12:33 PM May 22, 1996

HEALTH: NGOS SLATE DRUG PRICING POLICIES OF TNCS

Geneva 22 May (Chakravarthi Raghavan) -- A group of non-governmental organizations involved in the health sector called upon the World Health Assembly (now in progress here) and its member-states to take actions to effectively curb unethical promotion of pharmaceuticals, high prices charted for drugs in poorer countries.

The NGOs representing churches, consumers organizations and the Health Action International, were also critical of "donations" of drugs to poorer countries when the drugs were not relevant, or arrived at destinations unsorted and poorly labelled and often also after their expiry dates.

On this last problem, the WHO, the UNHCR, ICRC as well as nongovernmental organizations like Medicins sans Frontiers, World Council of Churches and OXFAM have evolved guidelines for drug donations.

The NGOs commended this, but stressed the need for their prompt acceptance and observance by all concerned.

Barbara Mintzes of Health Action International (HAI-Europe) and Dr. Eva Ombaka, Pharmaceutical advisor of the WCC, cited as examples of inappropriate donations threatening people's health, causing environmental protection and waste, the cases of:

* Mostar in Bosnia where a huge storehouse was holding 340 tons of donated drugs that could not be used. The drugs had been supplied by the EU member countries and the mayor of Mostar complained that the EU members were "dumping" their expired drugs and that such action was building up a serious health hazard;

* Calcutta where, in April 1996, a US-based NGO airlifted $10.5 million worth of medicines for the poor of which only nine of the 57 types of medicines were 'essential drugs', another seven were 'borderline' and 41 or 95% by value of the consignment were non-essential drugs. Most of the drugs had expired dates or were due to expire within a year;

Similar cases in other east European countries, in Africa -- ranging from Eritrea to Rwanda -- where unwanted, unlabelled and expired drugs arrived and sometimes used resulting in complications.

A WHO official who was present at the NGO briefing explained that there was a view that in emergencies any drug was better than no drug, but this often resulted in dangerous drugs being donated and sent.

Another NGO, Mr. K. Balasubramaniam, of the Asia Pacific regional office (in Penang, Malaysia) of the Consumers International, cited data showing the very large variation in prices charged by leading transnational pharmaceuticals for essential drugs across Asia, Europe and North America, and said the only element seemed to be the practice of the TNCs to charge what they thought the market could bear and they could get away with.

The same drug, Zantac, cost 33 US cents in Bangladesh, three in India and Nepal, 150 in Indonesia, 86 in Malaysia, 39 in Pakistan, 95 in the Philippines, 63 in Sri Lanka, 74-132 cents in Thailand, 20 in Australia, 81 in Canada, 128 in belgium, 99 in France, 149 in Germany, 284 in Switzerland, 73 in the UK, 169 in the USA, 47 in Colombia, 57 in Mexico and 87 in Zimbabwe.

Such a wide variation is not explainable except in terms of the drug pricing policies of the countries, the regime in respect of parallel imports and the transfer pricing practices of the TNCs who supply different markets through their subsidiaries, Balasubramaniam said.

The Uruguay Round agreement on TRIPs, requiring product as well as process patents and monopoly importing rights for the patentee would increase the prices of pharmaceuticals and the costs of drugs in all the developing world and the poorer countries, Balasubramaniam charged and said that the WHO officials with whom the NGOs had discussed the issue shared their concerns.

Part of the current low prices of several essential drugs in India, he noted, was due to its current IPR policy of granting process, but not product patents in this area, but this would have to change under US pressure and the TRIPs agreement, he said.

Some countries like India which had price controls and, hitherto, had intellectual property protection regimes that granted protection to processes and not products, had very low prices while the prices were high even in some neighbouring countries.

There was considerable amount of transfer pricing practices, Balasubramaniam said, citing their survey in Pakistan which showed that for some drugs the difference between the international price and the transfer price charged by the local subsidiaries of drugs bought from their principals ranged from a 163% to a 7044%. The TNCs imported the bulk drug used in reformulation and retailing by their local subsidiaries.

Sandoz charged per kg the transfer price of $59603, as against the international price of $22670 for pizotfen; a transfer price of $9591 per kg of Pindolol against an international price of $1805; and $65084 for Bromocriptin as against an international price of $19737. Ciba-Geigy charged for Xylometazline a price of $11092 per kg as against an international price of $320; Pfizer charged for Piroxicam a transfer price of $8930 per kg as against an international price of $125.

In Bangladesh, where similar high transfer pricing was the practice, governmental actions in setting drug prices had brought down by 1991 the bulk prices by a range of 70 to 95 percent from those in 1981, he said.

Another problem was that while in Europe and North America, much of the price of drugs came from public health schemes or paid by insurance, in the developing world the consumers had to pay from their pockets, making the high costs even more inequitous.

Another factor for the high prices for drugs in developing countries, Balasubramaniam said was due to the fact that in many of these countries parallel imports were either prohibited or not made use of.

Whereas in Europe, the EC Commission was cracking down on pharmaceutical companies that tried to discourage or block parallel imports, in Asia these were disallowed. He cited this as a reason for the high prices of same drugs in Malaysia, Indonesia and the Philippines as compared to India and some others.

The NGOs asked the WHO and the Health Assembly to undertake a study of the elements and factors that went into the pricing of pharmaceuticals. They called for a WHO-led drive for proper trade regulations to deal with inappropriate and unethical drug promotion and assist developing countries to formulate and adopt proper essential drugs policies and the production and distribution of generic drugs.