Sunday 23 July 2017

Drug makers on back foot in run-up to WHO 'fair pricing' summit

Ben Hirschler

DRUG makers are under fire around the world as a wave of new treatments for serious conditions reach the market at ever-rising prices - and the pressure looks set to increase.

Next week the debate on drug pricing - a particularly heated topic in the United States - will move to Amsterdam as the Dutch government hosts a forum for World Health Organization (WHO) member states to promote "fair pricing".

Donald Trump accused drug manufacturers of "getting away with murder", shortly before he became US president, and the May 11 event underscores the focus on medicine pricing in health ministries from Berlin to Beijing.

In Ireland the high cost of cystic fibrosis drug Orkambi has long been controversial. Health Minister Simon Harris ultimately agreed to fund the treatment, but this week Anthony McDonnell, an economist with Wellcome Trust, said the cost means diverting government funding from other areas and putting people's lives at risk.

German negotiators have caused some firms to pull drugs off the market rather than accept price cuts, while Britain last month introduced new budget curbs on pricey products.

China and Japan, the two biggest non-Western markets for pharmaceuticals, are also bearing down on costs, and poorer countries find many new drugs are out of reach.

"It's great that we have these treatments but we need to find a way to make them more affordable," Andrew Rintoul, the WHO health economist organising the drug pricing forum, told Reuters.

Drug makers know they must up their game to save their reputation - even as patients cheer the scientific advances behind new products, national budget agencies are baulking at the financial costs.

A major advertising campaign by the US Pharmaceutical Research and Manufacturers of America trade group, for example, includes accusations that insurers are failing to pass on the benefits of discounts negotiated with manufacturers.

This goes to the heart of a thorny issue. On the surface, the cost of medicines may be rising steeply but the picture is distorted by off-invoice discounts and rebates, which in the United States average around 30pc. In Europe, rebates amount to roughly 17pc. "I personally don't believe in the talk of drug expenditure breaking the system," Thomas Cueni, who recently took over as director-general of the International Federation of Pharmaceutical Manufacturers and Associations, told Reuters.

"When you look at the aggregate numbers, drug spending has been pretty stable in most OECD countries at around 10pc to 15pc of healthcare spending."

A lack of price transparency is a major bugbear.

There are also growing calls for greater disclosure on companies' R&D and production costs.

Transparency will be high on the agenda in Amsterdam, mirroring efforts by some US states to shine a light on costs. Companies, however, are reluctant to specify exactly how they come up with drug prices and prefer to stress the value that their medicines bring.

"The industry has to stand up and argue its value proposition," said Cueni, who admits he is "apprehensive" about the tone of the WHO meeting.

"I'm not a big fan of this term 'fairness' because, let's face it, fairness is in the eye of the beholder. There's no objective definition."(Reuters)

Irish Independent

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