Resolved to make prices transparent

  • Nation
  • Sunday, 02 Jun 2019

Pricing drugs: The WHA resolution brings some transparency to drug pricing but full disclosure of R&D costs is still not available to consumers. — Filepic

THE 72nd World Health Assembly (WHA) on Tuesday adopted a resolution that will make the pricing of medicines more transparent.

Critics, however, deem the resolution a weaker, watered down version of the original draft that had been sparked by concern that pharmaceutical companies have been setting prices so high that some life-saving drugs are beyond the reach of many (“Pricey problems with medicine”, Sunday Star, May 19; online at


But it is, at the very least, the first step in bringing greater disclosure of prices, say governments and civil society organisations that attended the assembly in Geneva, Switzerland last week.

The resolution covers all health products, which include medicines, vaccines, medical devices, diagnostics, assistive products, cell- and gene-based therapies, and other health technologies.

In welcoming the resolution’s adoption, Health Minister Datuk Seri Dr Dzulkefly Ahmad, in a May 29 tweet, said addressing escalating drug prices through disclosure and transparency, including of R&D costs, will see fairer pricing and greater access to medicines in poorer developing countries and help these countries achieve universal health coverage.

Health director-general Datuk Dr Noor Hisham Abdullah, on May 29, called the adoption of the resolution a “landmark agreement” towards a more open dialogue on price transparency to improve access to medicines.

The resolution was adopted after intense negotiations with member states over the draft proposed by Italy in April. Malaysia is one of the initial six co-sponsoring nations, along with Greece, Serbia, Spain and Uganda; 19 countries supported the final version that was adopted.

The resolution urges member states to undertake measures to publicly share information on prices and reimbursement costs of medicines, and improve public reporting of patent status information and marketing approval status, among others.

Britain, Germany and Hungary disassociated themselves from adopting the resolution.

According to health NGO Knowledge Ecology International (KEI), the final resolution is considerably weaker than the initial proposal because a number of countries opposed key parts of the draft.

KEI says the biggest achievement is the agreement that member states should, “Take appropriate measures to publicly share information on net prices”.

(Net price – or effective price or net transaction price or manufacturer selling price – is the amount received by manufacturers after subtraction of all rebates, discounts, and other incentives.)

“The price transparency issue was perhaps the most concrete issue for many government negotiators, and here the resolution represents an impressive achievement at a time when non-disclosure agreements have become increasingly common and problematic,” KEI says in a May 29 statement at its website,

The initial proposal had called for prices across the supply chain to be shared and that is where the largest failure lies, in the area of clinical trial costs, the NGO says.

KEI says there was wide support for the disclosure of trial costs but a small number of industry-friendly countries blocked a consensus.

However, it says that the resolution is an important first step in making markets more transparent, the beginning rather than the end of a process, and it expects NGOs to intensify their efforts on R&D transparency issues.

Legal adviser of Malaysia-based Third World Network Sangeeta Shasikant says the item on full disclosure of R&D costs was removed from the final resolution and replaced with “publicly-available or voluntary-provided data”.

“This has little value because companies do not disclose full R&D costs. An urgent next step is full transparency of these costs,” she says.

Industry’s concerns

The Pharmaceutical Association of Malaysia (PhAMA) acknowledges concerns relating to affordability and resource constraints on health systems, however, long-term solutions must support sustained investments in strengthening and funding health systems.

“It should go hand in hand with an ecosystem that incentivises research in new therapies,” it, says.

The association also defends intellectual property protection, as it believes it is “a key component of such an ecosystem to address unmet medical needs of patients.”

It also argues against disclosure of R&D costs that underscore “cost-plus” models, where the selling price of a product is determined by adding a profit margin to the costs of producing the product.

“Prices should reflect the therapeutic value of medicines and positive outcomes for patients and society, rather than simply the cost ‘input’ of an individual medicine,” the association says.

The association says that it supports universal health coverage (UHC) through strengthening the health system – ensuring the quality and integrity of the supply chain, improving health literacy, training health care workers, and exploring innovative approaches to patient access and financing health coverage.

It says medicines are just one component of UHC, which can only be achieved with complete healthcare infrastructure, adequate funding and a trained workforce.

For instance, in the last 10 years, Malaysia only spent 4.2%-4.5% of the GDP on healthcare, which is below the World Health Organisation’s recommended level of 5%-6%, it says.

The Malaysian Organisation of Pharmaceutical Industries says it welcomes the resolution which encourages disclosure of “manufacturers selling price” without mandating the disclosure of production costs.

“Production costs are influenced by many factors, including currency fluctuations, and contains commercially sensitive information which is confidential and proprietary.

“It is widely accepted in the commercial world that internal costing of a trader, seller or manufacturer is a closely guarded trade secret as it discloses the party’s profit margin and how the company does business,” says president Billy Urudra.

The organisation also supports the call for member states to improve public reporting of patent status information, developing and implementing policies that support national capabilities for local production, and rapid and timely adoption of generic and biosimilar products, he says.

Previously, the local industry had accepted the Guidelines on Good Pharmaceutical Trade Practice (GPTP) which provides for an official wholesale price list and formal announcement of price revisions or any change of trading terms from suppliers to customers to promote transparency, says Urudra.

The industry also participated in the Medicine Prices Monitoring report in 2017 and Consumer Price Guide by the Health Ministry which are both available to the public, he says.

It welcomes engagements and collaborations with the ministry, MyIPO (Intellectual Property Corporation of Malaysia) and relevant agencies to improve transparency of markets and ensure greater access to affordable drugs, he says.

What next?

Asked whether the WHO resolution will mean pharmaceutical companies will now have to declare costs during product registration or tender, Pharmaceutical Services Programme senior director Dr Ramli Zainal says that the resolution has only just been endorsed and every country will have to come up with its own mechanism and requirements for implementation.

Pointing out that the resolution asks member states to publicly share information on net prices of health products, Dr Ramli says, “This is a good start for better transparency of drug prices in future.

“With the resolution, we will know how drug prices are being set”.

Research institute Penang Institute in KL’s senior analyst Dr Lim Chee Han says that given budget constraints, the WHO resolution will strengthen the government’s position in setting appropriate indicative prices for drug procurement open tender bids.

This will enable the government to secure the best value from the bids and purchase more needed health products with the limited funds, he says.

The resolution will also help private patients to reduce their out-of-pockets expenditure on drugs, thus reducing the incidence of medical impoverishment after catastrophic illness, he says.

Lim says that the medicines that require the ministry to intervene and request transparency on are single-source originator medicines that are new in the market.

“This is where the market price data and information about the medicine are often lacking to determine the value, most likely subjected to unreasonable pricing,” he says.

In the current practice when calling for a tender, the ministry will compare prices with median prices of medicine in countries with a similar development status, says Lim.

“With this new resolution, all member states can urge pharmaceutical companies to declare the relevant information before accepting the list price set by the company.

“This can deter some companies from abusing their patent monopoly position to set unreasonably high benchmark/reference prices in different markets,” he says.

Moving ahead of the resolution, Thailand imposed a requirement for 353 private hospitals to display the prices of 3,000 drugs, as well as the fees for medical supplies and services, so that consumers can make better-informed decisions prior to receiving treatments, the Bangkok Post reported on Thursday.

The hospitals are required to display medicines that are widely used in emergency cases as part of the country’s Universal Coverage for Emergency Patients programme, which also requires that hospitals give patients an opportunity to buy drugs from pharmacies outside the hospital system by giving them prescriptions.

Watered down or not, countries can now move forward with the newly adopted resolution.

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