• Biosimilars
  • Drug Development/R&D
  • All Topics
OHE OHE
Newsletter SignupSubscribe

News & Insights
  • News
  • Events
  • Insights
  • Bulletin
  • News
  • Events
  • Insights
  • Bulletin

News & Insights

  • News
  • Events
  • Insights
  • Bulletin
Newsletter SignupSubscribe
  • News
  • Events
  • Insights
  • Bulletin

Close
OHE OHE
  • Research & Publications
  • News & Insights
  • Education
  • Innovation Policy Prize
  • Events
  • About Us
  • OHE Experts
  • Contact Us
Newsletter SignupSubscribe

Research & Publications

All Publications

Filter by:
  • Antimicrobial Resistance (AMR)
  • Biosimilars
  • Cell and Gene Therapies
  • Chronic Diseases
  • Combination Therapies
  • COVID-19 Research
  • Digital Health
  • Drug Development/R&D
  • Emerging Markets
  • EQ-5D and PROMs
  • Health Care Systems
  • Health Data and Statistics
  • Health Technology Assessment
  • Precision Medicine
  • Real World Evidence
  • Use of Medicines
  • Value-Based Pricing
  • Vaccine Research
  • Economics of Innovation
  • Measuring and Valuing Outcomes
  • Policy, Organisation and Incentives in Health Systems
  • Value, Affordability and Decision Making

News & Insights

  • News
  • Events
  • Insights
  • Bulletin

Education

  • Education Hub
  • OHE Graduate School
  • EVIA Programme

Innovation Policy Prize

  • The Prize Fund
  • 2022 Prize Fund

Latest Research & Publications

Proposal for a General Outcome-based Value Attribution Framework for Combination Therapies

CombTher_Adobe_photoguns_portrait
Read more
© photoguns
  • Digital Health

Navigating the Landscape of Digital Health – United Kingdom

Healthcare_Adobe_elenabsl
Read more

2021 OHE Annual Report to the Charity Commission

charityreport_lina-trochez-unsplash_landscape
Read more
© Lina Trochez/Unsplash

Supporting the Era of Green Pharmaceuticals in the UK

Sustainability_AdobeStock_270582392_landscape
Read more

Quality of life and wellbeing in individuals with experience of fertility problems and assisted reproductive techniques

Quality of life assisted reproduction Cover
Read more
  • Cell and Gene Therapies
  • Value, Affordability, and…

Health Technology Assessment of Gene Therapies: Are Our Methods Fit for Purpose?

gene_therapies_national-cancer-institute-unsplash_landscape
Read more
© NCI/Unsplash
  • Drug Development/R&D
  • Economics of Innovation
  • Health Policy and Regulation

Limitations of CBO’s Simulation Model of New Drug Development as a Tool for Policymakers

CBO-US_mayer-tawfik-K4Ckc0AxgDI-unsplash_landscape
Read more
© Mayer Tawfik/Unsplash
  • Measuring and Valuing Outcomes

When Generic Measures Fail to Reflect What Matters to Patients: Three Case Studies

PROMS_unsplash_National Cancer Institute_landscape
Read more
© NCI/Unsplash
Close
OHE
  • All Publications

    Filter by:
    • Antimicrobial Resistance (AMR)
    • Biosimilars
    • Cell and Gene Therapies
    • Chronic Diseases
    • Combination Therapies
    • COVID-19 Research
    • Digital Health
    • Drug Development/R&D
    • Emerging Markets
    • EQ-5D and PROMs
    • Health Care Systems
    • Health Data and Statistics
    • Health Technology Assessment
    • Precision Medicine
    • Real World Evidence
    • Use of Medicines
    • Value-Based Pricing
    • Vaccine Research
    • Economics of Innovation
    • Measuring and Valuing Outcomes
    • Policy, Organisation and Incentives in Health Systems
    • Value, Affordability and Decision Making
    • News
    • Events
    • Insights
    • Bulletin
    • Education Hub
    • OHE Graduate School
    • EVIA Programme
    • The Prize Fund
    • 2022 Prize Fund
  • Events
  • About Us
  • OHE Experts
  • Contact Us
Newsletter SignupSubscribe
Back
  • News
11 min read 19th May 2018

A Critique of Hill et al. (2018) on Estimated Costs of Production for the WHO Essential Medicines List

OHE Consulting produces a report critiquing a paper by Hill et al. (2018) on estimated costs of production for the WHO Essential Medicines List. This OHE Consulting Report, published today, reviews “Estimated costs of production and potential prices of medicines…

Share:
  •  Twitter
  •  LinkedIn
  •  Facebook
  • has-icon Email

OHE Consulting produces a report critiquing a paper by Hill et al. (2018) on estimated costs of production for the WHO Essential Medicines List.

