten, director of the WTO’s Intellectual Property Division.

Two of the organizers, the WHO and WTO, will each report on the outcome to forthcoming meetings in their organizations to be held in the next few months. In May, the WHO holds its World Health Assembly, and in June the WTO’s Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) will hold a special discussion on intellectual property and access to drugs.

All participants will be able draw on the ideas and experiences exchanged in the workshop, for use in their own work, together or separately.

Differential pricing has already been achieved for commodities such as vaccines, contraceptives and condoms through a combination of high-volume purchasing, reliable and adequate financing, advocacy, corporate responsibility and market forces.

The challenge is to find ways to expand this to life-saving medicines. The participants accepted that there is no single formula to achieve this. A wide mix of options is needed, they said.

“Intellectual property rights stimulate development of new medicines, but must be implemented in an impartial way that safeguards public health. We also need to ensure that there are additional incentives for the development of the drugs needed to address the health problems of people in poor countries,” Dr Brundtland said.

Among the ideas emerging from the meeting were:

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Differential pricing would allow companies that make patented drugs to recover most of the costs of research and development in richer markets and at the same time to sell or license production at lower prices in lower-income countries. Advocates said this could be a win-win solution if consumers in richer countries do not face higher prices as a result.

Critical to the success of this would be methods of preventing lower priced drugs from finding their way into rich country markets. A number of speakers were also concerned that lower prices in developing countries should not be used as reference points for price controls in industrialized countries.

Options for appropriate strategies suggested in the workshop included: creating the right conditions so that the market determines differential pricing; discounts negotiated bilaterally between companies and purchasers (which could include bulk purchasing on behalf of many customers); licences agreed voluntarily between patent owners and generic manufacturers; and global procurement and distribution systems.

Competition and generic drugs
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Several speakers also felt that generic drug manufacturers play an important role in bringing competition to pharmaceutical markets and improving production efficiency, which would reduce prices further.

Intellectual property and TRIPS safeguards
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Participants acknowledged that intellectual property protection is an important incentive for research and development into new drugs. Some said there are also other ways to encourage research and development.

At the same time, countries need to be able to make use of the public health safeguards built into the TRIPS Agreement — including compulsory licensing (governments allowing others to produce a patented invention without the patent owner’s permission) and “parallel” imports (i.e. imports of products supplied by the patent owner or a licensee at a lower price in another country).

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When drug prices fall — and many low priced essential drugs are already available — there is still no guarantee that poor communities can afford them. This is particularly true for HIV/AIDS drugs. Even with costs coming down to $500 per patient per year, this is well beyond the reach of the many countries whose total health expenditure is less than $10 to $20 per year. In these cases, significant amounts of external financing is needed.

Many of the participants also said financing for drugs should not be considered in isolation. They called for massive increases in finance to develop effective healthcare systems in general, including training, education and delivery, as well as for buying the drugs.

For more information:

Background papers for the conference are available on the WHO and WTO websites. For the WHO (www.who.int) look for “medicines” and “documents”.

For more information on TRIPS and pharmaceuticals, see a WTO fact sheet, downloadable from the TRIPS news page.

A report of the workshop’s proceedings and the presentations will shortly be available on these websites.