Towards transparency on health product pricing

KM Gopakumar | Updated on July 19, 2019 Published on July 19, 2019

Price transparency on affordability and availability of health products is key   -  3d-Guru

World Health Assembly has adopted a key resolution in this regard, a welcome move

The asymmetry of information due to the absence of transparency around the price of medicines, vaccines and other health products results in the exploitation of patients, and misapplication of public funds meant for them.

Drug companies often justify the exorbitant pricing of new health products by citing costs involved in their research and development without, however, revealing details that would reflect the real costs.

Generic companies too obscure the high trade margins given to institutional and retail sellers in the MRP (maximum retail price) while the cost of production often is a fraction of that printed price.

Many developed countries do not make the negotiated price of patented drugs public. And non-transparency of clinical trial data further helps companies sell their new medicines as the best-in-class.

Precisely to fix this sort of opaqueness, the recently concluded 72nd World Health Assembly (WHA) adopted a resolution to bring in a degree of transparency involving health products, especially on price.

Titled “Improving the transparency of markets for medicines, vaccines, and other health products”, it urges member states of the World Health Organization to “take appropriate measures to publicly share information on the net prices of health products.” The net price is defined as “the amount received by manufacturers after subtraction of all rebates, discounts, and other incentives”. This would reveal the final price obtained by the manufacturer.

Ideally, the resolution should have requested members to reveal the prices at all stages, including mark-up for wholesalers and retailers. But it is a milestone, nevertheless, specially given the opposition the Italy-sponsored resolution faced from the UK and Germany, for instance.

The resolution also urges members to improve transparency involving the costs and outcomes of clinical trials, information on product sales, prices, units sold, marketing costs, and subsidies and incentives. It calls for more information on the patent status and marketing approval of health products, a move that would help Governments take a call on ensuring these products are pegged at prices affordable to patients.

Urging the WHO to support member efforts on this count, the resolution also mandates the agency to monitor the impact of price transparency on affordability and availability of health products.

The WHO Secretariat is to carry out analyses of the available data from across the value chain, including clinical trial data and price information with a view to assessing the feasibility of a web-based tool to share information relevant to the transparency of health products.

Countries like the US have already taken steps to improve transparency through a presidential executive order. India, as a co-sponsor of the resolution, should also act as implementation is critical to check the exploitation of patients.

Presently, the National Pharmaceutical Pricing Authority’s (NPPA) “Pharma Sahi Dam” databases provides information on the MRP of medicines, besides the ceiling prices of medicines that fall under the National List of Essential Medicines and those that do not. However, there is no legal obligation on companies to provide information to this database and information is limited to MRP.

While many public procurement agencies of State governments provide public procurement prices, there are agencies like the Railways, armed forces and ESI who do not provide such information.

Taking it beyond MRP

The mere revelation of MRP does not bring relief to patients. Often, private sector hospitals procure health products at low costs but charge the entire MRP from patients. An NPPA investigation of two hospitals’ bills in 2018 revealed that they charged margins of 350 to 1,700 per cent on various health products. Revealing margins helps expose unethical trade practices and ensures transparency. A similar case can be made out for patented medicines and their prices to enable the use of public interest safeguards to ensure better patient access to these products.

The Government also needs to take steps to make information on clinical trial costs and data available to the public, especially that involving the efficacy of new medicines and how it compares to existing treatments or medicines. A combination of these measures will go a long way in protecting patients against misleading marketing tactics.


The writer is with the Third World Network and had closely followed the WHA negotiations on the issue. Views expressed are personal

Published on July 19, 2019
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