Company discounts

Company price discounts are not the answer

The pharmaceutical industry’s preferred response to the access to medicines crisis is to organise price discount programmes to combat specific diseases where they offer a treatment for free or for highly subsidised costs, subject to certain conditions.  These programmes are sometimes known as ‘tiered’ or ‘differential’ or ‘preferential’ prices.

While in some cases, preferential prices can genuinely improve access to a particular medicine, they do not, and cannot, solve the access to medicines crisis alone.  They do not constitute a sustainable solution.  There is a clear problem of scale – take HIV/AIDS for example, with over thirty million people infected: the volume of donations by multinational pharmaceutical companies can only address a fraction of the needs.  

Offers that come with strings attached
Companies often restrict the offer to certain actors or limit it to certain countries or for a defined period.  With differential prices, what in fact happens is that the company that has the monopoly on a product decides to charge different prices in different countries, according to a set of criteria of its own choosing –middle-income countries where a sizeable middle class constitutes a decent market for pharmaceutical companies are often excluded from the deal.

In a recent example, MSF was proposed a discounted price by the only manufacturer of a drug that prevents blindness in patients with HIV/AIDS – but governments were not given access to the same terms, and the price offer excluded most of the countries in Asia where the problem is the most acute.  

Sometimes the reduced price is simply theoretical
Although pharmaceutical companies often trumpet the discount programme to show their good will, all too often the drug simply isn’t registered nor marketed in the countries where the price discount is supposed to be available.  This means it can’t even be sold there!

What’s worse, companies’ offers may in fact have harmful effects.  One of the greatest dangers of such offers is that they come to be relied upon, whereas they are entirely dependent on a company’s decisions, and therefore cannot be seen as a sustainable or long-term solution.  They are also a form of harmful competition, and when providing products at a loss, may discourage potential competitors.  This can negatively impact the most effective and sustainable answer to bring prices down - the development of competition from generic manufacturers.

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