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Analysis Achieving Fair Pricing of Medicines

Defining the concept of fair pricing for medicines

BMJ 2020; 368 doi: https://doi.org/10.1136/bmj.l4726 (Published 13 January 2020) Cite this as: BMJ 2020;368:l4726

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  1. Suerie Moon, director of research1 2,
  2. Stephanie Mariat, technical officer3,
  3. Isao Kamae, professor4,
  4. Hanne Bak Pedersen, programme manager5
  1. 1Global Health Centre, Graduate Institute of International and Development Studies, Geneva, Switzerland
  2. 2Harvard T H Chan School of Public Health, Boston, USA
  3. 3World Health Organization, Geneva, Switzerland
  4. 4Graduate School of Public Policy, University of Tokyo, Japan
  1. 5Health Technologies and Pharmaceuticals, WHO Regional Office for Europe, Copenhagen, Denmark
  2. Correspondence to: S Moon suerie.moon{at}graduateinstitute.ch

Suerie Moon and colleagues consider what makes a fair price for both buyers and sellers

High and rising prices of medicines have attracted public concern from the poorest to richest countries. For example, of 1500 patient groups surveyed in 78 countries, only 9% believed that pharmaceutical companies were “excellent or good” at having “fair pricing policies”. This figure has hovered between 11% and 15% since the survey began in 2011.1 Politicians, experts, physicians, patients, and pharmaceutical executives have hotly debated whether medicines prices are fair, but without agreeing on what “fairness” means.

Medical, public health, and economic texts do not provide a standard definition of a fair price for medicines. Discussions of fair pricing of goods generally, however, provide some useful indications. These include the characteristics intrinsic to the product, market, and transaction at a point in time, and the perceptions of consumers and suppliers.23456 European competition law defines whether a price is excessive based on several factors, including production costs, profit margins, economic value, and prices of related goods.7

Drugs, biological agents, diagnostics, and other medical devices—which for brevity we call medicines—are not ordinary goods. The price of a medicine should allow for meeting the societal need for that product. Sellers often have strong price setting power, however, when need is greatest. For new medicines, monopoly power strengthens a seller’s position. These characteristics mean that government intervention is often needed to ensure a fair price.

Here we describe a conceptual framework for assessing whether a medicine’s price is fair. The framework was initially developed for the 2016 meeting of the WHO Advisory Group on Fair Pricing and revised after expert feedback and discussion. Increased clarity about a fair price, we argue, can help to achieve it.

Defining sellers and buyers

We divide those likely to have …

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