THERE WAS A COMMON VIEW that preferential prices in developing counties should not be a factor in pricing in the developed countries. Differential pricing policies hinge critically on the political acceptability of lower prices in poor countries. Two aspects of this issue were analysed. One is the issue of price interdependency which results from the use of third country prices for the calculation of permissible domestic prices (usually referred to as reference pricing) and the other is the less tangible way in which prices in one country can affect the acceptability of prices in another country, for example as mediated through the political process.

With regard to reference pricing, one presentation showed that, in parts of the world, market separability is breaking down. Price regulation of pharmaceuticals is increasingly based, either formally or informally, on international price comparisons and these are increasingly including, either directly or indirectly, developing country prices. Figure 5 shows countries which either use international price comparisons in their negotiations with manufacturers, or which are countries of reference for price purposes.

Figure 5 - A “web” of formal international price comparison has developed, much of it over the last five years.

Source: Presentation by Dr. E. Schoonveld

At the workshop, it was not contested that developing country prices should not be used, either directly or indirectly, as references in developed county reference pricing systems. Indeed, the question was raised as to whether the more widespread use of differential pricing might not call for some kind of international agreement among developed countries to desist from such forms of reference pricing for the products involved.

A more difficult point in the workshop was how to forestall differential prices being exploited in the political process in developed countries. It was pointed out that such a difficulty had arisen a few years ago when concern had been expressed in the legislature of a major developed country about tiered prices for vaccines. Some felt that political leadership, advocacy efforts and public education would be essential. Part of this effort would need to be directed at reassuring public opinion that lower prices in poor countries do not mean higher prices in rich ones or a greater burden on national health budgets. Some felt that, without such a vigorous campaign and the understanding and support of industrialized country purchaser and consumer and other civil society organizations, any transparent scheme of lower prices for poor countries may be taken as setting price benchmarks for negotiations in better-off markets. The point was made that uncertainty regarding future pricing policy can itself be a considerable disincentive to investment in R&D.