The high cost of medicines often limits access worldwide. At the same time, innovation in drug development is accelerating better treatments for chronic and challenging diseases. Sustainable pricing is a way to promote access to these drugs not only in developed countries, but also in developing countries where governments and patients alike struggle with affordability. Everyone should have access to medicines; the question is, how do pharmaceutical companies and countries agree on sustainable pricing? To learn more about this topic, we spoke with Nerea Blanqué-Catalina, Partner of Market Access, Pricing, and Sustainability at Alira Health.

What is the biggest challenge pharma companies encounter when they look to set a sustainable price?

Pharma companies strive to provide patients worldwide with treatments that meet their needs, which inevitably comes at a cost. The key question is: how can you reconcile the need for profitability with the global demand for accessible medicines at a sustainable price? Finding this delicate equilibrium is a challenge, but pricing strategies are evolving, and companies are broadening their focus.

What are some recent initiatives to improve health equity and price sustainability?

First of all, the World Health Organization’s (WHO) Essential Medicines List (EML) drives attention to key medicines deemed important and necessary for every country’s health system. Companies can apply to the WHO for inclusion of their drugs on the EML, which is part of many national healthcare policies to improve access.

Also, in 2019, the Valetta Declaration showed the importance of cooperation and transparency in drug pricing to improve access to medications across the EU. This declaration highlighted the need for member states to work together and share information to ensure fair pricing and availability of essential drugs. Building on this initiative, the Oslo Medicines Initiative, spearheaded by WHO/Europe, ran from 2020 to 2022 with a focus on enhancing transparency in drug pricing. The Oslo Medicines Initiative aimed to create a more open and equitable pharmaceutical market by encouraging the disclosure of pricing information.

At the same time, in 2020, the WHO published recommendations for pricing methodologies that countries can use to make medicines more affordable; for example, changing policies on biosimilars and generics. You can download our white paper WHO Guideline: Summary of Recommendations on Pharmaceutical Pricing Policies to learn more about the recommendations and what pharma companies should know. 

Currently, pharma companies are mandated to publish the prices of their drugs, but these are gross prices, which do not reflect the actual costs after discounts and rebates. The Oslo Medicines Initiative advocates for the publication of net prices, which would provide a clearer picture of the true cost of medications. However, many companies are reluctant to disclose net prices due to variability in pricing strategies across different countries. Concern about potential disruption to pricing strategies leads to unease about market dynamics and profitability.

Currently, the Technical Advisory Group on Pricing Policies for Medicines, an advisory body to WHO, is developing policies that will increase price visibility and decrease prices, but they have not yet issued a report.

The WHO also presents the Fair Pricing Forum on a biannual basis, training policymakers from developing countries to understand pricing and how to improve their pricing policies. Companies like Alira Health are active members. Recently, the WHO has allowed pharma companies to send representatives to the Forum.

How can pharma companies make medicines more accessible?

Many companies have initiated sustainable practices across their organizations, focusing on environmental sustainability, human resources sustainability, and sustainable pricing to ensure patient access. These efforts often align with their commitment to the United Nation’s Sustainable Development Goals (SDGs). In particular, the pharma industry has a responsibility towards SDG number three, which is, “Ensure healthy lives and promote well-being for all at all ages.” As you track your SDG indicators of success, you can also develop price corridors in line with your sustainability goals.

Some companies have even achieved B Corp Certification, demonstrating their commitment to operating sustainably and contributing to global sustainability. This certification encompasses aspects such as the pricing and availability of medicines.

You can also work with local authorities to distribute the product in their country to the people that need it while ensuring that pricing is not only fair but also profitable. Some companies organize various initiatives in developing countries, including setting up funds and organizing campaigns to make a product free while sometimes charging for associated services. Bear in mind issues such as a challenging in-country infrastructure for distribution and administration of medicines; for example, your drug might require refrigeration, which may not be available.

Other options are Voluntary licensing, that involve producing generics at a lower cost for developing countries and entering into risk-based or value-based agreements with payers.

The goal is to negotiate a system that works for you, the country’s health system, and the patients.

How can Alira Health help companies to launch their products in developing countries with sustainable pricing?

Our team of experts supports its clients with identifying target countries for expansion, determining a sustainable pricing strategy, and of course helping to get the best outcomes. We work side by side with the clients to demonstrate value, optimize patient access, and realize the commercial opportunity for their innovations.