TWN Info Service on Health Issues (Jan16/02)
28 January 2016
Third World Network

WHO: Is the Secretariat’s proposal on medicines shortage a windfall for big pharma?

Geneva, 28 January (K M Gopakumar) – A proposal by the World Health Organization secretariat to address shortage of medicines would be a windfall for big pharmaceutical companies.

The 138th session of the WHO Executive Board is to consider a Secretariat document titled “Addressing the global shortages of medicines, and the safety and accessibility of children’s medication” (EB138/41).

The document suggests the possibility of a multi-year advanced market commitment and a global minimum price as a response to a global shortage of medicine. The document states:

“At the global level, a set of essential medicines could be identified for which shortages have been reported or there exists a risk of shortages, and an international agreement about ensuring continuity of manufacturing and supply could be investigated … Questions that a general international agreement would have to resolve include: could a multi-year global advance purchase commitment be worked out? Would an agreed global minimum price that is commercially attractive help to keep a medicine on the market? How would such a price be set?”

Often big pharmaceutical companies stand to benefit from global level advanced market commitments and it may affect competition in the market. Further, global advanced market commitments require high level regulatory compliance and often it helps big pharma, including big generic companies.

The document contains two different issues viz. the global shortages of medicines and the safety and accessibility of children’s medication. The part on shortage of medicines provides an introduction, consequences of shortage, country approaches to shortage and new strategies on shortage of medicine. It also suggests a potential approach to prevent and manage shortages of essential medicines.

The Secretariat has not given a satisfactory explanation on shortage of medicines. It simply states: “The reasons for shortages have been investigated in many studies and in several countries, and the leading possible causes include: difficulties in acquiring raw materials, manufacturing problems, barriers to competition, business decisions, the impact of new technologies, expensive medicines, and fragmented markets”.

However, the document has not provided any citations of the studies.

Further, the document also cites the following three reasons for shortage of medicine: “… there is poor availability and quality of data on actual demand; inadequate management practices in procurement and the supply chain, combined with large tender contracts that do not sufficiently define quality standards but whose sole emphasis is on obtaining the lowest prices; and too small profit margins for manufacturers – all these factors may lead to shortages”.

The document does not provide any detailed list of instances of such shortages.

The document recognises the role of generic companies in lowering prices and increasing affordability. However, without giving any concrete examples, it warns that: “Too low prices, however, may drive manufacturers out of the market, and higher prices of alternative newer products may result in them being preferentially supplied, with a decline in market for vital but cheaper medicines”.

The document also conflates medicines shortages (the non-availability or lack of supply) with stock outs (the non-availability of medicines in health care facilities irrespective of the availability of medicine in the market). It states: “Continuing to react to stockouts on a case-by-case basis, especially those caused by market dynamics, will severely compromise the ability to achieve equitable access to essential medicines; more active approaches to shaping the market for essential medicines on a global scale will be needed”.

According to an observer, the shortage of medicines is one of the reasons for stock outs but all stock outs cannot be attributed to shortage of medicines.

Further, without providing any evidence yet again, the document states that shortages of medicines would increase the incidence of circulation of substandard/spurious/falsely labelled/ falsified and counterfeit (SSFFC) medicines.

Instead of insulating the availability of medicines from market dynamics, the solutions suggested by the Secretariat such as advanced market commitments and global minimum price would eliminate competition and makes the availability of medicines completely subservient to market dynamics.

The Secretariat proposed the following actions for a potential systemic approach to prevent and manage shortage of medicine.

·         application of a globalized notification system and response mechanisms;

·         proper assessment to define products at risk;

·         global agreement on actions to diminish specific shortages;

·         expansion of regulatory collaboration on essential medicines susceptible to shortages;

·         centralized negotiation to preserve essential medicines susceptible to shortages including definition of minimum volume and fair price;

·         analysis and understanding of costs of research and development for medicines for uncommon diseases in children;

·         expand the activities of the Paediatric medicines Regulators Network to promote appropriate legislation, regulatory strategies and capacity, and monitoring of medicines in children;

·         continue to promote ethical and appropriate clinical trials in children of all age groups;

·         work with partners to ensure appropriate demand for medicines for children, including medicines for uncommon diseases.

An observer described the proposed global agreement on actions to diminish specific shortage as “a camouflage term for advanced market commitments”.

The Secretariat proposed that the Executive Board “note” the document. Even though there was corridor talk of a resolution on the shortage of medicines, till today no draft resolution on the subject has been proposed. However, Member States are negotiating a draft resolution on medicines for children titled “Promoting the safety and accessibility of children’s medication”, proposed by China and Thailand.

In the absence of a resolution on shortages of medicines, explicit objection from Member States is required to prevent the Secretariat from proceeding with some of the problematic suggestions on future work, such as a global agreement on actions to diminish specific shortages as set out in its document.

Third World Network learned that the original proposal on shortages of medicines was proposed by the United States of America and South Africa. It proposed several potential measures to address the issue, including the lifting of price controls in force in many WHO Member States. The USA proposal stated: “More importantly long term solutions to these shortages must be sought. These could include dialogue with manufacturers, changes to policy related to numerous critical points such as possible lifting of price controls, exploration of pooled procurement or other approaches to increase production incentives where appropriate, modifications to procurement practices and developing sustainable local manufacturing capacity that can reliably step in and respond to specific needs where global producers have failed to do so”.

This proposal also proposed decision points as follows: “Discussion at the (Executive Board) with a view to develop decision points for action, recognizing the urgency of this emerging challenge to universal health coverage, linked to current work streams, and highlighting the need for concerted action in this regard, both by Member States and WHO”.  The Secretariat’s document is silent on this proposal, seeking Member States to only take note of the document. Interestingly, the USA proposal suggests “modifications to procurement practices and developing sustainable local manufacturing capacity that can reliably step in and respond to specific needs where global producers have failed to do so”. However, the Secretariat’s document is silent on the suggestion of local production.

Similarly, the Secretariat’s document is also silent on the two-day Consultation on Managing Global Stock-Outs of Essential Medicines held on 8-9 December 2015. The concept note of the consultation suggested the same solution as contained in the Secretariat’s document. The concept note proposed: “Whether it is possible to identify a core set of medicines that there is international agreement about ‘preserving’ could be investigated. For example, it is hard to imagine what would happen to the treatment of many oncological and immunological conditions without methotrexate – yet this is a product that has been reported as in short supply repeatedly. Would an agreed global minimum price that is commercially attractive help keep it on the market? How would such a price be set?”

One observer remarked with concern that the Secretariat’s document based on the USA proposal shows that big pharma is making the next move to grab the global generic market.