18th April 2001

WTO/WHO DRUGS WORKSHOP FOCUSES ON DIFFERENTIAL PRICING AND FINANCING

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A group of 80 experts from industrialised and developing countries met on 8-11 April for a WTO/World Health Organization (WHO) workshop on affordable drugs in Høsbjør, Norway. Discussions focused in particular on differential pricing and increases in external financing to ensure access for poor countries to affordable medicines and adequate healthcare.

Widespread support for differential pricing

Participants generally agreed that differential pricing — i.e. adjusting the prices that companies charge for a product according to the purchasing power of the different markets — offered a feasible way to make life-saving medicines more affordable for poor countries. “Differential pricing could and should play an important role in ensuring access to existing essential drugs at affordable prices…while allowing the patent system to continue to play its role of providing incentives for R&D [research & development] into new drugs,” said Adrian Otten from the WTO Secretariat. According to WHO Director-General Gro Harlem Brundtland, experience showed that differential pricing could result in prices that were between 1 and 10 percent of those charged in high-income markets.

Two questions were raised in this context, namely how to ensure that low-cost medicines from poor-country markets are not sold back into rich countries, and that lower prices in poor countries are not used to challenge prices in industrialised countries. Options for appropriate strategies to implement differential prices suggested during the workshop included: creating the right conditions so that the market determines differential pricing; discounts negotiated bilaterally between companies and purchases; licences agreed voluntarily between patent owners and generic manufactures; and global procurement and distribution systems.

Reduced prices not enough without additional financing

There was widespread agreement that reduced prices for essential medicines provided no guarantee that the people in poor countries would actually be able to afford and obtain the necessary drugs. Many of the participants called for significant and sustained amounts of external financing not only to support the purchase of drugs, but also to assist in the development of effective healthcare systems, including training, education and delivery. To reach such a “balanced” solution, Brundtland proposed the establishment of a new international health fund which “will give political prominence to priority health issues including HIV/AIDS - and is a tangible response to earlier commitments on the part of the international community to mobilise more money.”

Intellectual property rights and TRIPs

Participants also addressed the issue of intellectual property rights and the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). They acknowledged that effective intellectual property protection provided important incentives for R&D into new drugs, but also pointed out that countries needed to be able to use the public health safeguards built into the TRIPs Agreement, such as compulsory licensing (i.e. governments can allow the use of a patent without the consent of the patent-holder in certain cases) and parallel imports (i.e. allowing governments to obtain a patented drug more cheaply from foreign suppliers rather than from the manufacturer’s local subsidiary). The WTO and in particular the TRIPs Agreement have recently been accused of impeding poor countries’ access to essential medicines by protecting pharmaceutical patents (see BRIDGES, 20 February 2001).

NGOs disappointed about lack of progress

In a joint NGO statement, Médecins sans Frontières, Oxfam and Treatment Action Group, Health Action International, and Consumer Project on Technology expressed disappointment about the fact “that no real progress was made to bring drug prices for essential drugs in developing countries down”. They criticised pharmaceutical companies for not disclosing plans to actually implement differential pricing for their drugs after two and a half days of discussions during the workshop. While they saw differential pricing as a “crucial tool to help increase access to affordable medicines”, they recommended that only a mix of mutually supportive strategies would succeed in reducing drug prices significantly. They furthermore called for a new global convention on R&D designed to “create new mechanisms to boost global R&D funding in ways consistent with access to medicines and health needs by encouraging research on neglected diseases.”

The proceedings of the workshop will be summarised in a report which the WHO will present to the World Health Assembly next month and the WTO to the TRIPs Council meeting on 18-20 June during a day dedicated to special discussions on essential medicines (see BRIDGES Weekly, 10 April 2001). Documents of the workshop are available on the WTO website at: http://www.wto.org/english/tratop_e/trips_e/tn_hosbjor_e.htm.

“Major financing effort needed to get drugs to poor nations,” AFP, 11 April 2001; “Experts: Affordable medicines for poor countries are feasible,” WTO PRESS RELEASE, 12 April 2001; ICTSD Internal Files.