As a life-long social democrat, I am not a big fan of Milton Friedman, the world-famous free market economist and guru. Yet, there is one thing he said which certainly rings true: “The most important single central fact about a free market is that no exchange takes place unless both parties benefit.”
The operative word here is that for the market to deliver a win-win result it has to be ‘free’. Now what is absolutely indispensable for it to be so? Clearly, it is price transparency. Unless prices are publicly known to all prospective buyers, they cannot compare and make a rational choice.
Without open price competition they cannot take full advantage of the market. Quite basic economics, really.
This principle is precisely what lies at the heart of our current drive to get the best pharmaceutical prices for Malta. Actually, I should add that with our lead we are on the threshold of getting the best prices across a sizeable chunk of Europe. We are talking about 160 million EU citizens from Spain to Italy, from Croatia to Greece, from Slovenia and Ireland, and beyond.
The daunting wall we set out to break down with the launch of the Valletta Declaration during the Malta Presidency of the Council of the European Union had very simple writing on it. Large, powerful and global pharmaceutical corporations have been positioning themselves to set their prices with individual European countries, rather than allowing the market to do so transparently.
We are saying no to secret medicine prices
Currently they are artificially setting prices, particularly of high-cost new medicines, by negotiating behind closed doors and obliging the health authority of each country across the table to keep them secret. Consequently, no European state can compare the prices it is paying with those obtained by its fellow EU members. The pharma companies tell each country that they are giving them ‘the best’ prices. But this is patently untrue.
The result? Essentially, drug corporations know the price they sell to each country, but none of the latter know except their own. The corporations are negotiating from a permanent position of strength and forcing countries into one of permanent weakness. Exacerbating the situation, many of these companies have merged, thereby reinforcing their quasi-monopoly position.
Let’s face it, this is not a free market. It is not transparent, grossly distorted and certainly not of benefit to the impacted 160 million European citizens. Our request is as simple as it is logical and in line with free market principles. As health ministers of 10 European countries we are agreeing to share with each other the medicine prices that each of us negotiates individually with the pharmaceutical companies.
We are saying no to secret medicine prices. As representatives of so many millions of European citizens we want to sit at the negotiating table with pharmaceutical companies knowing there will be equality of arms. We want, so to speak, to go to the medicine supermarket together. We want the market to be transparent and work, first and foremost, in the interests of our citizens.
We are under no illusions. This is only the first step in a long journey. These companies will not give up their pole position without a fight. The irony of it is that as privately-owned corporations they should be fervent adherents of price transparency. They should be flying the free market flag higher than us. Yet, they are lobbying heavily against it because it is in their interest to do so. The game-changing proposal we launched is a bitter pill for them to swallow.
Yet, I am absolutely certain that we are on the right side of history on this one.
Bernie Sanders, a candidate for the American presidency in 2020 is already fortifying the essence of our argument from the other side of the Atlantic. “There is no rational reason,” he tweeted recently, “that insulin and other life-saving medications should cost ten times more in the United States than in Canada.”
Unity, prudence and principle shall prevail.
Chris Fearne is Deputy Prime Minister and Minister of Health.
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