UAEM alumni Suerie Moon on the dangers of tiered pricing.
““Tiered pricing” refers to pharmaceutical companies setting prices on (usually widely-patented) medicines at levels below those charged in high-income markets. At first glance, it sounds reasonable enough – lower prices for poorer countries. But, as summarized in a 2011 study, evidence from the past ten years shows that tiered pricing is in practice a feeble access strategy. First, it is demonstrably less reliable and effective than generic competition in achieving affordable prices for quality medicines. A 2010 study found that PEPFAR saved $323 million from 2005-2008 by purchasing generics rather than tiered-priced HIV drugs. Analogous cost-savings estimates for the Global Fund are not available, but could easily be an order of magnitude higher. Generic competition, often enabled by governments using flexibilities in intellectual property rules, has been central to improving medicines affordability in developing countries.”
PLOS December 2013