Trade, foreign policy, diplomacy and health

Access to Medicines

Expenditure on medicines accounts for a major proportion of health costs in developing countries. This means that access to treatment is heavily dependent on the availability of affordable medicines. Although trade in medicines is increasing rapidly, most of it takes place between wealthy countries, with developing countries accounting for just 17% of imports and 6% of exports. It is estimated that one-third of the developing world's people are unable to receive or purchase essential medicines on a regular basis. The provision of access to medicines depends on four factors:

  • Rational selection and use of medicines
  • Affordable prices
  • Sustainable financing
  • Reliable health and supply systems.

Of these, the second factor, affordable prices, is most affected by globalization. Strategies to increase affordability of medicines include:

  • Reducing taxes, tariffs and margins, and developing pricing policies.
  • Promoting competition for multi-source products.
  • Generic medicines including generic substitution.
  • Good procurement practices.
  • Equity pricing and competition for single-source products. Equity pricing policies ensure that, from the point of view of the community and the individual, the price of a drug is fair, equitable, and affordable. Those in favour of equity pricing argue that the poor should pay less for essential medicines.
  • Differential pricing (sometimes also called tiered pricing). The sale of the same good to different buyers at different prices, with the aim of improving the affordability of drugs while generating revenue for the pharmaceutical industry. Differential pricing has reduced the cost of many anti-retroviral HIV/AIDS therapies by up to 90% in low-income countries, although they continue to be sold at market price in developed countries. There are concerns that differential pricing will result in product diversion, with cheaper drugs leaking back into wealthy countries.
  • Price information and therapeutic substitution.
  • Promotion of competition, use of safeguards compatible with the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), such as parallel importation and compulsory licensing.

Parallel imports. Goods that are imported into a country without the authorization of the intellectual property right holder for that country, but after the goods have been legally placed on sale in another country. By allowing the reintroduction of price competition, parallel importation and compulsory licensing both provide safeguards against a patent holder charging excessively high prices in a particular market. They are recognized as TRIPS public health safeguards because they enhance the affordability and availability of medicines.

Compulsory licensing. Governments may issue a licence to allow the use of an invention (e.g. a patented drug) without the consent of the patent holder on grounds of public interest (e.g. national emergency, anti-competitive practices or for public, non-commercial use).

Patent protection is one incentive for the research and development of new drugs. However, there is also concern that the TRIPS agreement, which grants extensive patent rights to pharmaceutical companies, will prevent developing countries from producing or buying generic drugs that usually cost much less than brand name drugs. The United Nations Development Programme (UNDP) has questioned the compatibility of the TRIPS agreement with human rights law because of its impact on access to essential drugs in low-income countries.

WHO has recently added several anti-retrovirals to the Model List of Essential Drugs, increasing arguments that they should be available at reduced price.

The terms “differential”, “tiered”, “preferential”, “discounted pricing”, and “market segmentation” are also used to describe the practice of charging lower prices in different markets. They do not necessarily result in affordability or equitable access to a product.

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