Experts Lounge
The American pricing system different from many others
In the case of the UK , the Netherlands , and Spain , the government through a regulatory framework negotiates with pharmaceutical manufacturers about how much they will pay .
Each country uses a different process to balance drug companies ’ pursuit of profit with the public ’ s interest in making useful treatments widely available and affordable .
This process takes into account the therapeutic value offered by the drug at the cost to which this product is proposed to be offered by the manufacturer , providing a uniform scale of measure in terms of cost-effectiveness .
UK , for instance , runs its process through the National Institute for Clinical Excellence ( NICE ). The role of NICE is to determine at what point a new treatment is cost-effective ; it conducts many analyses each year , on drugs and surgeries and scanning devices . Through its findings , it advises manufacturers the price the government is willing to pay for the product or service .
... in Kenya and many other African countries , there are no legal or regulatory provisions affecting the pricing of medicines ...
In the US , there is no such negotiation process ; in fact , the Federal law bars Medicare , the country ’ s largest insurance plan , from negotiating any discounts with pharmaceutical manufacturers . For US , once a pharmaceutical company sets its price , Medicare is required to accept it .
In Kenya and many other African countries , there are no legal or regulatory provisions affecting the pricing of medicines .
In this regard manufacturers are free to vary their prices subject to what the market can take up . With the deepening and expanding scope of coverage by NHIF as well as growth of private health insurance schemes , pharmaceutical companies may be tempted to increase prices , especially for products still under patent protection , in order to exploit the opportunity to grow revenues . The US case must be seen as a warning in this regard .
Take homes from the US
1 . While lack of life-saving medicines has been a feature in resource – constrained settings for many years , the recent trend of escalating prices of pharmaceuticals has started to hinder access in industrialised countries too .
2 . Monopolies increases prices and limit access . Monopolies caused by patents on new medicines or where there is only a single producer for an older off-patent neglected medicines , which is now used as specialty medicine , are the most important reasons for high prices and lack of affordability and access to essential medicines .
3 . In markets which lack regulatory mechanisms for price determination , the price of medicines is neither related to research and development nor to production costs . Under these circumstances , pricing of medicines reflects what the unregulated market can afford to take up .
4 . Lack of access to medicines include the extent essential drugs are not available and or not affordable for patients who need them . For instance , pharmaceutical companies consider orphaned diseases not to be viable commercially owing to the small number of potential users ; in the event a company opts to produce such medicines which target narrow markets , they would price them very high . This is one of the factors driving the escalating costs in many markets .
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