Global Healthcare on the Ground: Differential Pricing - Pharmaceutical Technology

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Global Healthcare on the Ground: Differential Pricing
Tiered pricing is used throughout industry to help increase affordability and access to drugs in the developing world.


Pharmaceutical Technology
Volume 34, Issue 12, pp. 20-22

Alternative approaches

Despite the benefits that differential pricing provides those in need of medicines but who can't afford them, there has been some pushback to the approach over the years. For example, middle-income countries have demanded lower prices similar to those that the poorest countries receive, and some poorer countries have been reported to use various discount rates to barter and spark competition among drug manufacturers (2).

As a result, some alternative pricing methods are being established. For example, a new GAVI funding mechanism is being tested. GAVI, an alliance involving the Bill & Melinda Gates Foundation, UNICEF, WHO, and the World Bank Group, aims to save children's lives and protect health by increasing access to immunization in poor countries. Launched in 2000, the alliance brings together various countries and donor governments with the vaccine industry, research and technical agencies, and civil society to fulfill its mission. In the summer of 2009, GAVI formally launched advance market commitments (AMCs) as a funding approach designed to stimulate the development and manufacture of vaccines for developing countries. When a company makes an AMC, it commits funding to guarantee the price of vaccines once they have been developed. The funding helps vaccine manufacturers carry out research, train staff, and build manufacturing facilities. Participating companies also make binding commitments to supply the vaccines at lower and sustainable prices after the donor funds for the initial fixed price are used.

An pneumococcal AMC pilot program aims to prevent more than seven million childhood deaths by 2030. The governments of Italy, the United Kingdom, Canada, Norway, and Russia, as well as the Bill & Melinda Gates Foundation, committed $1.5 billion to the pilot, to which the World Bank has offered its support (6). And earlier this year, GSK and Pfizer (New York) agreed to supply as many as 300 million doses of their pneumococcal vaccines over the next decade to GAVI countries as part of the pilot program.

Sources

1. WTO, "Intellectual Property: Protection and Enforcement," http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.htm, accessed Nov. 12, 2010.

2. R. Bate, "Drug Pricing and Its Discontents," (AEI, Aug. 2007), http://www.aei.org/outlook/26622, accessed Nov. 12, 2010.

3. C. Strutt, Pharm. Technol. 34 (8) 129–130 (2010).

4. IFPMA, "Novo Nordisk: Differential Pricing on Insulin," Developing World Health Partnerships Directory, http://www.ifpma.org/index.php?id=3789/, accessed Nov. 12, 2010.

5. IFPMA, "Bristol-Myers Squibb Global Access Program," Developing World Health Partnerships Directory, http://www.ifpma.org/index.php?id=3682/, accessed Nov. 12, 2010.

6. AMC website, http://www.vaccineamc.org/, accessed Nov. 12, 2010.


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