January 19, 2021
Will COVID-19 be the shot in the arm that improves pharmaceutical pricing transparency?
By Natalie Rhodes, Policy Officer
Last month the Belgian Secretary of State tweeted the prices their government has paid for a range of COVID-19 vaccines. It was quickly taken down but offered a rare glimpse into the details of the agreements between pharmaceutical companies and government.
This secrecy over government contracts with pharmaceutical companies is not a COVID-19 idiosyncrasy. It is a long-standing issue.
Governments around the world have made commitments to transparency in public procurement in a bid to stamp out corruption and waste of public money. But details of contracts between governments and pharmaceutical companies are still rarely available.
With the world’s hopes of bringing COVID-19 under control resting on a new generation of vaccines, pharmaceutical transparency should be more important than ever. So why is it not happening and what could be gained by opening the door to transparency?
In 2019 the World Health Organization passed a resolution to increase the transparency of pharmaceutical pricing. Yet as we enter 2021 little progress has been made. Whilst there have been reported price tags against the various COVID-19 vaccines much of this is based on estimation. Transparency of pricing has yet to be sufficiently embedded in any government’s procurement or regulatory processes.
The reasoning behind the WHO resolution was that inequitable access to medicines is partly due to high prices. By increasing transparency over how much each country pays, it would allow comparison and strengthen their negotiating leverage, facilitating fairer pricing and better access.
Less talked about but equally important is the role of corruption in pharmaceutical procurement. Public procurement is notably vulnerable, with 10-25% of a public contract’s value being lost to corruption. This can involve price gouging, price manipulation, overpayments, collusion, or kickbacks during the procurement process and can occur at different levels from corruption on a systemic scale to smaller more local instances. Pharmaceutical contracts are not exempt. Corruption can lead to inflated prices for life-saving drugs, thereby reducing access.
Increasing transparency is key to mitigating these risks. Publishing pricing information is one way of achieving this.
Previous attempts to obtain details of COVID-19 vaccine contracts have been denied due to confidentiality agreements between governments and pharmaceutical companies, a norm seen across pharmaceutical procurement. Yet, billions of pounds of public funds have supported the development of COVID-19 vaccines. Consequently, pharmaceutical companies should be accountable not just to shareholders but to the public who have also been key investors.
At the upcoming WHO Executive Board meeting later in January, global leaders will once again discuss the pros and cons of pricing transparency. If the discussions of 2019 are anything to go by there will likely be heated debate. The added impetus of the vaccine nationalism playing out over COVID-19 vaccines might move the dial towards recognizing the need for better systemic transparency.
What is clear is that transparency is essential to providing confidence that public funds are used effectively and in the public interest, particularly during times of crisis when huge sums of money are being spent and contracts are being allocated at speed. This could not be more important when it comes to government contracts with vaccine manufacturers. Transparency should be an embedded norm, not an exception granted by accidental leaks.