n South African Journal on Human Rights - Pharmaceutical price regulation




Pharmaceutical price regulation is highly politicised, both globally and in South Africa. As a result misinformation and rhetoric is common. Regulators (whose duty it is to represent the public interest) face difficult policy decisions and are subject to pressure from all stakeholders. Despite these challenges, complex economic and legal solutions may be employed to ensure the accessibility of affordable medicines in the developing world. The nature of the pharmaceutical industry gives rise to unique economic problems which may be resolved through Ramsey optimal pricing (also referred to as differential pricing) which allows pharmaceutical manufacturers to price according to the price sensitivity of consumers, thereby ensuring that poorer consumers can afford essential medicines. This must be done within the legal flexibilities of the TRIPS Agreement. This article examines the theory of differential pricing, how it is constrained by TRIPS and how it is beginning to be implemented by way of international agreements and through specific policy choices made by national regulators. Examples from Europe and South Africa are considered and criticised. The European tiered pricing regulation offers the possibility of accessible and affordable medicines in the developing world but is vastly underutilised. South African law and policy makers ought to consider the principles of differential pricing in greater detail so that it may be worked into the current regulatory framework. In the interim, there is some potential in the possibility of granting compulsory licences.


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