Paris, 27 March 2003 — On 30 October last year, the European Commission proposed a price regulation scheme to encourage pharmaceutical companies to implement “differential price” policies which entail reduced prices for developing countries. The scheme paid particular attention to preventing the re-importation of these discounted drugs into rich countries. The Commission’s proposal obliged drug companies to reduce their prices by at least 80% compared with the average prices in OECD countries, or to offer a price only 10% above their production costs.
Médecins Sans Frontières finds that despite certain insufficiencies, the EC proposal was a welcome step towards allowing developing countries to benefit from medicines at discounted prices. However, several member states of the European Union, including France, are proposing to weaken the scheme.
The French proposal, based on work by a group comprised of representatives from the administration and industry, essentially relies on the good will of the pharmaceutical companies - a good will that appears to be lacking: the pharmaceutical industry has expressed its fears regarding any attempts at price-setting. In response to pressure from the companies, the French proposal aims at only a 70% reduction in price, as opposed to the 80% proposed by the Commission.
“We are today confronted with a particularly strange situation in Europe”, notes Ellen’t Hoen of Médecins Sans Frontières. “Pharmaceutical companies are afraid to have limits imposed on their pricing policies for developing countries and the member states of European Union are giving in to this pressure, all under the cover of offering advantageous prices to developing countries. It is essential that the member states strengthen – and not weaken – the European differential pricing scheme so that patients in poor countries can access essential medicines at affordable prices. This is even more essential as these proposals might be taken into consideration in the meetings that will take place during the next G8”.
The French proposal also promotes the idea of “partnerships” between companies and developing countries, which would make beneficiary countries dependant on the good will of pharmaceutical companies and the price reductions they choose to offer, or not. An example of this type of mechanism is the Accelerated Access Initiative (AAI*). Three years after its creation, this initiative has very clearly shown its limitations: agreements between individual countries and the laboratories have taken months, sometimes even years, to be finalised; the price reductions do not apply to all drugs. Sometimes the drugs are not actually available in the field, and the agreed reductions are often purely theoretical. Even more importantly, the prices offered by these companies are generally higher that those offered by generic manufacturers.
Generalising such models will thus not achieve the lowest prices possible. Spontaneous price reductions by pharmaceutical companies have yet to be seen: so far, companies have been forced to reduce their prices due to competition from generics and public pressure.
* AAI: “Accelerate access to HIV/AIDS treatment” initiative was launched by UNAIDS in 2000 for antiretroviral drugs. Rather than imposing price reductions for less developed and middle income countries, the initiative leaves it up to countries to negotiate the price of each drug with the multinationals participating in the initiative: Roche, Merck, Boehringer Ingelheim, GlaxoSmithKline and Bristol-Myers Squibb.