Yes / Upgrades are essential
By Eric BaseilhacDirector of Economic Affairs of Leem (Medicine Companies).
The shortage of amoxicillin has marked our fellow citizens. It is explained by the slowdown in the manufacture of raw materials in China, at a time when demand was very strong in Western countries. Production will restart, and these outages should end in March. Nevertheless, it will remain an economic subject: the manufacturer price excluding tax of the pediatric bottle is 76 cents. How can the production chain remain viable with such a price? And this is just one example among others: all mature products have suffered the weight of economic regulation, to a point where cost prices have sometimes become higher than selling prices. This prompted manufacturers to relocate. We have not ceased to alert, but the politicians were not very sensitive to our arguments. On the eve of the pandemic, 80% of the active ingredients and 40% of the drugs consumed in Europe came from China or India.
This trend must be reversed, we no longer have a choice. The first emergency: that the authorities establish the list of medicines of health and strategic interest. From there, we will be able to assess which are the most critical with regard to the risk of shortages, and apply collective price increases for the classes concerned. We must also work to relocate production, by rethinking the economic model of these drugs, otherwise the same causes – the additional costs linked to wage levels and environmental standards in Europe – will produce the same effects. Margins on generic drugs are indeed very low: 0.3% of gross operating profit on average. Of course, we are aware that this increase in prices cannot take place without guarantees, and we are not opposed to audits to confirm the need for them.
No / Let’s make the costs transparent first
By Pauline Londeix and Jérôme Martinco-founders of the Observatory of Transparency in Medicines Policies (OTMeds).
It is impossible to say whether or not it is necessary to raise the prices of medicines and health products without transparency on the rational elements that would allow them to be built today and on which the pharmaceutical multinationals maintain opacity. To know whether it would be appropriate to increase prices to counter shortages, you need concrete, solid and precise elements on the real costs of production, the price of pharmaceutical raw materials and the public aid received by manufacturers. The latter also make unparalleled margins on innovations that have been partly developed with public and charitable funds, and which are billed up to several million euros per treatment.
The inclusion of drugs in a logic based on supply and demand implies that certain suppliers of firms make choices according to market opportunities and not according to public health interests. Thus, producers based in China will not increase their production of active ingredients of amoxicillin or other essential drugs given the rise in energy prices, and may make other choices of industrial strategy.
For all of these reasons, it is essential to relocate, at least in part publicly, the manufacture of these essential drugs in France and in Europe. This relocation could involve an increase in costs, especially if the construction of new industrial sites involves stronger environmental constraints. This offers an opportunity to reflect on pharmaceutical production that is more environmentally conscious and guided by health needs. On the other hand, the prices must be constructed on rational bases, and the differentials justified.