Essential Medicines: Why International Price Discrimination May Increasingly Be the Wrong Solution to a Global Drug Problem

Abstract

The theoretical appeal of international pharmaceutical price discrimination derives from its ability to place essential medicines within reach of patients in low-income countries, while simultaneously allowing industry to recoup its significant research and development costs by selling the same drugs at much higher prices in high-income countries. Unfortunately, there are a number of challenges to the international price discrimination of drugs that makes this approach unlikely to lead to desired results. These include the arbitrage challenges (Internet sales, pharmaceutical tourism, reference pricing, and an absence of patent protection), fairness and political challenges, and effectiveness limitations (even low prices are not low enough to enable access for a majority of poor people). This article explores these challenges, and concludes by contrasting the recent success of advance market commitments (AMCs).

Keywords: Essential Medicines, Global Health, Price Discrimination, Differential Pricing, WHO, advance market commitments, Internet Arbitrage, pharmaceutical tourism, drug patents