Introductory remarks: Adrian Otten

On behalf of the WTO Secretariat I would like to join State Secretary Mogedal and D-G Brundtland in welcoming you all to this Workshop. We are extremely appreciative of your readiness to give up your valuable time and to contribute your experience and expertise to this important meeting.

You bring with you a great variety of knowledge, experience and perspectives. This diversity I believe will contribute to the richness of the discussions that I am confident we will have, provided all recognize and respect the different constraints and responsibilities that participants are under.

Being a meeting of experts, the purpose of this workshop is not to seek to negotiate an agreed course of action. Its main purpose is to generate a better understanding of the complex issues involved in differential pricing and financing of essential drugs. The main product of the meeting will be a report summarising the issues identified and points made, together with copies of the background papers submitted. It is hoped that this report will be helpful to the various actors involved, whether government, the international community, industry or civil society, or in refining further thinking and actions on these matters. As for the WTO, the WTO Council for TRIPS has requested that the report be made available to its next meeting, in mid-June, when a day’s special discussion will be devoted to the question of access to drugs.

This is very much an inter-disciplinary meeting, including people with health and trade policy backgrounds and concerns. It is not the first time that the WHO and WTO Secretariats have had joint meetings, but it is the first time that we have done anything together on this scale. I very much welcome the coming together of trade and health policy people on issues of common concern. As the world becomes increasingly integrated, it becomes less and less possible for different policy areas to be handled independently of each other, at the international as well as at the national level.

The idea of this workshop goes back to an exchange of correspondence in late 1999 between Dr. Brundtland and Mike Moore, the Director General of the WTO, in which they identified the issue of differential pricing as one of the number of topics on which the two Secretariats might work together. In the follow-up to this, the two Secretariats came to the conclusion that the best way of exploring this question would be to bring together a group of experts of the sort we have here today. We have added the topic of financing, because it is clear that the affordability of essential drugs is not only related to their price, but also to the funds available for their purchase.

Obviously, the WTO Secretariat comes to this meeting from the perspective of the functions and concerns of the WTO, and in particular its trade and intellectual property rules. One issue with which we are very much concerned is the widespread concern to ensure that world-wide intellectual property protection for pharmaceutical products is compatible with affordable access to these products in developing countries, especially the poorest.

This is an important issue, but only one of many involved in the problem of access to essential drugs in developing countries. I hope that, as a result of this meeting, we will get a better measure of the scope of this issue and how it relates to other obstacles to access, whether in terms of pricing, financing or distribution. Incidentally, one matter of particular interest to the WTO which we will be looking at in this connection is the impact of tariff and non-tariff barriers to trade.

Going back to the patent issue, I think that I can safely say that everyone in this room today is committed to ensuring that the incentives for research and development into new drugs are preserved and, where necessary, enhanced, while at the same time ensuring that the access of the neediest to existing drugs is not impeded. In this connection, I don't think there is any dispute that a suitably balanced patent system has an essential role to play, although the patent system may not need to be supplemented in cases where the market by itself will not provide the necessary level of incentives, notably for diseases prevalent amongst the poorest in developing countries

However, there is a concern that the patent system should operate in a way that the burden of providing incentives for research and development is equitably distributed. This is one reason why there is so much interest in the concept of differential pricing, under which prices charged are adapted to the capacity to pay of purchasers.

We are very much interested in the conditions that would make differential pricing work, both for patented drugs and, where possible, generic drugs. One of the important questions to be discussed is whether differential pricing can be something which is in the interests of everybody, or at least not harmful to the interests of anybody. Clearly, something which is mutually advantageous stands a much better chance of acceptance and implementation than something which will be resisted by one or other party. Thus, the question is can differential pricing be arranged in such a way that it is beneficial to the consumer in the poor country and beneficial, or at least not harmful, to the interests of the consumer in the rich countries, while maintaining incentives for research and development.

From our examination of the issue of differential pricing, it seems that a vital condition is that there is a sufficient degree of separation or segmentation between the markets of the rich countries and the markets where the preferentially priced drugs are sold. This gives rise to two questions that we would hope to understand more fully as a result of this workshop. One is that of how to avoid the diversion of low-priced product from poor country markets into rich country markets, while taking into account WTO international trade rules. The other is the more political or psychological way in which there can be a degree of interdependence of prices between rich and poor country markets. The question is how to minimize the risk that lower prices in poorer countries will be used to challenge prices in other countries, since that will act as a disincentive to differential pricing. This does not mean, of course, that the debate about prices in developed countries should be restrained, only that lower prices in poorer countries should not be used as an argument, whether to push for lower or higher prices.

Of course, events in this area are moving very quickly and, since we started our discussions with the WHO on differential pricing, numerous initiatives in this direction have been taken. In one of our sessions we will have the opportunity to learn from the experience with those initiatives, both in terms of the conditions which make differential pricing possible and in terms of the factors which may have limited the use of these initiatives.

I should not end these introductory remarks without expressing our appreciation to the Norwegian Ministry of Foreign Affairs for hosting this Workshop and financing the WTO share of the costs and also to the Global Health Council for its assistance in the planning and organization of this event.