Access to medicines: the role of procurement policies

Dr Margaret Chan
Director-General of the World Health Organization

Opening remarks on Creating synergies between intellectual property rights and public health, delivered at a joint technical symposium by WHO, WIPO and WTO on Access to Medicines: lessons from procurement practices
Geneva, Switzerland

16 July 2010

Mr Pascal Lamy, Dr Francis Gurry, colleagues in health and development, ladies and gentlemen,

I welcome this opportunity to jointly explore how drug procurement practices, intellectual property policies, competition policies, and ultimately prices can improve access to medicines.

Of all the issues discussed at WHO governing bodies, access to medicines consistently sparks the most heated, sometimes divisive, and potentially explosive debates. This is all the more so since these discussions almost inevitably turn to questions of prices, patents, intellectual property protection, and competition.

The debates are often clouded by suspicions: suspicions that the rules governing international trade in pharmaceutical products are rigged to favour the rich and powerful; that economic interests will trump health concerns; that medicines are being treated just like any other commodity, despite their health-promoting and life-saving roles; and that the social context is forgotten when the rights of patent holders are more important than the right to health.

The debates are further complicated by deep mistrust. Countries unskilled in trade negotiations fear they will be tricked or duped. Countries seeking to use the flexibilities under TRIPS fear they will be punished by trade sanctions imposed in retaliation. Countries fear that pharmaceutical companies will use unfair tactics, really, every trick in the book, to reduce competition from lower-priced generics.

I understand these suspicions and expressions of mistrust. It is my job to understand them. Taking these concerns on board is part of the quest for consensus on ways to make public health policies, and health outcomes, more equitable.

In a sense, there is nothing new about the main focus of these debates. Improving access to medicines has been a priority for WHO since the Organization began its work in 1948. WHO model lists of essential medicines date back to 1977.

But while the problem of access to medicines is nothing new, the context today is strikingly different than in the past. A quest for greater fairness, in income levels, in opportunities, in access to medicines and health services, has become a strategy for coping with the unique pressures of a globalizing world.

In a world of radically increased interdependence, lives and opportunities, including prospects for better health, are governed by international systems that create benefits, yet have no rules that guarantee fair distribution of these benefits.

The world has changed, and not at all for the better in the roughly one billion people who live on the margins of survival. The gaps in health outcomes are greater today than at any time in recent history. A person in a wealthy country can expect to live more than twice as long as someone from a poor country.

A woman in sub-Saharan Africa faces a risk of dying during pregnancy and childbirth that is more than 100 times greater than a woman living in Europe. These are largely preventable deaths, in which lack of access to essential medicines plays a major role.

This is not a healthy situation, also in terms of social cohesion and stability.

Ladies and gentlemen,

I welcome this opportunity to collaborate with WTO and WIPO as we jointly consider policies for drug procurement, pricing, and intellectual property from a public health perspective. Access to medicines is an appropriate, and a challenging, focus for our joint efforts, which I know will be continuing.

As we seek a common understanding of challenges and potential solutions, let me set out a few big-picture issues and facts. These help explain why access to medicines is such an emotive topic, especially when viewed from the perspective of the developing world.

We face two bottom-line realities. First, the essence of the ethical argument is straightforward. People should not be denied access to life-saving or health-promoting medicines for unfair reasons, including those with economic causes.

Yet the pharmaceutical industry operates in response to economic factors and market forces. This is a profit-driven industry, and not a philanthropist, not a humanitarian enterprise. What incentives does this industry have to fix prices according to their affordability among the poor?

Second, price has a decisive impact on access to medicines. Access is influenced by many other factors, like remoteness, lack of staff, poor procurement practices and delivery systems, and the absence of health insurance schemes. But price can be an absolute barrier to access for the poor. For the poor, access and affordability are usually one and the same.

WHO learned a great deal during the negotiations that eventually led to adoption of the Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property. Some of the tensions between the motives of a profit-driven industry and ethically-driven public health can be circumvented, if not entirely overcome.

Better procurement practices is an area where WHO and UNICEF have extensive experience and some lessons to offer, as you will be hearing later. Government procurement practices have an impact on both the availability and the price of medicines, and are a good entry point for exploring ways to make medicines more accessible.

Let me illustrate the challenge, and the importance of addressing it, with a few facts and figures.

Up to 90% of the population in developing countries purchase medicines through out-of-pocket payments. Medicines account for the second greatest household expenditure, right behind food. As I said, price matters.

The organization of a country’s pharmaceutical sector, its capacity for efficient and impartial procurement, quality control, regulation, and enforcement, affect the availability and price of medicines.

Efficient distribution is also important. When facilities in the public sector experience stock-outs, patients turn to the private sector, where the prices of medicines and the quality of care are often beyond regulatory control.

Surveys conducted in 30 low-income countries found that generic medicines, obtained in the private sector, cost more than 6 times more than their international reference price.

Prices for both originator and generic medicines, in both the public and private sectors, are substantially much lower if procurement and distribution procedures were more efficient, corruption-free and mark-ups were reasonable.

These are some of the problems that can be addressed through more efficient procurement policies. This is a joint opportunity that we are wise to seize.

Thank you.