Two events this week step up the debate on rewarding drug innovation with patents versus the exorbitant monopoly pricing that narrows patients’ access to medicines.
The first is multinational Merck’s planned launch of its patented diabetes drug Januvia in India at almost one-fifth of its US price; the second, a major public health conference sponsored by the World Health Organization at Geneva.
What Merck is adopting is a market-based differential pricing strategy—where firms price a product differently in separated markets/segments based on variations in ability and willingness to pay. The model widens access to more, poorer patients while the firm can make more money than it could have with uniform pricing. In other words, a market solution that works for both buyer and seller. And it may well set a welcome trend.
As Mint had reported last month, Merck’s peers are mulling a similar strategy even within the country. The idea is to sell patented drugs at different prices for government supply, patient access schemes, non-profits, etc. That, though, would be tough to do because India lacks the ability to curb diversion of supplies meant for targeted poor into the open market.
Pharma MNCs have for several years priced drugs differently across rich and poor countries on a negotiated, institutionalized basis in response to wide criticism of their patented drug pricing. But with limited success —the segmentation need not hold fast and substantial parallel imports from lower-priced markets by profiteers into the richer markets have happened.
The question remains: Can differential pricing fully solve the problem of ensuring affordable access to new medicines for an expanding range of life-threatening diseases? Unlikely, as the scale is only growing, especially in the highly populated and not-so-rich countries marked by vast income inequalities. It still is competition from generic drugs that can lower prices enough to deal with all this.
Of course, we don’t deny intellectual property rights per se. But we do ask whether the often frivolous grant of monopoly rights coupled with such strategies in response to growing pressure from poorer countries and patient groups is the best way to ensure innovation is rewarded. The debate on that is only going to escalate now. And the Geneva meet aims at initiating some lasting solutions.
Can Merck’s strategy set the pace for a lasting solution to affordable access? Write to us at firstname.lastname@example.org