#2011-054 Global Framework for differential pricing of pharmaceuticals
Rutger Daems, Edith Maes & Shyama V. Ramani
Global Framework for differential pricing of pharmaceuticals
This paper examines how equitable, differentiated pricing can improve
access to and affordability of medicines, particularly in low- and
middle-income countries, and how governments and supranational agencies
can create an environment that enables pharmaceutical companies to
operate a sustainable business model benefitting all key stakeholders.
Using value-based pricing techniques in combination with a non-linear
function that captures national income parameters as defined in the
Human Development Index together with health system variables, the
authors have developed an integrated pricing policy framework. The
degree to which the proposed framework offers a sustainable solution to
the problem of access to medicines depends on: the economic development
status of a country, the value of a particular medicine to its
therapeutic class and the incidence of the relevant disease, and the
extent to which market segmentation can be applied. This paper further
argues that for equitable, differential pricing to succeed, policymakers
and lawmakers must design and implement a regulatory and legislative
framework that prevents leakage through parallel trade and price
referencing between affluent and poorer segments when discounts are
Key words: globalization, pharmaceuticals, public policy, corporate strategy, pricing, access, equity.
JEL: D430, L110, L650.