Access to Medicine: From Philanthropy to Marketplace

September 14, 2010
  • Mark Little

    Former Director, Healthcare, Advisory Services, BSR

Pharmaceutical companies produce drugs that enhance and extend the lives of billions of people worldwide, but the poor are often excluded from these benefits. While access to medicine is a challenge for poor populations in both developed and less developed countries, the issue is most severe across Sub-Saharan Africa, South Asia, and China, where millions die every year from diseases like HIV/AIDS that are effectively treated elsewhere. Even more people die from “neglected diseases” like tuberculosis and malaria that were eradicated so long ago in most developed countries that diagnostics and therapies used today are more than 50 years old.

In light of these global health challenges, the pharmaceutical industry has received criticism—for pricing drugs out of reach for poor populations, for advocating trade policies that thwart generic competition, and for not investing enough in research and development for neglected diseases. And although the industry faces substantial costs and risks in researching and developing new therapies, critics also point to the wealth of pharmaceutical companies, which are among the most profitable businesses, as a reason for why these companies should do more.

While the industry certainly has a critical role to play in addressing public health challenges, it also has the responsibility to drive innovation and develop new drugs, a process fraught with risk and high costs. Recognizing the tension in these sometimes conflicting responsibilities, many companies are launching pilot programs and testing new initiatives to strike a balance, or in some cases even demonstrate that these two responsibilities can be mutually reinforcing.

Moving Beyond Philanthropy

Traditionally, pharmaceutical companies have relied on corporate philanthropy and strategic investments to expand access to medicines. Without a doubt, these programs save lives and are real demonstrations of the industry’s increasing level of commitment to the Global South. But systemic solutions that truly advance global public health will require more than drug donations.

Alongside corporate philanthropy programs, many pharma companies now use a tiered-pricing system in developing countries. Last year, for example, GlaxoSmithKline (GSK) reduced prices for patented medicines in the least-developed countries (or “LDCs”) to no higher than 25 percent of the prices charged in the developed world. These countries include Angola, Mozambique, and Rwanda, and most other countries in Sub-Saharan Africa. In addition, the company announced that 20 percent of all profits earned in LDCs would be reinvested into programs aimed at strengthening health care system infrastructure (e.g. programs that expand medical education and training for health care workers, and focus on knowledge and technology transfer to local manufacturers).

Pfizer has also launched an innovative pricing program with its eCard, which offers pharmacy discounts of up to 50 percent for patients in several developing countries. The benefit to patients is more affordable medicines, and Pfizer benefits by gaining access to data regarding patient adherence and refills.

Companies have also taken steps to promote R&D for neglected diseases. The Novartis Institute for Tropical Diseases, which is developing treatments for neglected diseases like malaria, tuberculosis, and dengue fever, will offer any new drugs the company discovers at cost for poor patients in those countries most impacted by these diseases.

Many pharmaceutical companies are contributing to new patent pools that allow generic drug manufacturers to produce and sell certain drugs at significantly reduced prices in developing countries. In July, GSK and Pfizer announced that their joint-venture, ViiV, a specialist business focused on HIV/AIDS, will open up its entire drug line to generics manufacturers in LDCs. By collaborating on this project, the companies can expand access to those most in need without sabotaging the commercial strategies employed in countries where income levels are higher.

Cross-Sector Partnerships

Although the pharmaceutical sector’s efforts will address some of the challenges associated with access to medicines, multi-stakeholder solutions are required to tackle the systemic challenges in access—poor health care system infrastructure, insufficient incentives and financing mechanisms to develop new drugs, and inadequate health education in local communities. Several recently formed partnerships point to the important roles played by governments, philanthropic foundations, and NGOs.

In 2007, five countries (Canada, Italy, Norway, Russia, and the U.K.), and the Bill and Melinda Gates Foundation committed US$1.5 billion to provide a guaranteed market for successfully developed vaccines that would not otherwise be commercially viable. Through this program, a GSK vaccine for pneumococcal disease, which kills nearly one million children every year, is expected to be made more widely available throughout the developing world later this year.

Cross-industry partnerships have also been useful in solving challenges associated with the timely availability of medicines. In Tanzania, where, at any given time, 5,000 clinics have run out of malaria medication, Novartis, IBM, Vodaphone, and the Roll Back Malaria Partnership have teamed up to develop a mobile-phone-based solution to the challenge of managing drug inventory levels. The new program, SMS for Life, sends automatic reminders to clinic workers who reply back with the level of drug inventory, thereby allowing “refill missions” to prioritize clinics that have the lowest stocks. The program has reduced these instances of “stock-outs” in one district by up to 75 percent. The group is now preparing to launch the program nationwide, and is considering expansion to other countries as well.

The Road Ahead

Despite these promising new initiatives, there remain many significant challenges in expanding access to medicines.

For instance, the global public health focus on neglected diseases in the developing world has allowed the rise of “new” health challenges, such as cancer, diabetes, and heart disease, to go relatively unaddressed in these regions. The fact that these diseases accompany rising standards of living raises questions around who should pay and how much. How should pharmaceutical companies price drugs for populations that can afford fast-food but not Lipitor? Across middle-income countries, and in the BRIC countries in particular, today’s “access challenge” is tomorrow’s thriving market. But in the meantime, the question is how (and why) should pharmaceutical companies open their intellectual property, develop generics strategies, or even reduce prices, when these activities set precedents that threaten to cannibalize future profits?

To be sure, ethical responsibilities and pressure from stakeholders can provide some fuel for the industry to pursue initiatives and take some calculated risks. But, fundamentally, the pharmaceutical sector needs an access strategy: a systematic approach to entering and expanding in low- and middle- income markets. That approach may start with philanthropy but ultimately should be structured to yield insights that support a later-stage commercial approach.

While each company’s access strategy should be tailored to align with its core competencies, such as its therapeutic lines, a successful access strategy will contain many of the following elements:

  • Local needs assessments: ethnographic field research aimed at generating new insights into the differentiated health needs of the poor
  • Pilot programs in which companies work closely with patients, doctors, and administrators on the ground to develop a tailored line of products and services that reflect the realities within these “emerging markets”
  • Clear mechanisms for linking the needs and insights surfaced through these programs with updated strategies for philanthropy, innovation, and business model development
  • Development of multi-stakeholder partnerships that build capacity—expand the health care workforce, improve distribution channels for medicine, and develop infrastructure such as clinics and financial systems—and promote a virtuous cycle where improved health fosters a more productive workforce and contributes to broader economic growth

To be sure, some geographies will not soon be ready for commercial approaches. But an access strategy will help maximize the impact of philanthropy where it remains critical, and it will pave the way for pharmaceutical companies to more precisely target the health needs of low-income populations, regardless of whether those needs are met through a philanthropic or a commercial approach.

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