Tiered pricing allows pharmaceutical companies to maximize profit in all countries

Proposed Shake-up on Drug-Pricing at Global Fund Risks Higher Costs for Middle Income Countries and Donors

GENEVA/NEW YORK, DECEMBER 2, 2013—Ahead of the Global Fund replenishment conference in Washington, DC, this week, the international medical humanitarian organization Doctors Without Borders/Médecins Sans Frontières (MSF) has warned the Global Fund to Fight AIDS, Tuberculosis, and Malaria of the consequences of spearheading a new pricing initiative that could result in middle-income countries paying significantly higher prices for medicines to combat diseases including HIV and tuberculosis.

In a report to the Board of Directors ahead of this meeting, new Global Fund Executive Director Mark Dybul announced a new initiative and creation of a task force to "develop a framework on multiple pricing and royalty tiers for health commodities." The idea would cement tiered pricing—the practice of selling drugs to different countries at different prices depending on their socio-economic status—for medicines and vaccines. For the past 12 years, countries, or the Global Fund negotiating on behalf of several countries, have simply negotiated for the lowest price possible, without tying prices to a particular country's wealth.

Tiered pricing allows pharmaceutical companies to maximize profit in all countries, as prices are determined according to the highest a country is prepared to pay. With their emerging middle classes now firmly on the pharmaceutical industry’s radar, middle-income countries are often left paying excessively high prices. Even poorer countries can lose out, as tiered pricing does not reflect the true lowest price potential of drugs, and acts against generic competition, which tends to deliver a lower sustainable price over the long term.

While generic competition brought the price of first-line HIV drugs down by close to 99 percent from over US $10,000 per person per year a decade ago to $120 today, tiered pricing leaves middle-income countries paying as much as $740 per person per year for second-line drug lopinavir/ritonavir—over 60 percent more than what pharmaceutical company Abbott is charging low-income countries. The higher price is unsustainable for countries with large numbers of poor people living with HIV, such as Brazil.........


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