Drug Production Costs ‘Trade Secret’, Say Generic Manufacturers

A recent World Health Organization resolution stopped short of forcing pharmaceutical companies to disclose R&D costs.

KUALA LUMPUR, June 3 – A group of Malaysian generic manufacturers welcomed a global resolution on drug pricing transparency for not mandating the disclosure of pharmaceutical companies’ research and development (R&D) costs.

The Malaysian Organisation of Pharmaceutical Industries (MOPI), a 45-member association comprising mostly local generic manufacturers, told The Star however that it supported the disclosure of “manufacturers’ selling price” that was encouraged by the recent World Health Organization (WHO) resolution.

“Production costs are influenced by many factors, including currency fluctuations, and contains commercially sensitive information which is confidential and proprietary.

“It is widely accepted in the commercial world that internal costing of a trader, seller or manufacturer is a closely guarded trade secret as it discloses the party’s profit margin and how the company does business,” MOPI president Billy Urudra was quoted saying.

The Pharmaceutical Association of Malaysia (PhAMA), comprising drug importers, distributors, and manufacturers, reportedly objected to the disclosure of R&D costs that underscored “cost-plus” models, in which a drug’s selling price is determined by adding a profit margin on top of the costs in producing it.

“Prices should reflect the therapeutic value of medicines and positive outcomes for patients and society, rather than simply the cost ‘input’ of an individual medicine,” PhAMA was quoted saying.

It added that drugs are just one part of universal health coverage, as health care infrastructure, sufficient funding, and a trained workforce are also necessary to ensure everyone can access quality health services.

PhAMA reportedly said long-term solutions to medicine affordability must support sustained investments in health care systems.

“It should go hand in hand with an ecosystem that incentivises research in new therapies.”

WHO’s 72nd World Health Assembly recently adopted a resolution, co-sponsored by Malaysia, that urged countries to publicly share information on the net prices of health products, stopping short of requiring pharmaceutical companies to reveal their R&D and clinical trial costs. Activists claim that drugs are priced much too high, while the costs of developing the medicines remain opaque.

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