This OHE Consulting Report, published today, reviews “Estimated costs of production and potential prices of medicines for the World Health Organization Essential Medicines List” (Hill et al., 2018) in which the authors argue for “greater transparency in drug pricing” and propose generating estimates of the cost of manufacturing essential medicines to inform negotiations on drug pricing. 
 
The OHE Report argues against use of a costing exercise to negotiate generic drug prices irrespective of the quality of the analysis.  The implication that prices should be reduced to the level predicted by a model is likely to lead to an increase in generic drug shortages. The Report’s authors state that the way to tackle generic drug prices is through more effective procurement arrangements which brings in competitive global suppliers. More efficient medicines prices may only be achieved by bringing in regional or global suppliers who are more efficient than local producers. Price transparency could help payers understand how effective their generic procurement process appeared to be. However, price transparency also conveys information to suppliers.
 
Although Hill et al. (2018) set out that 85% of EML drugs are generic, Hill et al. discuss the use of cost estimates and the removal of patent protection in the context of on-patent drugs. However, in many markets some recovery of R&D cost is both to be expected and is necessary. Health Technology Assessment (HTA) is the tool that can inform price negotiation or decisions about use of a product. In some low income markets or for some low income population groups we might expect to see tiered pricing bringing prices close to generic levels. Governments and international organisations could usefully seek to facilitate the use of tiered pricing. 
 
The OHE Report also critiques the methods used to generate the cost estimates. The model is not a good predictor of price for the three countries Hill et al. (2018) analyse. In India, 47% of medicines have observed prices that are 50% lower than the projected efficient price. In contrast, 78% of the prices observed in South Africa are in the range of three times above or below the estimated prices and around 60% of the medicines included for the UK have prices three times above the estimated price. 
 
The OHE Report is funded by the IFPMA and co-authored by Adrian Towse, Karla Hernandez-Villafuerte and Brendan Shaw. 
 
Read the full report here.
 
  • Emerging Markets
  • Economics of Innovation
  • Consulting Reports

Related News

  • News
  • October 2020

Opportunities to Increase Efficiency in Healthcare

Read more
  • News
  • September 2020

Cornerstones of ‘Fair’ Drug Coverage

Read more
  • News
  • September 2020

Assessing the Productivity Value of Vaccines in Health Technology Assessment: Worth a Shot?

Read more
  • News
  • September 2020

Establishing a Reasonable Price for an Orphan Drug

Read more
footer_ohe_logo

Leading intellectual authority on global health economics

Sign Up for the OHE News Bulletin

Newsletter SignupStart Sign Up

Research & Publications

News & Insights

Innovation Policy Prize

Education

Events

About Us

OHE Experts

Contact Us

Sign Up for the OHE News Bulletin

Newsletter SignupStart Sign Up

The Office of Health Economics (OHE) is a company limited by guarantee registered in England and Wales (registered number 09848965) and its registered office is at 2nd Floor Goldings House, Hay’s Galleria, 2 Hay’s Lane, London, SE1 2HB.

Terms & Conditions

Privacy Policy

Cookies Policy

© 2023 Website Design

An error has occurred, please try again later.An error has occurred, please try again later.

We are using cookies to give you the best experience on our website.

You can find out more about which cookies we are using or switch them off in settings.

 Twitter
 Facebook
 LinkedIn
 Copy
 Email
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.

3rd Party Cookies

This website uses Google Analytics to collect anonymous information such as the number of visitors to the site, and the most popular pages.

Keeping this cookie enabled helps us to improve our website.

Please enable Strictly Necessary Cookies first so that we can save your preferences!