In 2021, pharmaceutical spending accounted for between 6% and 32% of total health spending by OECD countries. At the same time, advances in the research and development of innovative medicines are significantly transforming the healthcare landscape, allowing chronic diseases – the greatest cost drivers – to be treated more effectively and affordably.
Our approach to pricing medicines
To help ensure that all patients have access to the most effective medicines for their needs, we are working to prevent cost from becoming a barrier to treatment. Therefore, we adapt our medicine prices according to people’s ability to pay in different geographic and socioeconomic segments.
We are committed to fair, flexible and sustainable pricing – both within and across countries. We therefore adapt our prices based on local market considerations, such as unmet medical and treatment needs, health system capacity, infrastructure and socioeconomic standards. This approach involves working closely with governments and other stakeholders. In addition, we continuously monitor dynamic healthcare environments and markets, pricing and reimbursement systems as well as legal and regulatory guidelines, adjusting our prices as necessary.
We conduct price analyses annually to validate price thresholds and provide guidance on local pricing to our subsidiaries for the following year. The aim is to ensure they meet patient access needs, taking a consistent, data-driven approach. We also make our products affordable to patients in low- and middle-income countries with an equitable value and access strategy that includes participating in government tenders, providing flexible pricing, establishing high-quality affordable brands or branded generics and operating patient access programs.
Furthermore, we support innovative risk-sharing agreements and are working to improve data efficiency in health systems in order to achieve an optimal distribution of funds and resources.
Roles and responsibilities
Our Global Market Access and Pricing (GMAP) unit evaluates market launch prices in coordination with the respective franchises. The team reports directly to a member of our Healthcare Executive Committee. The GMAP unit systematically evaluates our medicine portfolios and applies equal access initiatives to them. Our local affiliates are responsible for managing prices and adapting them to evolving local conditions in compliance with our pricing governance and the defined price approval process.
Our commitment: Medicine price guidelines and principles
The affordability of our health solutions is part of our broader patient value proposition. Our medicine pricing adheres to the stipulations of our overarching Access to Health Charter and is defined in detail in an internal guideline. Additionally, our Patient Access Programs Policy sets out standards for offering medicines at affordable prices.
Value-based contracting models
We are committed to advancing value-based healthcare through pricing and contracting mechanisms that fully comply with all applicable local laws and regulations. In collaboration with payers, such as health insurance companies, we have developed various product- and market-specific reimbursement and contracting models. These help to provide patients with prompt access to our innovations.
In Germany and Ireland, we continued in 2022 with innovative risk-sharing agreements that provide immediate access to Mavenclad® for patients with multiple sclerosis. In addition, the value-based contracting model for Mavenclad® has also been implemented in four more countries in Europe, Latin America, and the Middle East with more countries under assessment for further implementation. Besides that, we facilitated a roundtable with payers in Argentina, Brazil, Colombia, Germany, Italy, and Spain to discuss the current and future landscape of the value-based contracting model for Mavenclad®.
Equitable value and access approaches to serve low- and middle-income patients
We work in close partnership with governments and other stakeholders on innovative, differential medicine pricing schemes. In addition, we supply products at affordable prices to certain countries in Africa, Asia, Latin America, and the Middle East.
Strategic tender activities
Our pharmaceutical tender excellence initiative offers a strategic tender framework. This includes a web-based system that helps country teams increase quality and agility in tender decisions, while improving performance tracking and collaboration. We regularly participate in government tenders for products used in public hospitals serving low-income patients. Many of these tenders take place in low- to middle-income countries.
High-quality, affordable second brands
For some of our existing high-quality products, we have created second brands at affordable prices, particularly in countries with a large percentage of patients with very low incomes. For example, second brands for the betablocker bisoprolol (Concor®) are available at affordable prices in Brazil, Chile, Poland, and South Africa.
Patient access programs
We operate patient access programs that enable us to offer certain products at affordable prices in several countries. In India, we offer a program for our oncology drug Erbitux®, for example, to provide financial assistance to eligible underprivileged patients – in line with local laws and regulations. Since the initiation of the program in 2017, it has been made available to over 5,000 patients in the country. In 2022 alone, more than 1,500 patients benefited from the program.
In 2022, we continued to collaborate with national pharmacy chains in Mexico to provide patients with adherence support, discounts on blood tests and education on prediabetes and diabetes, thyroid, cardiovascular and obesity disorders. To improve adherence, in Central America (Costa Rica, the Dominican Republic, Guatemala, Honduras, Nicaragua, and Panama), we offer a digital loyalty program for the aforementioned conditions. To strengthen health systems and raise patient awareness in China, we sponsored the Hypertension Center Program in 2022, which is organized by the China Cardiovascular Association. The program aims to elevate awareness of standard diagnosis and treatment for patients with hypertension and increase blood pressure target achievement.