The Future of Global Health Procurement: Issues around Pricing Transparency - Working Paper 507

This paper focuses on the role that price transparency may play in the efficient and effective procurement of medicines by middle- and low-income countries. Will making prices publicly available make procurement more efficient and cost-effective medicines more accessible? We conclude that transparency of the procurement process significantly lowers costs by encouraging bidders. We do not recommend price transparency for on-patent medicines as the effect will be to slow the diffusion of innovative products to low-income countries. Differential pricing is important and can best be achieved in the current environment via confidential discounts. Developing country markets are, however, dominated by generic products. Price transparency for off-patent products could improve market efficiency if capacities are there to use the data to inform procurement decisions whilst protecting against supplier collusion. We recommend consideration of one-sided disclosure of multi-source prices, i.e., buyers should share price data for off-patent medicines amongst themselves.