Master Alliance Provisions Guide (MAPGuide)

Affordable Pricing

This issue refers to provisions requiring product developers to ensure affordable pricing for certain markets. Affordable pricing is a low but sustainable price that covers the developer’s costs for raw materials, manufacturing, distribution and operational overheads, and may include a reasonable margin to help ensure the economic sustainability of the production and distribution of the product (Medicines Patent Pool and Pfizer Sutezolid License Agreement, §3.3). Affordable pricing provisions are an important component of access to medicines because they act as a mechanism to ensure that the product can be made available in lower income countries at a reasonable cost.

Note: provisions related to more general pricing terms can be found under Business Model: Payment Structures.

Some questions to consider when developing an affordable pricing provision

  • What is the formula for affordable pricing?
  • Should there be a difference between the pricing for public sector and private sector purchasers?
  • Should prices be tiered by country or region and over what time period?
  • What level of oversight and control can/should the funder have in influencing and auditing the pricing of the funded products?
  • What are the remedies if the actual pricing deviates from the affordable and reasonable pricing standard?

Example approaches found in the MAPGuide

  • If the developer elects to commercialize the funded product, it has a duty to negotiate in good faith with the funder to ensure that the terms of commercialization provide preferential pricing to public sector purchasers for developing countries compared to that charged to private sector purchasers in those countries.
  • The developer agrees that the price of the funded product will be reasonable in order to achieve equitable access for populations in need of the product, as well as an appropriate return on investment for product manufacturers that make on-going supply commercially sustainable.