GEOPOLITICAL COMPLEXITY BEHIND PHARMA PRICING
Chris Shilling, 8th August 2025
This article was originally published in the PRiMA Headlines 05‑2025 edition. Full editions of PRiMA Headlines are available exclusively to subscribers. Further details are provided at the end of the article.
The pharmaceutical industry globally continues to speculate as to the actual impact of proposed US measures, and to react to policy approaches in e.g., China and the UK, that at worst may threaten financial viability of supplying innovative medicines. In the last edition of PRiMA headlines we looked at a range of different policy approaches to solving drug pricing and shortage issues.
A recent article by a senior official from Norway’s NOMA criticized Pharma’s “excessively high prices”, emphasizing the industry’s social responsibility to provide healthcare and need for better trials to support HTA decisions. However, several stories noted in this edition suggest that there may be a significant element of ‘attacking the messenger’ when it comes to price increases.
Impact of a more dangerous world
While the headlines about major conflicts rightfully focus on attempts to end human suffering, the long tail of consequences includes an impact on the operational aspects of pharmaceutical production. This takes the form of g due to needing to avoid some routes, increases in raw materials costs that drive up the cost of production. The impact includes availability of packaging materials – Russia has been the biggest exporter of aluminium sheets, used extensively in pharmaceutical packaging; trade embargoes have reduced the supply of this vital material.
Energy Costs
The increasing uncertainty associated with growing conflict also impacts the cost of energy, driving base costs for industry. While pharmaceutical manufacturing facilities are quite small compared to other sectors, they use significant energy in production and are also impacted by logistics costs. For example, drug production costs in Egypt rose 50% last year, driven by higher fuel, electricity, insurance, and labour expenses. In South Africa, load shedding of electricity presents problems in maintaining temperature-controlled storage and causing damage to expensive manufacturing equipment; both increase overall costs. The price of fuel continues to rise, adding to transportation costs.
‘Health Security’… and eventual over-capacity?
There has been a growing trend – stimulated by access challenges during the Covid pandemic – for developing nations to establish domestic production to achieve Health Security. Stories in this month’s edition from Algeria and Morocco demonstrate the success of these initiatives; current access challenges in Thailand show impact from a national perspective of over-reliance on importation in a time of rising costs.
However, there is a potential unintended consequence of this focus on local production is currently described as a benefit – moving from local sustainability to export. This recent article suggests that what is currently a local improvement could also become an exporting opportunity. Many of the articles describing such initiatives in Africa and Asia suggest the same benefit – it seems unlikely that all of them can succeed in becoming exporters, posing the risk of over-capacity. It may be that countries could agree to specialize in particular products, enabling all to trade, but this does not align with the key goal of Health Security.
National v. International Tensions
Healthcare provision is an area of government prone to multiple complexities, evidenced by the range of approaches taken at national, regional and sub-regional scale within many countries, and the different priorities in different countries around the world. Introducing international competition and collaboration elements adds further complexity and cost – all of which is not necessarily adequately represented in standard HTA disease models.
About this publication
This article was originally published in the PRiMA Headlines 05‑2025 edition.
Full editions of PRiMA Headlines are available exclusively to subscribers. On our website, we publish selected opinion pieces and analyses only, typically 6–12 months after the original publication date.
