Parts of this blog were previously published in the Lancet Regional Health Europe
Secret medicines prices are hotly debated as European health systems struggle to finance medicines for patients. Proponents of secrecy generally argue that confidential purchase prices allow suppliers (usually pharmaceutical companies) to grant discounts and rebates that benefit buyers (i.e. governments or publicly-funded bodies) and ultimately, patients. When there are one or few suppliers, or there is a supply shortage, this model relies on governments’ willingness to pay and allows companies to determine appropriate discounts and rebates. This model can result in inequitable price setting and the risk of higher medicines prices (see here, and here). For example, the leaked purchase prices of the Oxford-AstraZeneca Covid-19 vaccine revealed that South Africa paid more than double than the European Union (EU) for the same product.
Advocates of transparency argue that openness about a medicine’s price components (e.g. research and development (R&D) costs, production costs, discounts and rebates etc.) is essential to know whether the price is ‘fair’ to the seller and the buyer. This commentary highlights the normative basis for transparency, and recent initiatives in Europe supporting increased transparency of medicines and medical product price components. Aligning governments’ transparency practices with their commitments and legal principles is urgent as cross-country collaborations (for medicines information sharing, and joint assessment and price negotiation) take shape in Europe, and as the European Commission expands its role in centraliszed medicines procurement.
Transparency of medicines prices is an emerging global norm and related to human rights
Greater transparency of pharmaceutical markets is an emerging global norm. In 2019, 194 Member States of the WHO adopted the ‘Transparency Resolution’ (WHA resolution 72.8). Germany, the UK and Hungary disassociated themselves from the resolution. Resolution WHA 72.8 urges Member States to take steps to publicly share information on the net prices of health products (official/list prices less rebates and discounts), and calls on Member States to work collaboratively to improve the reporting by suppliers of sales revenue, prices, units sold, marketing costs, investments and subsidies. Although not legally binding, this Resolution illustrates a high level of commitment and support from all Member States to achieve the objectives it sets.
Transparency of medicines prices is also related to the human right to access public documents, enshrined in international law (e.g. International Covenant on Civil and Political Rights, among others) that is binding on 173 states, and in national law. Recent cases in Spain (Kymriah), Colombia (Covid-19 vaccines), and USA (Covid-19 vaccines) illustrate how the right to access public documents has been applied to medicines purchase prices, criteria, and R&D and procurement contracts. A decision by the Spanish Council of Transparency and Good Governance (Resolution 079/2019) highlighted the societal and legal importance of knowing how public powers make decisions that affect public health and its financing. The Council underscored that the right to access to public information has ‘intrinsic value to the concept of democracy’.
Room for more European governments to implement transparency commitments
Our recent WHO report on the the evidence on legal measures to improve the transparency of markets for medicines, vaccines and other health productsshows that there is still scope for other European governments to undertake legal and policy measures to create a supportive environment for price and cost disclosure. Two European governments (France, Italy) have adopted laws requiring pharmaceutical manufacturers to disclose the public R&D investments in new medicines seeking reimbursement. Fifteen national governments in the WHO European Region publish the various types of medicines prices in publicly accessible online registries; these prices usually do not reveal the net price, except in Switzerland. Switzerland is one of the last high-income countries to publish the rebates it negotiates on selected medicines, offering an under-explored ‘laboratory’ to study the dynamics of discounting and disclosure on the pharmaceutical market. This laboratory is threatened by proposed legal reforms that would legitimise confidential rebates as part of federal health insurance.
Response to OECD’s work on price transparency & pharmaceutical markets
In 2021, the OECD sought to clarify “what should be made more transparent [with regards to pricing], and how greater transparency would affect the functioning of [pharmaceutical] markets” through a roundtable, literature review, and interviews, which representatives of ML&P were invited to contribute to. In its 2022 working paper “Exploring the consequences of greater price transparency on the dynamics of pharmaceutical markets”, the OECD reported sparse evidence and little consensus among experts about what information should be disclosed, for what purpose, and how this could impact markets. Consequently, the OECD recommends generating more evidence (particularly about existing cross-country initiatives, and through modelling the expected behaviour of stakeholders and effects on markets) and seeking input from countries about what price information they could share, how, and their willingness and motivation to do so (which will appear in a subsequent OECD report). Finally, the OECD recommends seeking greater ‘agreement’ on which aspects of transparency could be prioritised.
While most of these recommendations are natural next steps, it is our view that more action is urgently needed on the part of states to implement the WHA 72.8 Transparency Resolution. In line with our report on the WHA 72.8 Resolution, this action includes:
- recognise that it is within the remit of Member States to decide not to enter into confidentiality agreements with pharmaceutical manufacturers if doing so is not in the public interest;
- take steps to implement legislation at the national and regional levels that will ensure the transparency of prices (including discounts, rebates, market entry agreements and mark-ups) across the pharmaceutical supply chain, in line with WHO recommendations, recognising that to do so is within the remit of Member States;
- adapt to multicountry contexts any existing law and policy mechanisms from specific countries for the disclosure of medicines, vaccines and health products prices and pilot these in groups of Member States (e.g. agreements may include clear terms of what could be kept confidential and what should be shared in the consultation process);
- implement price regulation and price monitoring and reporting tools and databases in a consistent manner to optimise their impact on the market;
- take steps to implement legislation to improve the transparency of R&D investments and costs, drawing from existing examples of EU and national legislation in France and Italy; and
- review national access to data about prices and costs in order to ensure informed price negotiations.
It would be important that countries report on the steps they are taking to implement the WHA 72.8 Transparency Resolution to the World Health Assembly as was agreed in 2019.