e., their
willingness and ability to pay) - or in deference to their political
and legal clout.
Differential prices are not set by supply and demand and, therefore, do
not fluctuate. All the consumers within each market are charged the
same - prices vary only across markets. They are determined by the
manufacturer in each and every market separately in accordance with
local conditions.
A March 2001 WHO/WTO background paper titled "More Equitable Pricing
for Essential Drugs" discovered immense variations in the prices of
medicines among different national markets. But, surprisingly, these
price differences were unrelated to national income.
Even allowing for price differentials, the one-month cost of treatment
of Tuberculosis in Tanzania was the equivalent of 500 working hours -
compared to 1.4 working hours in Switzerland. The price of medicines in
poor countries - from Zimbabwe to India - was clearly higher than one
would have expected from income measures such as GDP per capita or
average wages. Why didn't drug prices adjust to reflect indigenous
purchasing power?
According to the Paris-based International Chamber of Commerce (ICC),
differential pricing is also - perhaps mostly - influenced by other
considerations such as: transportation costs, disparate tax and customs
regimes, cost of employment, differences in property rights and
royalties, local safety and health standards, price controls, quality
of internal distribution systems, the size of the order, the size of
the market, and so on.
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