Emerging Markets Tiered Pricing: A Quantitative Assessment Of Local Affordability And Existing Price To Patient

Abstract

Investigate the role of tiered pricing on patient access while considering the factors affecting pharmaceutical pricing in major emerging markets including but not limited to budget constraints, pharmaceutical distribution mark ups, capacity of Govt. to pay for medicines, patient affordability, role of NGOs, lack of trust in generics, wide spread availability of fake medicines, divergence of published list price and net effective selling price. A demand model was constructed to evaluate the affordability of price to patient inclusive of mark-ups across 20 UMI & LMI markets by leveraging detailed income distributions across the markets to inform how far down the wealth pyramid recent launch products may be able to reach. A mix of industry stakeholders responded to the model and provided initial reactions to potential policy implications. Our research evaluated the principles of tiered pricing which are based on sound equity principles (Pricing using HDI- and GNI-based indexes). The model outputs determined that a significant proportion of patients cannot access modern innovations in many LMI markets and in payer driven markets negotiated pricing can fall out of equitable bands resulting in UMI markets paying less than LMI markets. Existing approaches for tiered pricing neglect to incorporate local funding and income distribution dynamics. Although the vaccines industry has been able to leverage NGOs to enhance patient access a gap continues to exist when it comes to pharmaceuticals. There is precedent in many cash pay markets for the role of local access programs to enable patient access to expand down the wealth pyramid. Tiered pricing was once seen as the answer for equitable access but a fresh look is required by manufactures if they are to live up to the ATMI goals and aspirations. On its own tier pricing is not enough to expand access to medicines down the wealth pyramid.