Medicine Pricing and Financing
Promoting affordable and fair pricing and effective financing
Equitable access to essential, high-quality and affordable essential medicines and other medical technologies depends on affordable and fair pricing and effective financing schemes. Promoting affordable and fair prices and cost-effective interventions is central to the achievement of universal health coverage.
An ‘affordable and fair’ price is one that can reasonably be funded by patients and health budgets and simultaneously sustains research and development, production and distribution within a country.
Medicine prices are not static
The ‘price’ of a medicine or a technology is generally a function of markets, and changes over time. Prices can be measured and evaluated as the price paid to the manufacturer, the price paid by the consumer or patient, or prices from suppliers. Typically, a new medicine is launched under patent and may have a high price until the patent expires and competition and/or generic products emerge. Prices of generic versions that are registered following patent expiry usually decrease rapidly, often by more than 90% compared to originator brand.
Many countries are unable to benefit from lower priced generics due to delays with market entry or lack of effective competition. However, public pressure and legal challenges decreased the price of several antiretroviral medicines in countries with high burdens of human immunodeficiency virus before patent expiry.
Flexibilities under the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement allow countries to gain access to medicines that in other countries may still be under patent, in the interest of public health.
High medicines prices: a growing challenge for health systems
Currently, high prices of many new medicines are challenging public health care systems or patients who have to pay for them out of pocket (as is the situation in most low- and middle-income countries). The recent approval of novel high-priced medicines for many conditions has prompted a new global debate on medicine costs and calls for a fair pricing model for both drug development and drug supply.
Strategies for measuring, monitoring and managing prices are essential for promoting access to medicines. There is not one single approach that suits all systems. But all systems need to promote equity in access to new products, by ensuring that medical advances are affordable and working with a viable pharmaceutical industry that responds to public health needs.
Almost all high-income countries with largely publicly funded medicines expenditures control and regulate medicines through a range of policy measures. These are also relevant for low- and middle-income countries, especially for systems working towards implementing universal health coverage. For more information, see WHO Guideline on Country Pharmaceutical Pricing Policies.