Ecks argues that Novartis eventually aims to charge the same high price across all its markets. Yet, if we consider the company’s dynamic pricing structure and the information spillover effect, this seems unlikely this will occur. One of the ways Ecks answers the question of why Novartis provides Glivec to Indian patients at no cost is by pointing to Novartis’s “ ‘dynamic’ pricing structure”. He writes that in countries too poor to afford the drug’s market price, Novartis deploys a business model responsive to the country’s economic development: when they can’t pay they won’t, but when they can pay they will. He also proposes a different answer: that ‘physical leakage’ – drugs purchased cheaply in one country finding their way to high-price markets – and information spillovers – “the knowledge about lower prices in developing countries generating demand for lower prices in developed ones” – deters the sale of cheap, regionally-priced pharmaceuticals.
If Norvatis prices a drug such as Glivec according to the rising economy of the country in which it is being sold, then there will be a period when the price of Glivec in developing countries will be less then its market-price in North America and Europe. In this case, it seems that an information spillover will occur, and consumers in high-price markets will begin campaigning for a reduction in drug costs. Ecks claims that free Glivec should be seen as part of a global pricing strategy, but his analysis suggests that Novartis’s strategy will not succeed in raising drug prices across all markets. It seems more likely that the extreme pricing-gap in drug costs across different countries will eventually resolve itself by balancing decreases in the developed world with increases in the developing world.