IDPF-UNITAID: A "New" Economic Model?

I've said it before, and I'll say it again: increasing demand raises prices. And yet the Joint Declaration on the International Drug Purchase Facility - UNITAID issued by Brazil, Chile, France and Norway at the launch of UNITAID on June 2nd explicitly includes the following contradictory principles of the new entity:

The IDPF-UNITAID will contribute for generating a steady demand for drugs - thereby fostering the supply of drugs at lower prices - as well as for creating economies of scale thanks to long-term pooled purchases. The Facility will provide a new impetus to ongoing prequalification processes coordinated by the WHO, including processes related to active pharmaceutical ingredients (API) and will also play a role in strenghtening national regulatory agencies for drug quality control.

As a result, the IDPF-UNITAID is expected to play a pro-active role in prompting greater market efficiency, inasmuch as it will induce price reductions, promote the diversification of generic products of certified quality and diagnosis kits, stimulate the entry of new manufacturers in the market and consequently enhance in a significant manner the access of affected people in developing countries to drugs.

There is a lot to be said for this new entity, and it holds a great deal of potential to improve access to global health products by reducing uncertainty and sharing market risks (particularly through long-term binding contracts). But they should learn from GAVI's experience: in the short-term, prices won't necessarily go down.

In his message to UNGASS (delivered by Philippe Douste-Blazy), French President Jacques Chirac concluded that:

A new economic model will thus be established. By giving manufacturers the visibility necessary to invest in research and new pharmaceutical production capacity, and consolidating reductions in prices, it will ensure that poorer countries have the capacity to access effective treatment for everyone.

A "new" economic model, indeed.