The paradox of opaque drug prices: why governments do the opposite of what they say | Health

Countries that make up the Organization for Economic Co-operation and Development (OECD), an organization of 38 of the world’s most economically developed countries, say they are pushing for greater international transparency when it comes to procurement contracts for innovative medicines. The governments of these countries even admit that the current lack of transparency and proliferation of privacy regulations is “undermining the accountability” of government agencies. This undermines the sustainability of health systems and weakens states’ bargaining power with big pharmaceutical companies.

However, according to a report recently published by the OECD, when it comes to critical situations, it is governments who choose these kinds of unclear agreements. This paradox is well illustrated by the following data: all countries want more transparency, and most want to know the prices other governments pay, but “only seven countries express interest in sharing prices.” There are several reasons for this reluctance, but the main one is that by signing secret clauses demanded by pharmaceutical companies, governments are allowed to “obtain lower prices.”

Mikel Serra, a researcher at the University of Zurich specializing in health economics, explains: “(The OECD report) is a good quality paper showing the contradictions that exist in drug procurement policies. It can be used as an example of the so-called “tragedy of the commons,” in which all participants ultimately suffer by putting their private interests above a common approach that would allow them to obtain better overall results.”

The report is based on two key and apparently contradictory ideas. First, “pharmaceutical markets are increasingly characterized by price opacity.” Although generic drug procurement is much more transparent, innovator drugs actually have two prices: one is usually published – the “official” or “list” price, and the other is the real or “net” price, which is nationwide. governments ultimately pay, and it is almost always kept secret. The report warns that “actual transaction prices paid by buyers are increasingly diverging from official list prices.”

The second starting point is that “transparency has received increasing attention within pharmaceutical policy in recent years.” In response to public pressure to increase international price transparency, “the 72nd World Health Assembly adopted a resolution in 2019.” This resolution “encourages countries to exchange information on prices.”

However, through this study and other previous work, the OECD has seen countries’ desire to do so face almost insurmountable obstacles. First, there are numerous restrictions in national law that limit public information that is considered confidential. Added to this is a lack of consensus on how far transparency should go—what type of data it would affect, whether it should be made entirely public or available only to other governments—and a lack of knowledge (even fear) about the consequences this move might have on transaction prices.

In fact, the report itself highlights that there are already “more than 30 information-sharing initiatives” among OECD countries, including the European Medicines Price Database (EURIPID). The authors note, however, that in all cases these projects exclude the most sensitive information—prices reported are usually official, not real—and “confidentiality of net drug prices remains the norm internationally.”

Study of 43 countries

Faced with this reality, the aim of the OECD report is to help “advance the policy debate” as well as analyze the “feasibility” of implementing systems to share more information. To do this, the authors sent a survey to 43 OECD and non-OECD countries, of which 34 responded fully or partially to the survey.

The most notable findings show that while “20 countries are required (by their national law) to publish list prices, they often face legal and contractual restrictions that prevent them from sharing net price information.” Spain is an example of a high-income country that publishes these prices in accordance with resolutions of the Interministerial Commission on Drug Prices, although it also does not report prices actually paid due to confidentiality provisions agreed with pharmaceutical companies.

All countries surveyed are “interested in receiving information about the prices their peers pay.” Specifically, 24 countries state that this interest relates to net prices, but only seven are willing to share this information.

“Countries have different views on the possible consequences of disclosing net price information, whether publicly or on a closed network,” the article continues. Most believe that “sharing net prices will increase or leave unchanged” the bargaining power of national governments. However, there is great disagreement about how this will affect prices. Of the 24 countries that responded to this question, seven (the document does not specify which) believe they will “fall a little” and eight believe they will remain unchanged. Another seven believe they will “go up a little,” while another two think prices will “go up a lot.”

There is still controversy when it comes to assessing whether greater transparency could delay a given country’s access to new treatments. Eight countries believe that the publication of net prices will significantly or slightly delay their access to them. Eight believe that there will be no changes, and seven believe that, on the contrary, publishing prices will shorten the time frame. Finally, the report states: “18 countries are interested in participating in a pilot mechanism for sharing net price information with other countries.”

José María Gimeno, a professor of administrative law at the University of Zaragoza in Spain, said the study highlights the uniqueness of the market for innovative drugs: “There are many drugs that have no competition because of patents. Thus, the scope for price increases is limited, and governments’ priority is to ensure that people have access to them at prices they can afford. And in this regard, a certain degree of confidentiality may be useful.” According to this expert, Spain is a good example of this, since “the opacity of contracts allows (the federal government) to obtain better prices than the Nordic countries.”

According to Juan Oliva, a professor of health economics at the University of Castilla La Mancha, a public Spanish institution, the problem with this situation is that no one (except the pharmaceutical companies themselves) can be sure of what each country is paying. “It is often said that Spain benefits from this system, that this kind of secret negotiation allows it to claim that it is a big country, with a good network of hospitals and research, in order to achieve lower prices. But we don’t really know because none of this information is released. And several studies by independent organizations have actually observed a convergence between the actual prices countries pay,” he says.

The majority of experts surveyed generally agree, pointing to four problems in the market for innovative drugs. The first is efficiency. “Economic theory states that markets with multiple buyers and sellers, in which everyone has access to relevant information, are more efficient. However, in this case there is only one seller due to the monopoly provided by patents. And (this seller) is the only one who knows how much each country pays. As a result, the market turned out to be very inefficient,” complains Miquel Serra.

Regarding this first point, the study and the experts involved point to a second issue: the sustainability of health systems. In an inefficient market, resources are typically not allocated where they would produce better outcomes in terms of patient health. In the long term, this could jeopardize the future of those who need treatment.

The third shortcoming is the quality of democracy, or as the report puts it, “accountability.” This issue was already addressed in a 2019 WHO resolution that advocated greater transparency and was supported by virtually all OECD countries. “Citizens have a fundamental right to know the final destination of the resources they support with their taxes,” argues Jesús Lizcano, professor of financial economics and accounting at the Autonomous University of Madrid and former president of Transparency International in Spain.

Finally, some warn that a lack of transparency can also harm patient health and safety. “The lack of transparency is not just limited to prices, but also extends to clinical trials, real-world efficacy and safety data. Ultimately, we are not confident that we have all the information or the most up-to-date information—which only pharmaceutical companies have—about what the best treatment might be for a given patient,” concludes Adrian Alonso, director of Research and Policy Advocacy at the Law Foundation. to your health.”

The Madrid-based civil society organization has long submitted access to information requests to the Spanish Ministry of Health regarding the prices of four prescription drugs: Kymriah, Veklury, Zolgensma and Tahzyro. All cases resulted in lengthy legal proceedings due to opposition from pharmaceutical companies as well as the ministry itself. They don’t want drug prices to be made public.

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