In OECD (Organization for Economic Cooperation and Development) countries, prescription drug costs currently account for between 6% and 29% of total healthcare spending. However, advances in the research and development of innovative medicines are dramatically transforming the healthcare landscape, allowing chronic diseases – the greatest cost drivers – to be treated more effectively and affordably.
Our approach to pricing medicines
We want to ensure that all patients have access to the most effective medicines for their needs, which is why we are working to prevent cost from becoming a barrier to treatment. We are committed to flexible and fair pricing – both within and across countries. We therefore adapt our prices based on local market access, also taking into account factors such as health system capacity and financial standing, geographic circumstances and existing infrastructure, statutory requirements, unmet medical needs, and socioeconomic aspects such as the ability of patients to pay. This approach involves working closely with governments and other stakeholders. In addition to these considerations, we continuously monitor dynamic healthcare environments and markets, pricing and reimbursement systems and legal and regulatory guidelines, adjusting our prices as necessary.
We review our prices on an annual basis to ensure they meet patient access needs. To assist this process, we use a consistent, data-driven approach to monitor our local pricing. We also make our products affordable to patients in certain countries by participating in government tenders, establishing second low-price brands or branded generics and operating patient access programs.
Moreover, we support risk-sharing agreements and are working to improve data efficiency in health systems in order to achieve an optimal distribution of funds and resources.
Setting medicine prices
Our Global Pricing and Market Access unit sets initial prices in coordination with the respective businesses. Following a reorganization in 2018, this team now reports to the Chief Operating Officer of our Healthcare business sector. Our individual subsidiaries are responsible for managing prices and continually adapting them to local environments.
Our commitment: Medicine price guidelines and principles
The affordability of our health solutions is part of our broader patient value proposition, which includes increasing accessibility, availability and awareness. Medicine pricing adheres to the stipulations of our overarching Access to Health Charter and is defined in detail by our Pricing of Medicines guideline. Our Patient Access Programs Policy furthermore sets out standards that enable us to offer medicines at reduced prices.
Customer-centric contracting models
We are dedicated to advancing value-based healthcare through pricing and contracting mechanisms that comply fully with all local laws. In collaboration with payers such as health insurance companies, we have developed various product- and market-specific reimbursement and contracting models with the aim of providing patients with prompt access to our innovations. For instance, we have entered into a risk-sharing agreement in the United Kingdom that provides immediate access to Mavenclad® for patients with multiple sclerosis (MS); under this agreement, the National Health Service only has to pay for medicines for those patients who respond to the drug. Since the start of 2018, under this scheme 488 patients in the United Kingdom have been reimbursed for the cost of the drug.
We have also created contracting models for our oncology drug Erbitux®, our MS drug Rebif® and our growth hormone Saizen® to make it easier for patients to access these medicines. In this vein, we have also capped per patient costs in certain countries and have formed risk-sharing agreements there.
Pricing schemes to serve low-income patients
We work in close partnership with governments and other stakeholders on innovative, differential medicine pricing schemes and furthermore supply products at reduced prices to certain countries in Africa, Asia, Latin America and the Middle East. In India, for instance, we are working with public sector representatives such as Bharat Heavy Electricals Limited (BHEL) and the Oil and Natural Gas Corporation (ONGC) to develop alternative models for low-income patients and patients who have a limited ability to pay.
Moreover, we regularly participate in government tenders for products that are used in public hospitals serving low-income patients. Many of these tenders take place in developing countries.
Low-price second brands
We have established low-price second brands for some of our existing brands, particularly in countries with a large percentage of very low-income patients. In Brazil, for instance, twelve of our products are available as a lower priced version. Other examples of countries where we have established low-price second brands include Mexico, the Philippines, Poland, and South Africa.
Hand in hand with our partners, we offer branded generics particularly in developing countries to meet the local need for affordable, high-quality medicines that are required to treat the diseases endemic to these nations. In doing so, we ensure better access to reliably high-quality medicines at lower prices. In the Philippines, for instance, four branded generics have been launched to date.
Patient access programs
Worldwide, we operate patient access programs that allow us to offer certain products at more affordable prices in several countries. Examples include efforts in China to expand access to our oncology drug Erbitux®, which is used to treat conditions such as colorectal cancer. Geared primarily toward low-income patients who receive the drug free of charge, our Erbitux® donations have so far benefited around 11,500 patients in China.
We run similar assistance programs in other countries such as India, where we also offer Erbitux® at discounted prices. Over 1,700 patients have participated in the initiative. In nations such as China, Peru and the Philippines, we offer free-of-charge biomarker screening that determines whether Erbitux® would be a suitable treatment.
In addition to our oncology initiatives, we offer access programs for our drugs Rebif®, Gonal-F® and Saizen®. In China, for instance, we operate the Gonal-F-Baby Fund, an access program that provides financial assistance for fertility treatments to low-income couples who have lost their only baby.