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From tiered pricing to tiered IP: The evolving access to medicines landscape
Recent weeks have seen a number of interesting developments which contribute to the access-to-medicines debate. Coinciding with the UN High Level Panel on the topic, at the end of March, GSK announced a new graduated approach to intellectual property (IP) which will see the organization refrain from filing patents for any of its products on the WHO's list of essential medicines in least-developed and low-income countries. In lower-middle-income countries, GSK will grant voluntary licenses to generic manufacturers, from whom it will seek to obtain small royalties. At the same time, the company announced that it will explore the commitment of its portfolio of cancer treatments to patent pooling.
GSK as a company has done much to shape the access debate, consistently maintaining its lead position on the Access to Medicine Index. The organization is well known for having articulated its inter-country tiered pricing approach for vaccines, and went public with its pledge to generally cap prices in least-developed countries across broader segments of its portfolio. In the wake of the recent announcement, graduated - or indeed tiered - IP now sits alongside tiered pricing as a potentially high-profile component of access strategy.
Tiered pricing, tiered IP
As part of its new approach to IP, GSK has committed to voluntary licensing in lower-middle-income countries for a period of ten years, applicable even when countries transition beyond this status due to economic growth in the interim. This pledge highlights the extent to which the tiered IP approach mirrors tiered pricing, if we consider GSK's announcement that it will freeze vaccine prices for the same duration of time for countries graduating from the Gavi programme of support.
Anyone following the access debate in the vaccines space will be familiar with the controversy over Gavi graduation - 2015 saw a large number of developing countries surpass the national income level threshold beyond which they are no longer eligible for support in the form of subsidies and/or Gavi-negotiated prices. The company's tiered pricing policy had previously specified that GSK would provide pricing support to graduates facing challenges with regards to national immunisation budgets. However, in early 2015, GSK announced that it would continue to honour Gavi prices for vaccines against cervical cancer, diarrhea and pneumonia for a decade following graduation.
The tiering exercise raises important questions over sustainability in terms of what happens once countries graduate from a specific tier. Research conducted by our team highlights the additional example of Merck & Co's anti-retroviral tiered pricing programme, which based tiering on both the UN Development Programme's Human Development Index (HDI) and HIV prevalence rates. The company similarly decided to grandfather countries in at their previous prices to prevent progress in terms of HDI ranking or disease burden from imposing too great a financial hardship too soon.
As with many access strategy considerations, there are rarely clear-cut answers to questions such as how much support should be offered to transitioning countries and for what length of time. A more fundamental issue is of course the basis for tiering in the first place, and what natural breakpoints exist for country clustering. Precisely because there are often no clear-cut answers, tiering exercises require an internal meditation on, and clear articulation of, a company's unique philosophy.
A move toward a broader understanding of access
As many commentators rightly point out, pricing is an important but not the only factor underlying access. Tiered pricing is thus one but not the only solution to the access challenge. It is commonly put forward that access to medicines is a function of many variables, including basic economic attainment, levels of corruption, the organization of public healthcare services, the state of healthcare infrastructure, the existence of adequately trained healthcare professionals, levels of education and awareness, and so on.
To this end, many companies have actively been investing and partnering with public and third-sector organizations to play a role in the evolution of the broader healthcare landscape. Last month, Johnson & Johnson announced the launch of a new global public health strategy to be based in South Africa. The initiative will comprise what the company calls an "end-to-end" approach, tackling everything from local R&D efforts and distribution activities to awareness raising and philanthropy. The strategy will initially focus on HIV, tuberculosis and maternal, newborn and child health, and likely expand to include additional therapeutic and geographic areas over time.
The initiative is similar, in its integrated and multidisciplinary approach, to the "Base of the Pyramid" project from Novo Nordisk, which focuses on capacity building and issues in the supply chain to ensure that patients actually benefit from tiered prices, or Sanofi's Access to Medicines initiatives, which pair tiered pricing with healthcare professional training, public education, advocacy, and healthcare infrastructure support in neglected diseases, mental health, and epilepsy.
The evolution of the access approach to encompass broader strategic initiatives and specific new components like tiered IP reflects the complexity of the access equation and underscores the extent to which any given strategy such as tiered pricing works most effectively in concert with other levers. Operationalizing this approach necessitates a full understanding of context, prefaced on country intelligence that takes stock of traditional elements like disease burden and ability to pay, but also risk, distribution and supply dynamics.
An opportunity to put things in context
At IHS, our Life Sciences team has linked forces with our colleagues in Economics and Country Risk and leveraged resources such as our Global Consumer Markets data to provide organizations with this holistic view, supporting them in their access strategy formulation. Comparative consumer, macroeconomic and demographic data can support companies to formulate tiers, while insights into on-the-ground access dynamics and related issues such as international reference pricing enable organizations to develop broader access strategies and appropriate risk mitigation measures. Pairing this intelligence with data forecasts and a forward-looking view on the direction of health policy enables companies to adopt a longer-term perspective, informing the discussion around elements such as tier graduation policies.
With a growing number of organizations interested in formalizing an approach to tiered pricing, and tiered IP making its debut in the access landscape, it is increasingly important to give due consideration to these issues when formulating the tiering approach. At the same time, the move toward broader strategic access initiatives provides further rationale for elaboration of a formal access philosophy or statement of intent.
With data collection for the Access to Medicine Index 2016 under way, we expect to gain new insights soon on the approaches organizations are taking in this important area of healthcare.
To learn more about optimal pricing structures for emerging markets, purchase our multi-client primary research study on Tiered Pricing.
Cameron Lockwood is the manager of the life sciences EMEA consulting team for IHS
Posted 23 May 2016
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