The Drug Pricing Conundrum: Why Transparency Reforms Are Necessary to Make Healthcare Accessible

The spiralling costs of monopoly medicines is a universal problem that is not only confined to India. Although governments agree that medicines should be made more affordable, they are reluctant to initiate and implement policies against the abusive patenting, pricing and business practices of pharmaceutical corporations due to their immense lobbying influence.

Therefore reforms to make medicines more affordable are thus, glacially slow. Transparency reforms, however, may just change the status quo.

In May this year, US President Donald Trump signed an executive order to improve price transparency in American healthcare. The order — though flawed— is a clear sign that the desperate need to rein in healthcare costs has dawned on the US government and lawmakers after decades of backing biopharmaceutical industry’s over public interest.

Meanwhile, people in India, which increasingly relies on the private healthcare system for treatment, medicines priced under monopoly are often out of reach. The Indian government too cannot afford to be complacent about drug prices and must start addressing the information asymmetry to help regulate drug prices fairly and responsibly and ensure access to life-saving medicines.

While an intellectual property system that includes safeguards for early introduction of generics does reap price-lowering benefits for India, making transparency reforms part of its agenda will spotlight the mark-ups, production costs and the actual R&D investments by companies vis-à-vis that is underwritten by tax subsidies.

President Trump’s order came nearly a month after the 72nd World Health Assembly (WHA) in Geneva adopted a resolution on “Improving the Transparency of Markets for Drugs, Vaccines and other Health-related Technologies”. Tabled by Italy, a high-income country, which has struggled to address the exorbitant prices of direct-acting antivirals for hepatitis C in its national health budget, the resolution generated marathon negotiation sessions with historic mobilisation of civil society and governments with 19 countries, including India, co-sponsoring it.

The WHA resolution empowers governments to ask for more than just the final price of the product. It advises countries to collect and analyse information on economic data across the value chain for all health products. The resolution’s relevance was underlined when news trickled in during the negotiations that the Swiss pharmaceutical corporation, Novartis, was pricing its new gene therapy for spinal muscular atrophy (SMA)—a rare genetic disorder among children—at a staggering US$ 2.1 million (nearly Rs.14 crore).

This is, however, not an isolated instance. The exorbitant pricing of medicines has been a systemic problem. In 2013, a hundred cancer researchers and doctors published a powerful commentary in Blood, the journal of the American Society of Hematology, denouncing cancer drug prices as unsustainable and calling for health policy reforms to lower the prices of cancer drugs so that more patients can afford them. One of these was the chronic myeloid leukaemia drug, imatinib, patented and marketed by Novartis at over a 106,000 USD a year, which costs 790 USD in India from a generic manufacturer.

Similarly, Gilead Sciences launched an oral drug, Sofosbuvir, in 2014 to treat Hepatitis C (HCV) which it priced at an outrageous USD 84,000 for a single three-month treatment course (roughly translating to USD 1000 a pill). The exorbitant price prompted HCV patients and treatment activists to challenge the US corporations’ patents and pricing system across the world — from the European Union to China.

Over the last year, access to insulin analogues for Type 1 (T1) diabetes has become a human rights issue in the US. With three major pharmaceutical corporations controlling the market for this life-saving treatment, the cost for one vial of insulin is in the 300 USD range. For millions living with type 1 diabetes, access to insulin is literally a matter of life and death.

Closer home, India has a growing burden of diabetes and cancer for which pharmaceutical products are the most expensive. Patients are dependent on out of pocket expenditures since the government is yet to focus on providing universal access to diagnostics and treatment for non-communicable diseases.

The printed price for one 440 mg. vial of Trastuzumab — a biological medicine for breast cancer — is an exorbitant Rs 58,820 while hospitals treating women with breast cancer typically charge anything between Rs 40,000 to Rs 58,000 per vial. However, distributors supply these medicines to the hospitals at prices as low as Rs 20,000. The kickbacks and trade margins are shrouded in secrecy and there is an urgent need for transparency and government regulation to monitor such agreements between pharmaceutical companies and hospitals as a crucial public health safeguard.

Additionally, the prices of patented cancer drugs in India bear no connection to their cost of production. For example, patented dasatinib costs over Rs.18 lakhs per patient per year in India, and yet, the drug can be synthesised at low costs and estimated generic price is as low as Rs. 11,000 per patient per year.

There is no doubt that transparency reforms in India will be crucial to rein in the pharmaceutical industry and to compel it to emerge from its shroud of secrecy on mark-ups, kickbacks to prescribers, production costs, clinical trial data, how much R&D investment is really covered by companies, and how much is underwritten by subsidies and taxpayers. Transparency in the pricing of medicines is a crucial policy measure to ensure patients and governments get affordable prices for life-saving drugs.

(The authors work with Doctors Without Borders, an international humanitarian organisation that delivers emergency aid to people in war-torn regions. Views expressed are personal.) – News 18