Alternative Models Of Differential Pricing For Medicines

author: Tomas J. Philipson, Harris School of Public Policy, University of Chicago
author: David Meeker, Genzyme Corporation
author: Una Ryan, Waltham Technologies, Inc.
author: Patricia M. Danzon, Wharton School, University of Pennsylvania
author: Hannah E. Kettler, The Bill and Melinda Gates Foundation
published: March 20, 2013,   recorded: August 2004,   views: 2761
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Each speaker on this panel proposes a unique approach to the problem of making medicines universally affordable. Dr. David Meeker works in the area of rare diseases. Genzyme’s hormone replacement therapy for Gaucher disease, which affects roughly 30 thousand globally, costs $150k to $200k per year. For patients in nations with poor health care systems, Genzyme discounts the medicine steeply. “Don’t say free drugs,” says Meeker. “We’ll help individual patients as best we can but we’re going to work on developing a health care system in that country that will eventually be able to take over.”

At Avant Immunotherapeutics, Una Ryan’s company tackles new vaccines for travelers, bio-defense, global health and food safety uses. “We’re trying to making vaccines people will actually take: safe, effective, oral, single dose, rapid protection and no refrigeration.” There are enormous development costs involved, which are hard for a small company to shoulder, she says. Perhaps “all developed nations should pay their fair share for pharma R&D…and for developing countries’ drugs,” indexing drug prices to each nation’s GDP.

Patricia Danzon suggests that drug manufacturers sell “products to wholesalers at uniform prices worldwide, then negotiate confidential rebates with final purchasers... This way, the lower prices offered to lower income countries won’t spill over to higher income countries.” Hannah Kettler describes the Gates Foundation’s efforts to invest funds in public-private partnerships to reduce pharmaceutical RD costs. The foundation is also trying to build a fund to cover the costs of vaccinating in developing countries. Our expectation, she says, “is that if we pay the higher prices now, supply will expand and over time the price of vaccines will come down.”

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