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Can law help make the market for medicines, vaccines and other health products more transparent? Recently, Katrina Perehudoff led the Medicines Law & Policy team to publish a report, commissioned by WHO, on this issue. She answers four legal questions.
Katrina Perehudoff
Katrina Perehudoff

What exactly is going on with medicines prices? 

'The high cost of research and development (R&D, red.) for new medicines and health products is often used to justify their high prices. Although R&D can be costly, there is little objective and transparent information about the actual costs of R&D and the prices, meaning, prices net of discounts and rebates, that governments pay to purchase health products. This lack of transparency hampers governments from making fully informed decisions when negotiating the prices of health products for their populations. 

The result can be detrimental for public health: governments may spend too much on a medicine, leaving less funding for others. Or they deny reimbursing an expensive medicine altogether and sometimes leaving patients with few alternatives.

Increasing concerns among governments about medicines prices led to the adoption of the 2019 World Health Assembly Resolution 72.8. It urges the public sharing of the net prices of health products, the costs of clinical research, and information about sales revenue, marketing costs, subsidies and incentives.'

Are there any dangers to more transparent medicines prices? 

'There are also arguments against price transparency. Price transparency might reveal different prices for the same product in different markets, which could trigger manufacturers to delay marketing medicines, raise prices in the less-expensive market, and to collude to fix prices. Evidence suggests that some of these potential drawbacks, such as marketing delays, happen regardless of whether prices are made public. 

Still, there is an emerging consensus, shown by the WHA Resolution 72.8, that more clarity on the cost to research and develop medicines and health products can help with negotiating and setting fair prices.'

Legal reform creates a supportive environment for price transparency, but it is not the only tool. Katrina Perehudoff

How could transparency be improved? 

'My research with the research group Medicines Law & Policy found several interesting examples of legislation that could improve the transparency of R&D investments and costs. Since 2019, France and Italy have adopted new laws to disclose the public contribution towards the cost of R&D for medicines that will be reimbursed. These legal reforms are consistent with EU Member States’ responsibility to manage their national pharmaceutical supplies and with EU law.'

Is legal reform necessary to achieve more transparent medicines prices?

'No. Legal reform creates a supportive environment for price transparency, but it is not the only tool. Governments (meaning, public purchasers, red.) can decide not to enter into confidentiality purchase agreements with manufacturers if doing so is not in the public interest.

Some existing laws also indirectly promote R&D cost transparency, such as national legislation on access to public information that has been used to obtain the price the Spanish government paid for the expensive medicine, Kymriah. 

A private initiative right here in the Netherlands, the Hospital Purchase Benchmark system, was introduced to compare the prices of medical products purchased by different hospitals in order to strengthen their bargaining position. This voluntary system gives hospitals access to prices in exchange for providing information about their purchase orders. In 2017 this system revealed large price variations for 17 commonly used medical products (e.g. pacemakers, gloves and stents) in 38 Dutch hospitals.'