Defining the concept of fair pricing for medicines
Authors: Suerie Moon, Stephanie Mariat, Isao Kamae, Hanne Bak Pedersen
Journal: BMJ (2020)

Achieving FAir Pricing oF MedicinesDefining the concept of fair pricing for medicines Suerie Moon and colleagues consider what makes a fair price for both buyers and sellers H igh and rising prices of medicines have attracted public concern from the poorest to richest countries.For example, of 1500 patient groups surveyed in 78 countries, only 9% believed that pharmaceutical companies were "excellent or good" at having "fair pricing policies".This figure has hovered between 11% and 15% since the survey began in 2011. 1 Politicians, experts, physicians, patients, and pharmaceutical executives have hotly debated whether medicines prices are fair, but without agreeing on what "fairness" means.Medical, public health, and economic texts do not provide a standard definition of a fair price for medicines.Discussions of fair pricing of goods generally, however, provide some useful indications.3][4][5][6] European competition law defines whether a price is excessive based on several factors, including production costs, profit margins, economic value, and prices of related goods. 7rugs, biological agents, diagnostics, and other medical devices-which for brevity we call medicines-are not ordinary goods.The price of a medicine should allow for meeting the societal need for that product.Sellers often have strong price setting power, however, when need is greatest.For new medicines, monopoly power strengthens a seller's position.These characteristics mean that government intervention is often needed to ensure a fair price.Here we describe a conceptual framework for assessing whether a medicine's price is fair.The framework was initially developed for the 2016 meeting of the WHO Advisory Group on Fair Pricing and revised after expert feedback and discussion.Increased clarity about a fair price, we argue, can help to achieve it. Defining sellers and buyersWe divide those likely to have different views of fair pricing into "sellers" and "buyers."Sellers include several subgroups.One subgroup is developers conducting research and development (R&D).These comprise academic and government laboratories for basic research, small companies developing a promising technology in preclinical and clinical trials, larger companies developing medicines through regulatory approval, and generic firms adapting formulations.A second subgroup is manufacturers, who may or may not be distinct from developers.A third subgroup includes distributors moving medicines from manufacturers towards patients and the public-for example, wholesalers, importers, pharmacies, healthcare facilities, online retailers, and informal outlets.Buyers include those who pay for a medicine, such as households, insurers, ministries of health, and donors.We also include those who benefit from a medicine, such as patients for therapeutics, or entire populations for prophylactics (eg, vaccines, drugs).The public is ultimately the buyer of medicines, whether through out-of-pocket payments, private insurance premiums, or taxes for publicly financed health insurance.Public perceptions of fairness matter.